Your aging friends and relatives may not always manage their money in ways you agree with, but when your mom secretly drains her retirement savings, or your dad suddenly stops paying his bills, you’ll want to take a closer look at what’s going on.
People in the early stages of cognitive change can make unusual purchases, change their investment habits, begin hoarding cash or start racking up debt, even though they’ve been prudent savers their entire lives.
In many cases, odd financial behaviour “certainly can be an early warning sign for dementia,” says Gail Black-Elliott, Chief Development Officer for the Alzheimer Society of Canada.
People in the early stages of cognitive change can make unusual purchases, change their investment habits, begin hoarding cash or start racking up debt, even though they’ve been prudent savers their entire lives.
Not all bumps in the road are worth worrying about, of course – if the bank changes their online portal and dad gets confused by it, that’s no big deal. However, if he forgets how to use his bank card, then be concerned. “This falls into the category of things mom or dad used to be able to do, not something they just learned,” says Black-Elliott.
With about half a million Canadians suffering from dementia now, and more than 930,000 expected to have it by 2031, family members have an important role to play in helping identify the disease early – and protecting their loved one’s finances. “We’ve been seeing a lot more issues with seniors and financial vulnerability over the last 10 years,” says Christine Van Cauwenberghe, Head of Financial Planning at IG Wealth Management.
Here’s how to tell if those money-related quirks indicate a health problem, and how to keep a senior’s money safe.
Money’s cognitive connection
Dealing with finances requires use of memory and an array of complex cognitive skills, so when there’s a problem with the brain, some of the simple money skills we take for granted start to suffer. “With different forms of dementia, different parts of the brain are affected,” says Black-Elliott.
Alzheimer’s impacts memory, so your mom might forget her passwords or even how to get to the bank. Someone with other forms of early dementia might struggle to do basic math or become confused by sales tax. Some cognitive challenges can trigger paranoid feelings or anxiety, so people could hoard cash or become secretive with money.
Seniors are also at higher risk of falling for financial scams, according to the Government of Canada. Cognitive problems can make them extra vulnerable, so a loved one falling for a scam could be a warning sign, too.
Talk to your family’s advisor
Fortunately, a reliable advisor can be part of early detection. Since advisors know their clients’ intimate financial details, they’re often the first to see if someone’s money-related patterns are off.
There have been many situations where IG Wealth Management advisors have been asked by an older client to make a huge withdrawal or a buy a risky investment that’s not in their best interest. “We will refuse instructions in cases where it is pretty clear that the client no longer has capacity,” says Van Cauwenberghe. “We don’t have to have a doctor’s note to determine if someone doesn’t have the capacity to make their own decisions.”
Advisors have to work carefully around privacy rules, but they can call the assigned power of attorney or an emergency contact if something seems suspicious and offer a warning. If they believe a senior may be a victim of financial fraud, they can ask head office to notify the authorities.
How to intervene
If you suspect the early stages of dementia, it’s a good idea to get a diagnosis to rule out other causes – medications and other illnesses can mimic the signs of cognitive problems – and get treatment and health advice for slowing the decline. Urge your loved one go to their family doctor. If they put it off, Black-Elliott suggests tipping off the doctor who can encourage that person to come in.
Ideally, people will have put a financial power of attorney in place and set out criteria around how to hand off their financial affairs to someone else. If not, the senior in question needs to get to a lawyer and get this process started.
If dementia isn’t caught early, and if your loved one’s financial mistakes – even though they’re unintended – continue, that person’s nest egg could be at risk.
No matter what, it’s always a good idea to encourage those you care about to update their wills and put powers of attorney in place well in advance of any problems. It’s also a good idea to spend time with them so you can keep an eye on their financial, physical, mental and cognitive health.
