A truly smart person cannot go broke

Intelligence is how much a person knows about the situation they are in.

If a person is truly smart, they should have enough intelligence not to get into an apocalyptic financial crisis.

Point is, you cannot tell whether someone is smart or not when they are still in the process, it is only the result that can tell if the person was smart or not.

Yes, there may be one or two special cases where a smart person can go broke such as if they had a health emergency that renders them useless for a very extended period.

It is a given that increasing someone’s mental capacity will directly increase their financial status. Why then is it difficult to see that if they lose that financial status it is because they were not so smart in the period that they lost it?

Smartness is the observed ability of a person to make decisions that favour them. Smartness cannot be measured without putting the resultant effect in perspective. If they make a wrong turn, and their money gets lost, there were not so smart on that decision.

If an investment is going to crash, a person that is smart will pull out their money from it or even avoid the investment entirely.
A person that is not so smart will be caught unawares.

Many smart people have gone broke several times and made a recovery. Of course, the broke days are the days they were not so smart.
Where most people miss it is that a formerly smart person who made a not-so-smart decision can self-correct to become even smarter.
The way you can tell is that they never repeat a mistake that cost them their money twice.

Money is the unit of measurement of power. Power is just a word for describing the number of options available to a person or group.
You are right, in every system with scarce resources, some individuals will choose not to compete.
If a person isolates themselves from the public and lives in solitude without money and material possessions, that is ok.
But there is no way to tell if they are doing it out of choice or out of poverty and lack of options unless we look at their bank account.

Choosing to live without money and being broke are two different things. Many people such as Buddah, Steve Jobs, Keanu Reeves have chosen at one point in time to live completely without money. But that never meant they were broke.