An ancient Chinese proverb goes as follows: Money can take one man anywhere, but it cannot pass through three generations.
This Chinese proverb is remarkable in light of current financial statistics. 90% of families do not retain their unity and their finances after three generations.
One reason may be that many older adults fall victim to financial scams. Older adults hold a disproportionate percentage of the nation’s wealth. Yet, 22% of adults over age 71 have some cognitive disorder.
When working with a financial advisor, I recommend you consider the following to protect yourself:
- Work with a fiduciary, not a salesperson.
- Encourage trusted family members to join you in your financial review meetings.
- Work with an advisor who provides written summaries after all meetings.
- Work with advisors who document all financial and investment conversations and decisions in a client management system.
- Work with an investment advisor who develops a written Investment Policy Statement detailing how your money is managed.
- Consider signing an authorization document giving your trusted advisor permission to contact specific professionals, family members, or friends in the event of a change in your physical or cognitive abilities.
A tension exists between protecting older adults with diminished capacity and promoting autonomy in older adults who have capacity. All of us have different objectives, yet all of us want to remain independent and in control of our lives. Yet, denying reality will not protect you or your wealth. Setup protocols and relationships with advisors you trust to place your best interest first.
For more insight, listen to Jentner Wealth Management’s weekly podcast by clicking here. Or download Jentner’s white papers on The Four Cornerstones of Prudent Investing and The Active Versus Passive Investing Debate.