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  1. #1

    Risk to DIY investors due to mild dementia

    It discusses that for some forms of dementia the first symptoms are acting irrationally or emotionally and not always loss of memory. These forms of dementia can be very dangerous to a DIY investor as you are more likely to make foolish decisions, or become exposed to scammers.

    I know we have talked about spouses who have no interest in investing but I had never considered this issue. I am not sure how practical it is to put in place safeguards to prevent this, but I think I will have a discussion with the wife about this and see if we can agree some things that we (she) can do to avoid this risk.

  2. #2
    There is nothing with a high degree of certainty for the DIY investor, especially if there is insufficient counterbalance between spouses, i.e. one intervening when the other starts behaving irrationally, or a son or dau or sibling having the opportunity to provide some oversight on a somewhat frequent basis.

    Other than turning over the portfolio to an advisor with trading rights well ahead of time, the next best thing I can think of is having a contract with a 'fee for service' planner where a regular (annual?) visit to the planner for a portfolio review would allow that planner to 'intervene' via another family member. I know a few people who are now getting into relationships with fee for service palnners and I've recommended to my ex, who will soon not have anything but ETFs in her portfolio, that she plan to do that within the next 5 years (not that she is likely to get dementia, especially anywhere in the next 10+ years).

    I think we are going to see more written on this over time as the DIY crowd which really came into its own (rapidly growing numbers of people) in the last 10-15 years starts getting into advanced years and higher probabilities of dementia. It could have devastating consequences to a family portfolio.

  3. #3
    One measure is to annuitize, and thus let your finances run on autopilot.

    In fact, that's one of the strongest reasons for annuitizing that I know.

    If the amounts of money are large enough, a trust, with yourself as beneficiary, might be worth looking into.


  4. #4
    I don't think an annual visit to a fee for service planner would suffice to mitigate the danger. A lot of damage could be one in a much shorter time. One thing I am considering is having all my trade and statement emails copied to my wife and seeing if she will (In her best interest) look at the statements occasionally so she can spot irrational behaviour, or look for it if she sees other 'non-financial' irrational behaviours.

    Agree that it makes an argument for annuities (And is an additional benefit to a DB pension), but I am loath to have my precious money given over to the insurance scammers to protect it from other scammers (At 55 I am also too young to think about annuities as a sensible option, though dementia can affect you earlier than the age where annuities might make sense.)

  5. #5
    Personally, I've been thinking about this even before the above was posted by Chufinora. We don't have any children and my wife isn't interested in investing at all. Still got an 89 year old mother on the other side of Canada as well, who needs handholding just for a 1-5 year GIC ladder in a RRIF. I may possibly be willing to give up some of the investment accounts partially to a third party. After looking at a couple of older threads, I'm thinking of possibilities like Mawer, PH&N or Steadyhand.

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