Have you ever felt frustrated when you thought your client was showing signs of declining mental status?  Did you ever want to get someone else involved in financial decisions but thought you couldn’t because of privacy rules?

The average advisor has seven clients with some form of diminished capacity.  Perhaps you are one of them, not comfortable with the privacy laws that restrict you from calling in someone to help when your client doesn’t seem all there anymore.

If you are worried that you must just stand by and watch a vulnerable client make bad decisions, or worse, get ripped off by someone who is manipulating him and taking advantage of his cognitive impairment, there’s good news.  There is a way around the confidentiality conundrum.  You need your client’s permission in advance to call that third party.

How do you plan for the possibility of needing a third party? Take your cue from lawyers. When we have a conflict that would be there unless we get an ok from our clients, we design a document that allows the client to give up the right she would otherwise have. We get the client’s signed approval do to what we need to do whenever feasible.  You can do the same thing with privacy restrictions.

Imagine that you have some clients over the age of 65.  Imagine that you are a proactive thinker.  You want to keep all of them safe and keep those clients, even if they decline cognitively in the future.  Imagine that you have been really smart and have gotten a special permission document done.  Every client over age 65 signs it.  You are ready!

What Should A Privacy Permission Contain?

We recommend three essential elements for your document.

First, you need to identify the circumstances under which your client wants to give you the ok to call in that third party they identify.

Second, the document needs to be legally sufficient; i.e., it should have language like an advance healthcare directive or a standard durable power of attorney.

Third, it needs to be signed and notarized by your client.

How Do You Get It Done?

Your legal department should be able to help you.  If not, a model document was created by lawyers at AgingInvestor.com, in the context of a senior-specific program to protect your aging investors.  You can’t just throw one together.  As you have to know, recognize and document the signs of diminished capacity that would lead to use of this kind of document, those are prerequisites.  Then the matter escalates according to a standard procedure.  Get a clear path. Find out more about it HERE.

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