One broker had an $8M client take his assets elsewhere because of a fatal communication mistake. Could it happen to you?
An adult daughter of a broker’s client approached the broker about her father’s recent diagnosis of Alzheimer’s Disease. She asked for his help. He shrugged his shoulders and said, “Basically, I don’t do any of that. I just manage the money”. The daughter was upset, as her father was losing his memory and put his finances at risk. The broker did not wish to get involved with that problem.
Of course, that was the end of his managing the $8M worth of assets.
This situation, having to face a client who has been diagnosed with a brain disease or some other form of cognitive impairment is not unusual and it is becoming a much more frequent issue as our population ages. People are living longer than ever and the risk of Alzheimer’s and other age-related problems rises steadily with age. Can financial professionals just hope this issue will go away because you “only manage the money”? We think not.
The communication, the knowledge and the skill set needed to best manage your aging investors are needed, yet few are seeking to personally improve by acquiring them. How many frustrated family members of your aging clients are going to take assets away from your management because you don’t know what to do and aren’t willing to get out of your comfort zone and be a part of protecting a vulnerable elderly client?
Here are three steps you the professional in a similar situation could take to hold onto the assets, protect the client and let the family know that you care about more than just the assets.
- Meet with the family and explore the extent of the impairment. If the client is still competent to sign a privacy waiver, get that done so you can communicate with the client’s appointed representative.
- Educate the client’s appointee in your client’s presence about his plans for his investments and the philosophy he has demonstrated in the past. This will ensure continuation of what the impaired person wants going forward.
- Set up regular family meetings going forward from the first notice of the problem. This will ease the transition of the client with Alzheimer’s disease out of the seat of power while still respecting the ability he has remaining to communicate about what he wants. It is important to empower the successor to decision making with knowledge the elder may provide while assuring the aging client that his wishes will be honored in the future.
If you are uncomfortable with the whole area of diminished capacity, you can get the skill set you need without taking too much time. Wouldn’t it be great to have more confidence about it?
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