Cognitive decline is the gradual deterioration of mental faculties due to a neurological and/or psychological disturbance such as Alzheimer’s disease, dementia, depression, or substance abuse. Cognitive issues can stem from different factors, including environmental circumstances, genetic traits, and/or hormonal changes. People can experience varying symptoms including memory lapses, poor judgement, lack of focus, volatile behavior, and general confusion.
Investors should be aware of the risks involved in cognitive decline, which can rob them of their judgement, often with essentially no warning. This should be of particular concern to individuals who manage their own nest eggs, with little or no consultation. One big mistake, or several small ones, can go unnoticed, with material, adverse consequences.
Individuals who believe that they are capable of managing their own investments should, at a minimum, consider keeping a trusted relative and/or advisor(s) in the loop. In recognition of this issue, and the potential consequences, many of the major do-it-yourself investing and trading venues are upgrading protocols to help to identify signs of decline.
All comments and suggestions are welcome.
Walter J. Kirchberger, CFA®