One of the most obvious things to watch for is when clients proactively decide they want to review or change their beneficiaries on their plans. It usually stems from the frustration of not remembering who they currently are and can be an indicator of memory loss.Andy Dean Photography/iStockPhoto / Getty Images
Sign up for the new Globe Advisor weekly newsletter for professional financial advisors on our newsletter sign-up page. Get exclusive investment industry news and insights, the week’s top headlines, and what you and your clients need to know.
Few situations must be handled as delicately as when an advisor is facing the cognitive decline of an aging client.
And as the rate of intergenerational asset transfers has sped up, advisors are increasingly encountering financial decision-makers in the early stages of dementia.
The key lies in never undermining the client or compromising their wishes, but rather drawing in concerned parties as soon as possible to support them, says Carole Urias, insurance and financial advisor at Peak Investment Services Inc. in East Selkirk, Man.
Ms. Urias says that as soon as she notices any forgetfulness or confusion during regular client meetings, she will ask for a family member to join a follow-up discussion.
“In my experience, it’s always helpful to include a spouse or other family [member] in any financial decisions,” she says. “This protects both the client and the advisor.”
The strongest indicators of confirmed dementia Ms. Urias has witnessed in her practice include exhibiting emotions and mood swings that don’t fit the circumstances, as well as expressing confusion about timelines and environments.
However, on some occasions, Ms. Urias says she has come across individuals who were deemed to have diminished capacity, only to learn later that they were actually hard of hearing. As a result, her client discussions now include visual materials and, where needed, an American Sign Language interpreter and Video Relay Service chat for virtual meetings.
If this possibility can be ruled out, other symptoms of dementia advisors should watch out for include memory loss, repeating questions, or simply being unaware of their surroundings.
“Everyone has an internal ‘spidey-sense’ about these things,” says Darren Ulmer, certified financial planner with Darren Ulmer Financial & Insurance Services Inc. at Sun Life Financial Investment Services (Canada) Inc. in Saskatoon.
“If you have sincere relationships with your clients, you’ll notice subtle changes each time you meet with them to review their planning.”
One of the most obvious things Mr. Ulmer and his team watch for is when clients decide proactively that they want to review or change their beneficiaries on their plans, he says. It usually stems from the frustration of not remembering who they currently are and can be an indicator of memory loss.
When the family is involved
Mr. Ulmer stresses to clients that financial planning and working with a professional advisor is not a transactional business. Rather, it involves getting to know and building bonds with the entire family as well as other advisors working with them.
“We are very genuinely insistent that to work with us, they do require a current will and preferably a power of attorney as well,” he says.
“One other piece is that the client discovery package includes the names and addresses of assigned family members and consent for us to reach out to them if we ever have a concern about their mental capacity.”
But what happens when a trusted family contact turns out to be not so trustworthy after all?
As someone with personal experience of a family member falling victim to elder abuse, Ms. Urias is acutely aware of the difficulty in resolving the situation when that does happen.
That’s largely because family members tend to want to keep the peace within the family rather than disrupt the situation – even when signs of abuse are visibly present, she says.
“In one case in which a client redeemed sums of money from their registered account to give to their children, I discovered that if they had not done so, there may have been an element of withholding access to their grandchildren,” she says.
“This is often a precarious position, and an advisor must tread as cautiously as possible.”
Expressing concerns about the intention of their children may cause a rift between client and advisor, she adds.
How to enforce safeguards for clients
As clients with dementia are especially vulnerable and reliant on their power of attorney for the day-to-day management of their finances and sometimes even care, outcomes can be dire if that relationship breaks down. These can include abandonment, isolation from family members and children, and financial, physical, emotional, and spiritual abuse.
The better the client’s affairs are structured before the power of attorney comes into effect, the less likely financial abuse will occur, says Ms. Urias, adding that it’s beneficial to arrange direct deposit of Canada Pension Plan and Old Age Security payments to discourage any need for physical trips to the bank.
Mr. Ulmer says that “many times, a power of attorney thinks they can do things like change a beneficiary or make ad-hoc redemptions from investments, and when confronted with not being able to accomplish their deeds, they will bring in the elder client, often very compliant, to sign for these changes. As professionals, we need to understand how to spot this and involve the family or other professionals without compromising client confidentiality.”
Mr. Ulmer implements additional safeguards such as prohibiting any transactions over the phone or video, especially for any financial withdrawals, plan or beneficiary changes.
Family meetings are mandatory every four to five years to review clients’ holdings so everyone is in the loop. When he senses something is wrong, it probably is, he says.
“So, we stop and take a break for at least 10 minutes to gather our thoughts before proceeding,” he adds.
As a community, all advisors can make themselves more aware of financial and elder abuse and take steps to prevent it from happening.
“We’ll all go through this eventually, so the more planning and processes we put in place ahead of time, the better positioned for success the aging client will feel,” Ms. Urias says.
For more from Globe Advisor, visit our homepage.