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Requiring advisors to undergo cognitive testing beginning at 70 or 75 may violate core rights. The same goes for introducing mandatory retirement. Blanket policies are often problematic from an ethical and legal standpoint.monkeybusinessimages/iStockPhoto / Getty Images

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When was the last time you mistakenly put your steaming cup of coffee in the freezer? Or forgot about a client meeting? Again. How about struggling to fill out a compliance form that’s been completed a hundred times before?

Advisors look out for cognitive decline in their clients, but what happens when it’s advisors themselves who experience progressive memory loss and other symptoms severe enough to impact their work?

Justine Zavitz, vice president of Zavitz Insurance & Wealth in London, Ont., says she and her mother, the firm’s president Terry Zavitz, have thought about this question and are proactive – while adding a side of humour to the uncomfortable conversation.

“My mom is very cognitively okay, but it’s always a joke here, right? Like, ‘Oh, mom’s losing it! You better take over the company!’” she says. “But there’s always that little undercurrent where we go, ‘But seriously, if that happens, what are we going to do?’”

They’re smart to contemplate their options early. While it’s not a given that any one person will experience dementia, cognitive decline is becoming a larger issue as Canadians age. By 2030, seniors are expected to number more than 9.5 million, or almost a quarter (23 per cent) of the population, up from 15.6 per cent in 2014. Meanwhile, 955,900 people will be living with dementia by then, according to the Alzheimer Society of Canada.

This demographic shift is more than reflected in the financial advisory industry. One 2019 survey of 2,000 members of the Financial Advisors Association of Canada – known as Advocis – found that more than half (51 per cent) of advisors were at least 55 years old. Yet, discussing the cognitive realities around aging is often taboo. (Several investment firms contacted for this article declined to participate.)

“It’s a really difficult topic,” says Sharona Hoffman, professor of law and bioethics at Case Western Reserve University in Cleveland and author of Aging With a Plan: How a little thought today can vastly improve your tomorrow.

“We have this with doctors and judges, too. Nobody wants to admit they may have employees with this problem because that will really shake the confidence of clients, customers and patients.”

She feels compassion for those who may struggle with memory lapses and a decline in judgment. Realizing you’re experiencing cognitive impairment is not only frightening, but it can lead to a loss in income and stability.

Still, deciding how to handle advisors’ deteriorating cognitive abilities is tricky, Ms. Hoffman says. For starters, it’s a challenge to even know whether an issue is cognitive decline in the first place. The advisor could be simply distracted by personal issues or health problems, including long COVID-19, vitamin deficiencies or stress.

Then, there’s deciding how to weigh the rights of advisors against the rights of their clients. Requiring advisors to undergo cognitive testing beginning at 70 or 75 years of age may violate core rights. The same goes for introducing mandatory retirement. Blanket policies are often problematic from an ethical and legal standpoint. Besides, sometimes, they don’t work.

“You can be in your 70s and be among the best workers because you have the experience and skill set,” Ms. Hoffman says. “We don’t want to force people out of the workforce who can be really good performers.”

What’s the role of regulatory bodies?

While it’s problematic for firms to test their advisors, Ms. Hoffman makes the case that oversight bodies and licensing organizations could potentially do some form of periodic knowledge testing. If they already require continuing education, testing to ensure people retain basic competence isn’t so different.

“[Regulators] should be paying attention,” Ms. Hoffman says. “They’re in the best position to try to have some kind of intervention.”

The Investment Industry Regulatory Organization of Canada (IIROC) and the Mutual Fund Dealers Association of Canada (MFDA) said in a joint statement that neither organization has rules in place dealing specifically with diminished mental capacity in advisors.

“However, if an advisor’s diminished mental capacity affects their ability to perform the functions of their role, dealers may consider two foundational requirements of the MFDA and IIROC regulatory framework – standards of conduct and the proficiency principle,” they said. In other words, advisors must be able to do the work competently enough not to harm clients.

Ways to identify cognitive decline

On dealers’ side, doing regular evaluations of advisors’ work quality is the most lawful way to identify cognitive decline, Ms. Hoffman says. And it’s important to keep thorough records.

Training is important too. Dealers should train supervisors and managers about cognitive decline and how it might appear in job assessments. Maybe advisors are making errors they’ve never made before or suddenly miss meetings. Any conversations will need to be handled with sensitivity and compassion while going over these specific gaffes.

Carol Lynde, president and chief executive officer at Bridgehouse Asset Managers in Toronto, started researching mental health and advisors in 2016. Their research showed 65 per cent of advisors worked with senior clients with diminished capacity. Ms. Lynde admits it’s easy for advisors to take on their clients’ stressors as their own, so it’s vital to practice self-care including better diet, exercise and rest.

“Get fresh air,” she says. “I tell my staff all the time. Did you get outside today?”

That advice could actually reap cognitive rewards for advisors in the future, too. A 2021 study from Simon Fraser University showed that moderate-intensity physical activity may lower the risk of cognitive decline.

Ms. Zavitz of Zavitz Insurance & Wealth says the key to staying on top of any potential problems comes down to two things – communication and succession planning. For her, that means sitting in on any discussion about wills and power of attorney for her mother.

She’s started thinking about a Plan B if anything were to happen to her as well. Ms. Zavitz says she can point to a couple of people on their management team who could step in and keep the firm running in accordance with her goals and vision.

“I’m not that old, but anything can happen to anyone,” she says.

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