The Cognitive Ability Test is specifically designed to help advisors better protect baby boomer clients by detecting the early signs of cognitive declines due to advance age, Alzheimer’s and dementia.
Since financial decisions require a higher level of cognitive ability, advisors often notice it before clients have any difficulty in daily lives thus before having an official medical diagnosis. Advisors often hesitate to bring it up because they don’t want to be rude and offend their clients.
These clients are the primary target of fraud and scam as well as manipulation and coercion from people they know, even from their loved ones, thus it is very important for advisors to have this conversation and put the right measures in place to protect the financial well-being of the baby boomer clients.
We recommend that clients take the Cognitive Ability Test when they are relatively young, say 65 years old, to establish a baseline. And then repeat it every year or more often as needed. If there is any change, clients will see it themselves. Now the advisors are the hero coming to the rescue instead of having to be the messenger.
It also helps the advisor establish a trusting relationship with clients’ adult children so that when the wealth transfer happens, the children are more likely to keep the money with the advisor. Study shows that ~80% of assets leave the advisor during the generational wealth transfer.
By Helen Yang, CFA