AGING, COGNITIVE DECLINE, AND FINANCIAL DECISION-MAKING
By Chris Heye
Literature REview Overview
Increasingly longer lifespans present new challenges and risks for older adults and their families. One such risk is cognitive decline, a serious issue that leaves older adults both susceptible to making suboptimal financial decisions and vulnerable to financial exploitation and abuse. Researchers have consistently found a strong relationship between healthy executive functions and good financial decision making. The significance of healthy executive functioning suggests that family members and financial professionals alike need to be on the lookout for signs of confusion, disorganization, impulsivity, and disorientation. If any such symptoms are present, these observers need to adjust their actions and recommendations accordingly. Importantly, someone with executive function deficiencies is unlikely to be able to complete a conventional risk tolerance questionnaire with any degree of reliability, and the results of any such questionnaire could in fact generate investment recommendations that are highly inappropriate.
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About the Author
Chris Heye is the CEO and founder of Whealthcare Solutions, Inc. and Whealthcare Planning LLC. Dr. Heye is a technology entrepreneur, writer, researcher, and speaker in fields residing at the intersection of physical, behavioral, and mental health and financial well-being. Dr. Heye is a regular columnist for the Journal of Financial Planning and is a research fellow at the Alliance for Lifetime Income.