In the past I have noted that people are better served by educating themselves and managing their own money. My belief is that the services of a financial advisor should only be engaged if an individual has very specific questions or is seeking specific guidance and in all cases, the fees being paid to such an advisor should be kept to a minimum.
There is another occasion, or more accurately, a period when outside counsel should be sought … as individuals age and their mental acuity declines. Experts say that older adults should have a “financial” checkup the same time they have annual doctor visit.
Previous studies have shown that as humans age, cognitive declines are inevitable. Now, a recent study by researchers at the University of Missouri and Texas Tech University has confirmed that this cognitive decline extends into financial literacy. The researchers also found that older individuals retain a strong sense of self-confidence, which could add to the problem, leading to significant mistakes when making financial decisions.
“Mixing a decline of financial literacy with an increase in self-confidence is a toxic combination,” said John Howe, professor and chair of the Department of Finance in the Trulaske College of Business. “This opens the door for more honest mistakes as well as fraud. It’s widely known that older adults are very common victims of financial fraud. It’s important that as we age, we find someone who has our best interests in mind when managing our finances.”
In the study, Howe and his colleagues, Michael Finke and Sandra Huston from Texas Tech University, surveyed more than 3,850 individuals 60 and older and found that they experienced increasing declines in financial literacy …
Read the news release in its entirety at News Bureau, University of Missouri.