Dementia Planning

The Hidden Risk to Client Wealth: Recognizing Dementia Before It’s Too Late

When most people think about dementia, they generally think about memory loss. Financial professionals should also think about risk management.

The U.S. population is aging at an unprecedented rate. According to the U.S. Census Bureau, more than 10,000 Americans turn 65 every day, and for the first time in history, adults over age 65 are projected to outnumber children by 2034. At the same time, individuals who reach age 65 have a strong likelihood of living well into their 90s, extending financial planning horizons from years to decades.

Yet many clients may be less prepared for growing older than they believe.

Dementia is one consideration. Dementia is a general term describing a decline in cognitive abilities severe enough to interfere with daily life. Symptoms often include memory loss, impaired reasoning, poor judgment, and language difficulties. While Alzheimer’s disease is the most recognized form, dementia can also result from vascular disease, Lewy body disease, Parkinson’s disease, frontotemporal disorders, stroke, traumatic brain injury, alcohol abuse, and other causes. In fact, mixed dementias are common.

What makes dementia particularly relevant to financial professionals is this: difficulty managing money is often one of the earliest signs.

Research suggests that financial management skills can begin declining six to eight years before a formal diagnosis. During this period, clients may miss bill payments, make unusual investment decisions, become more susceptible to scams, or demonstrate changes in spending patterns long before family members recognize a problem.

The financial consequences can be significant. Household wealth often declines due to increased care expenses, home modifications, reduced income when caregivers leave the workforce, and harmful financial behaviors. Studies have shown that the later dementia is recognized and diagnosed, the greater the impact on household net worth.

For wealth managers, trust administrators, and other fiduciary professionals, this creates both a challenge and an opportunity.

What Professionals Can Do

• Invest in education about dementia and cognitive decline.
• Watch for early warning signs, particularly changes in financial decision-making or uncharacteristic difficulty understanding financial information.
• Start conversations early about future planning, capacity, and trusted contacts.
• Increase client interaction when concerns arise.
• Consider in-person meetings or home visits when appropriate.
• Collaborate with family members and other professionals.
• Partner with Aging Life Care Consultants and other aging specialists who can help assess needs and coordinate support.

As the number of older adults continues to grow, the intersection of finance and dementia will become increasingly important. Financial professionals are often among the first people to notice changes in a client’s financial behavior. Recognizing those signs early can help protect assets, preserve independence, and improve outcomes for clients and their families.

The question is no longer whether your practice will encounter dementia. The question is whether you’re prepared when it does.

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Connect with Aging Wisdom

Aging Wisdom helps professionals and families navigate the complex realities of aging with confidence and clarity. Contact Annie Hafermann at annie@agingwisdom.com to schedule a presentation for your team or clients on:

• The Intersection of Cognitive Decline and Financial & Estate Planning
• A Holistic Approach to Supporting Older Clients
• Actionable Strategies for Aging and Care Planning

Additional Reading

• Dementia Usually Shows Up in the Checkbook First (Aging Wisdom article)
• These Professionals May Be the Best Kept Secret in Elder Care (New York Times article)