Danger: You Need To Act Fast When Your Client Seems Cognitively Impaired

Danger: You Need To Act Fast When Your Client Seems Cognitively Impaired

Nov 11, 2020 | financial advisors

Danger: You Need To Act Fast When Your Client Seems Cognitively Impaired

This really happened. An advisor was managing a portfolio for a client we'll call "Janet" with about $5M in assets. She seemed to be "with it" most of the time. But she had become confused in some of their conversations, unable to follow what her advisor was saying. (It was not complicated). She called several times in one week, asking the same questions over and over. She forgot that they had already been answered. She missed two appointments, apologizing that she had been really busy. The advisor didn't seem to take all this seriously and didn't do anything differently from how he had always interacted with this client.

Janet had always been a generous person. She liked to help people out. She got drawn into a "friendship" with a stranger, who was very sweet and complimentary to her and it made her feel good to hear all those nice things. He saw her often. And after awhile, he asked her for a loan. She gave it to him. He kept up the frequent calls and visits. Perhaps she was addicted to them. The loans continued. Her advisor was concerned, but he figured it's her money and she can do what she wants with it. The amounts climbed, first to $100,000 in these "loans" and over three years the amount she had given to this false friend reached over $500,000. Of course he never intended to repay any of it.

The advisor finally seemed to catch on that something was wrong. He contacted Janet's daughter, and steps were taken right away to stop the drain on her assets, stop the phony friend and stop Janet from making those poor decisions.

The takeaways that every advisor should know are these:

  1. When your clients seem confused, forgets phone conversations and misses two appointments, these are RED FLAGS of diminished capacity. The time to contact the family is right then, not after some disaster happens.
  2. Even if your client has ample assets, it is wrong to simply allow a predator to manipulate her or him out of them. You, the advisor have the obligation to do all things possible to stop financial manipulation. It is not an excuse that "it's her money and she can do what she wants with it." That aids and abets elder abuse.
  3. You need advance information in your file when you accept the client into your book. That information must include more than one alternate contact and written permission from your client in a legally sufficient document, to contact the responsible others when you see fit.
  4. An unusual change in your client's spending pattern, such as Janet's taking out huge sums to "loan" to this fake friend should be red flags of financial elder abuse for you. Please don't wait until a thief takes a half a million dollars from someone before you catch on that something is very wrong here and you need to act right away.

If you are not sure about the warning signs of diminished capacity to look for, you can get a free checklist at AgingInvestor.com. Download yours today and you won't make the same mistake as the anonymous advisor in this case study. If you aren't sure about the major warning signs of financial elder abuse, we can help you there too, with another free checklist. Get yours right away and keep those aging clients financially safer.

Carolyn Rosenblatt, RN, Elder Law Attorney, AgingInvestor.com

 

Dr. Mikol Davis and Carolyn Rosenblatt, co-founders of AgingInvestor.com

Carolyn Rosenblatt, RN, Elder Law Attorney offers a wealth of experience with aging to help you create tools so you can skillfully manage your aging clients. You will understand your rights and theirs so you can stay safe and keep them safe too.

Dr. Mikol Davis, Psychologist, Gerontologist offers in depth of knowledge about diminished financial capacity in older adults to help you strategize best practices so you can protect your vulnerable aging clients.

They are the authors of "Succeed With Senior Clients: A Financial Advisors Guide To Best Practice," and "Hidden Truths About Retirement And Long Term Care," available at AgingInvestor.com offers accredited cutting edge on-line continuing education courses for financial professionals wanting to expand their expertise in best practices for their aging clients. To learn more about our courses click HERE
An Important Question For Your Clients Contemplating Retirement

An Important Question For Your Clients Contemplating Retirement

Jun 18, 2019 | aging, aging investor, cost of aging, cost of long term care, declining health, elder investor, elderly, finances for elders, financial advisors, financial judgement, long term care, nursing home, resources for senior, resources for seniors, retirement, retirement planning, senior investor, seniors finances

An Important Question For Your Clients Contemplating Retirement

Longevity is increasing, as millions of Americans are living to 90 years and above, the U.S. Census Bureau reports. Will any of these long-lived folks be the parents of your current clients? Some clients reaching retirement age themselves will be dealing with the challenges of their aging family members, even as they plan their own retirement years.

One critical question perhaps not built into your calculations for retirement income needs should be whether your clients can reasonably expect to have to support their aging parents. As reported by NPR citing the Census Bureau report, nearly 20 percent of 90- to 94-year-olds live in nursing homes. Among those 95-99, about 31 percent are in nursing homes. And in the 100+ population, 38.2 percent live in nursing homes. Who pays for that care?

Most financial advisors have a basic understanding that Medicare benefits are very limited when it comes to nursing home care. Post hospitalization, the maximum benefit is 100 days and most people do not receive even that, due to qualification requirements. For those who have to live in nursing homes long term, rather than for shorter stays involving rehabilitation such as physical therapy, the costs are paid out of pocket. The exception is for the lowest income elders. For them, Medicaid pays the cost of long term nursing home care. For everyone else, a long stay in a nursing home can wipe out an older person’s assets. The financial burden then falls on family who may have the means to prevent the impoverishment of their loved one.

