The Globe and Mail article below points to the need for all financial institutions with a frontline role on managing and protecting client/member’s wealth to get to know them , espcially seniors, who may be experiencing cognitive deficits as they age. Seniors are also the subject of many targeted attacks on their wealth by unscrupulous people and fraudsters who go after their vulnerabilities to remove them from their hard-earned money.

How financial behaviour can reveal early signs of cognitive decline

Alison MacAlpine

Special to The Globe and Mail

Published July 25, 2024

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Recent research from the Federal Reserve Bank of New York and Georgetown University suggests that memory disorders such as dementia show up in credit scores and payment delinquencies years before diagnosis. If financial behaviour is an early sign of cognitive decline, can advisors play a role in early detection to protect their clients’ finances and even their quality of life?

Early diagnosis enables early intervention that can help people with dementia stay healthy and independent for as long as possible, says Dr. Samir Sinha, director of geriatrics at Sinai Health and the University Health Network, and director of health policy research at the National Institute on Ageing at Toronto Metropolitan University.

The challenge is that more than two-thirds of “community-dwelling older adults” who have dementia haven’t been diagnosed formally, he says. “There are a lot of people out there who are living with dementia years before they actually get a formal diagnosis, and some people never get diagnosed.”

Dr. Sinha sees patients who have missed more than a bill payment or two in his practice. They may be at the point of being evicted because they haven’t been paying their rent, or their power has been cut off, or their phone has been disconnected.

It’s those “subtle higher-order tasks” that are affected, he says. “If one was to appreciate what’s happening better, or what’s getting in the way, [one] can more easily put in safeguards and other mechanisms.”

In theory – although not yet widely in practice – technological tools such as artificial intelligence (AI) could identify financial behaviours that are a precursor to dementia. There’s a parallel in medicine, in which Dr. Sinha says it’s often possible to detect the start of memory problems in bloodwork to monitor well-controlled chronic conditions such as diabetes, a thyroid disorder or high cholesterol. As patients begin to forget medication doses – a behavioural parallel to forgetting bill payments – it’s reflected in lab results.

From Dr. Sinha’s perspective, using technology to help identify cognitive decline comes with a range of concerns related to everything from cybersecurity to ethics. But he can see the value in the idea of a bank, for example, offering an opt-in program, with clear consent, that tracks financial transactions such as bill payments or keeps tabs on online banking mistakes. It’s not that dissimilar to the technology that looks for unusual patterns in credit card transactions to detect fraud.

That said, he warns, “It opens potential issues about how that information can be used [and] will that information be weaponized against me? … Will someone want me to be declared incapable or incompetent that much sooner? Will it make it harder for me to buy insurance?”

Automating decisions

Dr. Bonnie-Jeanne MacDonald, director of financial security research at the National Institute on Ageing, has been researching the benefits of “automated income” in retirement through an employer pension plan or a program such as the Canada/Quebec Pension Plan. Automating some of the flow of money out of a household by, for example, setting up pre-authorized bill payments may help as well. Ideally, this type of intervention should happen before cognitive decline sets in.

“Putting these automatic decisions in place when people have the health and the wealth to make those decisions for their future selves is brilliant. … If a financial advisor can help them do that, then that’s a great service,” she says. “Having everything automated for older adults takes the pressure off them, [and] off their loved ones.”

Dr. MacDonald says it can also be helpful for advisors to ask “what if” questions while clients are cognitively healthy. Find out what they want you to do if you suspect memory issues – and, of course, set up the necessary legal documents so someone else can act on their behalf if it becomes necessary.

“People don’t like to talk about bad things happening to their future selves – but if it’s done by a professional, people are more open to those conversations,” she says.

The human touch

Maili Wong, senior wealth advisor and senior portfolio manager with The Wong Group at Wellington-Altus Private Wealth Inc. in Vancouver, says advisors are better positioned than technology to notice subtle changes in client behaviour that may indicate cognitive decline.

“There is a place for technology, [although] we have not come across a particular program or app that we use to rely on for this purpose,” she says. Instead, her approach is based on relationships and understanding the client’s behaviour with their finances.

A red flag may be a client who has always been very detail-oriented and who starts to forget key information. One of Ms. Wong’s clients in his 80s called to arrange payment for taxes due but was confused about why the bill was so high and unsure where the money would come from.

“We were concerned because we had had conversations with this client, who had decided to wind down one of his companies and sell investments [that would] trigger capital gains last year, and had discussed with their accountant the rationale for doing so,” Ms. Wong says. “Having a relationship with this client, who was always very sharp and on the ball, we probed a bit deeper.”

The client acknowledged he had been experiencing forgetfulness and asked Ms. Wong to meet one-on-one with his daughter, who also had power of attorney on his investment accounts. After that meeting, the three met and came to understand that the client wanted to use the money earmarked for taxes to invest in a private investment that didn’t seem appropriate for his goals. The “triangular relationship” that included the client, daughter and Ms. Wong helped reorient the client back toward his financial plan and away from a rash decision.

Ms. Wong was able to intervene before her client took a regrettable step because she observed out-of-character behaviour and then asked probing questions. She watches for situations in which a client asks about something already discussed, forgets a request they made, or poses an out-of-context question. That prompts a conversation to find out whether the client has noticed recent forgetfulness and, when appropriate, she reaches out to the client’s trusted contact person or power of attorney.

“If we can be proactive, it can help prevent bigger problems.”