There has been a tremendous amount of research done on the cause of investor behavior. After all, investor results have told us people are impulsive, short sighted, reactionary, and confused. Research has now illuminated the science behind it. A few years ago, I began to incorporate these under-standings into my approach with clients and their financial planning.
On June 5th, I asked a friend of mine, Dr. Paul Nussbaum to address a group of my colleagues. Paul is a Neuropsychologist who specializes in the aging brain. He has published and presented on the subject of brain health and financial decision making often, and I wanted to provide a summary of the points he made with us.
First, some stats: Your brain weighs 2 – 4 pounds, is composed of 60% fat, and consumes 25% of the blood each time your heart beats. If you are a 170 pound male, 3% of your body uses 25% of your blood. So, its importance for your functioning is primary.
Further research suggests that from age 60 on, both cognitive impairment without dementia (CIND) and dementia rise measurably every five years. Most people are holding their greatest level of wealth, and therefore making critical decisions, at the time of increased cognitive decline. My role as a financial advisor for these folks is much different than the one I have with a younger client. My ability to realize that and utilize appropriate resources is critical.
These were just a few points made by Dr. Paul Nussbaum. It was an invaluable hour, and I wanted to share some of the insight. If you are thinking about your situation, or that of a relative or friend, and would like to ask me a question, please do not hesitate to contact me. For more information from Dr. Nussbaum, please visit his site at www.brainhealthctr.com.
1 Journal of Financial Counseling and Planning
2 Charles Schwab Retirement Advice Survey, 2010
Author: David Jeter, CFP®, Allegheny Financial Group, June 2013
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The above comments are provided for discussion purposes only and are not meant to be an offer of any specific investment.