---
title: The Financial Risks of Cognitive Decline
description: Read more about why your estate and investment plans should address cognitive decline. Planning now can ease the burden to you & your family if it should happen
image: https://www.letsassemble.com/hubfs/blog-files/Risks-of_Cognitive_Decline.png
---

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# The Financial Risks of Cognitive Decline

Posted by [ Seton McAndrews | CFP®, Vice President Investments](https://www.letsassemble.com/wealth-management-blog/author/seton-mcandrews)  
 September 20, 2017

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![Cognitive_Decline.png](https://www.letsassemble.com/hs-fs/hubfs/blog-files/Cognitive_Decline.png?width=404&name=Cognitive_Decline.png)When it comes to investment planning and setting up plans for life in retirement, it would be wonderful if we could just focus on growth, investment, spending, and financial security for you and your family. Those are the exciting features of planning that – while not always easy to work through – are challenges that are rewarding to solve.

But proper [investment planning](https://www.letsassemble.com/wealth-management-blog/new-e-book-helps-you-face-retirement-planning-with-confidence) should also include addressing issues that are often difficult for families to discuss. One of those issues is cognitive decline.

According to State Street Global Advisors, only about 39% of investors believe they have a suitable plan if their decision-making ability becomes diminished. That number may be low because of the following statistic: while 85% of advisors report encouraging their clients to have a plan in case of cognitive decline, *only 41% of investors think they actually need one*.

The other 59% who don’t think they need a contingency plan may just need some additional nudging from their financial advisor and family. According to [State Street](http://proactiveadvisormagazine.com/avoiding-financial-risks-of-cognitive-decline/), investors who live a long life will almost certainly experience some form of cognitive decline, and the risks of not having a plan can be high. Even worse, investors who are experiencing cognitive decline may be especially vulnerable to fraud, which can not only deplete assets but also leave the family vulnerable to legal headaches. State Street points out that in some cases, an investor in cognitive decline may be unaware of what’s going on, or are too embarrassed about the scam to ask for help.

**Being Solution-Oriented**

Having a conversation about cognitive decline is difficult no matter what the circumstances. But the conversation only gets more difficult if an investor actually starts to experience it. At that point, the options can be more limited and more burdensome for the investor’s family. That’s why it makes sense to begin planning not only when an investor is operating at full cognitive abilities, but also *well before the conversation may actually be needed. *For many readers, that could mean having the conversation now.

Talking to a Wealth Manager at WrapManager could be a good place to start. While we do not offer any legal services, we can talk you through the steps you may want to consider for setting up your contingency plan. That may include having written directives on file, perhaps setting up power of attorney over some of your accounts, and establishing clear language within a living will. A simple but oft-overlooked idea is to create documentation for those who will step-in to help as needed that lists out pertinent financial information. For example, a detailed listing of bills that would need to be paid that includes information such as whether or not they are automated, when they are due, and what account they are paid out of. Also, carrier and policy details on any insurance policies should be readily available.

It also means having a candid conversation with family members, particularly those who would need to take action in the event of cognitive decline.

A Wealth Manager here at WrapManager would be happy to get the conversation started with you, and to help you take the next steps towards creating a plan. Just reach out to us at 1-800-541-7774 or start a conversation over email at [wealth@wrapmanager.com](mailto:wealth@wrapmanager.com).  

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