When Carol Ringrose Alexander helped her father to get his affairs in order after he was diagnosed with Alzheimer’s, she used a planning tool known as the “five wishes document” to guide her after he was no longer able to make decisions for himself.

“He was a physician, and when I asked him if he wanted pain medication if needed, he said, ‘No. I want to be present mentally.’

“I followed up with, ‘You have an Alzheimer’s diagnosis. If you aren’t [present mentally], do you still want to be in pain?’

“He pondered it for a while before he said, ‘No, I actually don’t.’ So, that gave me comfort knowing what he wanted.”

Alexander’s experiences are not unique. More Americans are having similar discussions with elderly parents each year as the US grows older.

The 2020 census reported that 56 million people – roughly 17 percent of the US population – were over 65. The Department of Health and Human Services expects that number to rise to over 80 million by 2040.

According to a report issued in November of 2022 by The Administration for Community Living, over 28 percent of Americans over 65 have trouble with cognition.

As the US population grows older and the number of people with diminished faculties rises, all aspects of society, the economy, and the government will feel the impact.

Even the 2024 election cycle has become, in part, a referendum on the cognitive abilities of senior citizens. It appears increasingly likely that President Biden, who is 80, will face former President Trump, 78, on the national ballot next November, while ten lawmakers serving on Capitol Hill are even older.

At 90, Diane Feinstein, California’s senior senator, is the oldest serving member of Congress. Legal documents filed in July and made public last month revealed that Senator Feinstein had ceded partial power of attorney to her daughter. This news contributed to ongoing public debate over the ability of elderly Americans to serve effectively in elected office.

The court documents filed on Senator Feinstein’s behalf indicate that she granted her daughter specific control over her financial affairs. She joins an increasing number of elderly Americans who have handed management of their financial affairs in whole or in part to family or outside advisors as they continue living independently otherwise.

This growing need is increasingly being met by specialists who can help aging individuals as well as their families through difficult transitions.

Carol Ringrose Alexander, an executive vice president at Retirement Investment Advisors, Inc. in Oklahoma City, is one of them.

Alexander’s experience caring for her father ultimately led her to pursue the Elder Planning Specialist designation conferred by the Financial Planning Association (FPA).

“Through our work with families, we face these issues and challenges on a regular basis,” she said. “This training helped my capacity to do a better job taking care of my clients and helping their families.”

Annalee Kruger and Bob Mauterstock created the Elder Planning Specialist Program to assist financial advisors in navigating the complex issues they face when working with aging clients.

The scale of the generational transition facing the financial services industry is staggering.

The baby boomers now entering advanced age are the wealthiest generation of Americans in history. Cerulli Associates estimates that $84 trillion will be available for generational transfer by 2045.

In a white paper issued by the SEC’s Office of the Investor Advocate in 2019, Senior Director Stephen Deane outlined the challenges facing the affluent elderly.

“A decade-long shift from defined benefit to defined contribution retirement plans has placed the onus on many more retirees to manage their retirement savings themselves — ironically, just at the time they may develop cognitive impairments that impair their ability to shoulder the financial responsibility.”

Neurodegenerative diseases, like Alzheimer’s, might spring to mind upon hearing the term “cognitive impairments,” but scientists have concluded that aging alters general decision-making ability, regardless of an individual’s health.

Research conducted by Erik Asp, a professor of Psychology at Hamline University, suggests that normal declines in frontal lobe activity as we mature may make us more likely to believe false information irrespective of intelligence and experience. Asp’s “false tagging theory” explains how intelligent people can become more vulnerable to deception as they age.

Wealth concentrated in the accounts of elderly investors less equipped to protect themselves has unsurprisingly led to an uptick in financial exploitation.

In a report to Congress in October last year, the Federal Trade Commission highlighted a dramatic rise in financial fraud targeting senior citizens. According to the report, documented investment scams victimizing the elderly rose by 213 percent from 2020-21, while business and government impersonation crimes increased by 134 percent and 109 percent, respectively.

Often, the people taking advantage of the elderly are trusted by the victim.

Financial Advisor Vance Barse recalls a recent situation in which an 86-year-old client who no longer drives was making large ATM withdrawals monthly. “I wondered, ‘Why on Earth would the client need to go to the ATM to take out $3,000 a month?’ And the answer was, the client had no need for that.” Barse and his team determined that a family member had access to the client’s ATM card and resolved the issue with the client’s trustee.

Barse is the founder of Dallas-based wealth management firm Your Dedicated Fiduciary – part of Commonwealth Financial Network. With an undergraduate degree in neurobiology and neurophysiology, Barse has made late-life planning a core part of his firm’s services.

According to Barse, advance planning is critical. As part of his onboarding process, Barse helps clients prepare a group of trusted decision-makers who can step in when necessary. That group may include family members, legal and tax professionals, and others the client selects to manage their financial affairs when they can no longer do so themselves.

Barse also recommends that new clients have a family meeting to hash out the client’s desires and write them down. That helps adult children, who will be called upon to act as decision-makers in the years ahead, as well as grandchildren and other loved ones who may be watching from the sidelines while difficult choices are made.

“It fosters that platform of trust and transparency,” Barse explains, “both of which are vital.”