There are several typical warning signs when people start to lose the ability to manage their money, experts say. And it pays to be watchful: Parents aren't likely to recognize their own declining abilities.
In a study of financial knowledge by FINRA, the Financial Industry Regulatory Authority, people who reported being more confident in their financial decision making than they were five years ago had slightly lower cognition scores than those who said their confidence was unchanged. In the Fed's Older Adult Survey, 96 percent of respondents age 70 or older said they were just as confident or more confident in their decision-making than five years earlier.
If an elderly person suddenly changes investment strategies—if a normally cautious investor suddenly gets excited about a new, high-risk security, for example—that is often a red flag.
Getting behind on bills is another potential warning sign, especially if it's someone who has been very organized in the past. Calls from creditors may be a signal that someone can no longer keep track of bills or is facing some other financial challenge worth surfacing.
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If someone has always been careful about filing and record-keeping and now the papers are piling up, that may indicate a problem. The same goes for a sudden rash of expensive purchases that seem out of character.
Watch out as well for an onslaught of charitable solicitations, experts say, or a bunch of expensive purchases.
Barry Glassman, president of Glassman Wealth Services, said he has brought in a client's son or daughter (with the client's permission) on at least two occasions when he became concerned about slipping cognition and questionable transactions. "As soon as the son stepped in we were able to see that there was a financial predator."