Credit Scores May Help Advisors Recognize Cognitive Decline

Financial advisor David Demming Sr. had an uneasy feeling when an elderly client called his office requesting money for home renovations. An employee heard a voice in the background whisper: “Tell him it’s for the porch.” His firm, Demming Financial Services, eventually realized a neighbor was attempting to take advantage of his client.

“We got even because one of her kids was a federal prosecutor,” Demming Sr. said. “But it was one of those situations where clearly there’s a vulnerability and you need to get involved.”

It’s an all-too-familiar scenario for aging clients especially those suffering from Alzheimer’s disease and related dementias. Some 2 out of 3 Americans now suffer from some level of cognitive impairment by the age of 70, according to ScienceDirect. But, new research points to warning signs that can help advisors protect their clients well before that.

Credit Check

Falling credit scores appear on average five years before a health diagnosis is determined, according to a New York Federal Reserve Bank study published in May. Additional metrics like, missed credit card and mortgage payments, may also point to a problem, the research found. “Advisors encounter these situations more often than many realize,” said Melissa Pavone, founder of Mindful Financial Partners. “We encourage clients to consider these ‘what if’ scenarios early.”

Other signs of cognitive decline include confusion about financial matters that clients previously handled with ease or unusual savings withdrawal patterns, Pavone told The Daily Upside. These warning signs could be important tools that give advisors an edge in stopping financial scams.

Time for a Talk: When the time comes to address cognitive decline, the conversation is often difficult. Pavone advises a step-by-step approach, often involving trusted family members or pre-authorized individuals. It’s also crucial to adjust financial strategies, moving toward more conservative investments, setting up checks on account activity, and establishing legal protections like a power of attorney. “It’s vital to approach them with patience, empathy, and clarity,” she said.

Demming Sr. suggests initiating these conversations in a client’s 50s, before cognitive decline becomes a pressing concern. “When the kids move out, it becomes a more natural conversation,” he said.