After almost three decades providing financial advice to clients in St. Albert, Alta., Greg MacIntosh says he often feels the stress of having to guess if aging clients are showing early signs of dementia.
“There are instances like them not remembering things that you know they should remember,” says Mr. MacIntosh, vice-president of Wild Rose Group of Cos., who worked toward obtaining the elder planning counselor designation to spot early signs of dementia.
One strategy he employs is to quiz clients with questionable mental capacities on matters that are already on their files, such as who’s their power of attorney (POA), lawyer or accountant.
“The problem with testing memory is that unless you know what the answer should be, it’s difficult to know whether there’s a memory loss issue,” Mr. MacIntosh says. “Sometimes, it could be temporary because of a medication and sometimes it can be part of a more progressive problem.”
As more and more members of the baby boomer generation enter retirement, Mr. MacIntosh is one of many advisors feeling overwhelmed and unqualified to spot signs of dementia – even though they often suspect problems before family members.
“If we see them every six months, we have gaps, so we have something to compare to. If someone is degenerating, people around them may not notice it as much,” he says.
Kevin Spence, owner and advisor at Langley, B.C.-based Spence Financial Services Inc., says that during his work as an advisor for the past 35 years, he has also spotted signs of dementia in clients.
“The first signs are they repeat themselves, or they’re not grasping what you’re telling them,” he says.
His first step is to try to involve family members before turning to formal alternatives, but in some cases the clients are estranged from their families. In other cases, family members could be part of the problem.
“You could have family trying to dip into their parent’s account,” he says. “It’s a really an awkward conversation to have.”
“Advisors have noticed situations of what I would call elder abuse by family members,” says
Greg Pollock, president and chief executive of Advocis, an association that represents more than 13,000 advisors in Canada, says problems arising from clients with dementia are growing faster than investment industry regulators can or are able to deal with.
In July, the Canadian Securities Administrators (CSA) introduced new rules that will require registrants to take reasonable steps to obtain the name and contact information of a trusted contact person (TCP) whom advisors could alert if they have concerns about a client’s ability to make financial decisions, or if advisors suspect the client is being exploited.
While a TCP doesn’t have the authority, like a POA, to make transactions on a client’s account, the intention is he or she would be a resource in helping advisors protect a client’s financial interests or assets.
“The CSA is suggesting a trusted contact person be identified and be on file, and at that point, you would take steps to contact that person and share your concerns,” Mr. Pollock says. “[But] the trusted contact person is somebody who could easily say, ‘Okay, thank you. I’ll look into it.’”
Advocis, which sponsors workshops on issues surrounding dementia through local chapters, is urging members to take the initiative to put a TCP in place when they do their mandatory know-your-client reviews every two years. The client, though, is under no obligation to provide a TCP.
“We would recommend to our members, if that is the case, to make sure you have evidence that you have asked at least – and [to document] that there was a refusal on the client’s part,” Mr. Pollock says. “For the most part, advisors will do the right thing and will ensure that these kinds of contacts are in place when they should be.”
He adds that advisors can ultimately turn to the common legal resort of deferring matters to a person appointed as POA, who has the authority to manage a person’s money and property if a medical doctor determines that person is unable for mental or physical reasons. Clients are also under no obligation to appoint a POA.
In addition to the TCP, the CSA’s new rules give advisors the power to place temporary holds on transactions if they suspect a client is suffering from dementia.
Mr. Pollock says he’s disappointed the rules didn’t go further to protect advisors who are being put in a situation in which they alone are making health and investment decisions on their clients’ behalf.
“We had asked the CSA to include a safe-harbour provision, which would protect advisors from potential liability should they put a temporary hold on the client’s investment because they suspect something odd or unusual,” he says.
One potential hazard he sees from not having a safe-harbour provision comes if an advisor makes the call that a client is not mentally able to make rational investment decisions but the client is merely experiencing temporary memory loss, just having an off day, or is distracted by other matters.
Mr. Pollock says Advocis will continue to push for clearer and effective regulations concerning mental health but stresses the urgency for immediate action.
“You have to put these things in place when the client is of clear mind. Once something has occurred where that’s not the case, it’s really too late,” he says.