Some adult children will not allow Mom or Dad to live in a nursing home long term. Maybe it was a promise they made to the aging parent. Essentially, it is no one’s first choice of where to go when care is needed. If a family has some assets but does not want to wipe out their own retirement income by paying for nursing home care or even full-time home care, the most cost effective solution is to take in the aging parent.

There is a cost involved in this choice as well, and it extends to many factors beyond money. Every family relationship in the household is impacted. Some adult children are not patient, not willing and not good at caring for an impaired aging parent in declining health. For others it is seen as an honor and a final chance to give back to the parent in gratitude for what the parent did for them over a long lifetime. Individuals vary in their perspectives, ability and willingness to take in an aging loved one.

Some families take in an aging parent and pay for part-time help, providing a significant part of the caregiving themselves. Others pay for assisted living for an aging parent, but that is not suitable for those who need care around the clock. Others allow a parent to spend down their assets until they can qualify for state paid nursing home care. The parent is then placed there somewhat as a last resort.

No matter what choice a client will make about an aging parent, it is important that the financial professional in their lives helps them see the big picture and plan according to anticipated needs for both the client and the elders for whom they feel responsible.

The Takeaways

  1. Longevity is creating an issue for families who are facing years of decline in aging parents who may not have the means to pay for care on their own.
  2. Responsible financial advisors must raise the question with every retiring client: is there someone in your life that you will likely have to support financially during your retirement?
  3. Advisors and families alike must consider and plan for how any essential financial support should be handled by adult children of aging parents. Take in the parent? Supplement the parent’s income by paying for home care or assisted living?
  4. When the means are not available to offer financial support, and the physical needs for care are extensive, it sometimes becomes necessary to allow the aging parent to become impoverished and to qualify for Medicaid. Medicaid does pay for long term nursing home care.
  5. For those with sufficient investment income expected, financial support for aging parents can be part of an overall retirement planning strategy. It is up to the financial professional to help with this process.

 

Carolyn L. Rosenblatt, RN, Attorney, AgingInvestor.com ©AgingInvestor.com™

 If you the financial professional need a clear explanation of the actual costs of long term care, whether at home, in adult day centers, assisted living or skilled nursing, get the facts so you can plan with clients. It’s all laid out for you in Hidden Truths About Retirement & Long Term Care, available now. Click here to get your print, digital, or audio copy.

About Carolyn Rosenblatt and Dr. Mikol Davis

Carolyn Rosenblatt and Dr. Mikol Davis are co-authors of The Family Guide to Aging Parents (www.agingparents.com) and Succeed With Senior Clients: A Financial Advisors Guide To Best Practices. Rosenblatt, a registered nurse and elder law attorney, has more than 45 years combined experience in her professions. She has been quoted in the New York Times, Wall Street Journal, Money magazine and many other publications. Davis, a clinical psychologist and gerontologist, has more than 44 years experience as a mental health provider. In addition to serving his patients, Davis creates online courses and products to assist professionals and the public with understanding aging issues. Rosenblatt and Davis have been married for 34 years.

Advising for Longevity: Why Advisors Must Consider Older Clients’ Health Issues

Advising for Longevity: Why Advisors Must Consider Older Clients’ Health Issues

Jan 28, 2019 | aging, aging in place, aging investor, cost of aging, cost of long term care, custodial care, declining health, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, financial elder abuse, financial judgement, handling money for seniors, health, long term care, nursing home, resources for seniors, seniors finances

Your clients are getting ready for retirement. You've done the calculations, balanced the portfolio and advised them of what income to expect. You've discussed how much spending is ok. You used your program and your analysis was thorough. You've done your job, right?

 Not exactly. There is probably no algorithm nor program that will calculate your client's individual profile of health risks that will likely lead to the expense of long term care.  That can be a whopper. Maybe you've suggested long term care insurance. Most people don't choose to buy it. For those who do, the benefits are limited and the "elimination period" (deductible) is thousands of dollars. There go your careful calculations. At least 90% of folks don't have that coverage. Now what?

 But how can you predict what's going to happen to anyone's health in retirement, you ask. You can't be precise, but you surely can make some rational observations and give advice accordingly.  Those observations consist of two parts: what you can see with your own eyes and what you can glean by asking a few basic questions.  If you think asking any client about their health conditions is too nosy or not your job, consider that if the client needs long term care and runs out of money because of it, they're not going to think much of you. And the cost can wipe out their security.

 Asking about health issues is not nosy at all. Rather, it's what any smart advisor planning for longevity must do. Let's not keep pretending that everyone stays the same physically and mentally from the start of retirement to end of life.  Our bodies go through wear and tear and things break down. Cognitive decline affects at least a third of people who reach the age of 85. The risk of Alzheimer's disease keeps climbing after that.  Now, what was that life expectancy you were using in your calculation? Was it age 99?

 Let's start with what you can see in your client with your own eyes. (If they're not in front of you, perhaps Skype is an option). Is your client obese, as about 40% of the U.S. population is?  This leads to heart disease, stroke, and diabetes, among other diseases and conditions.  The medical care people receive in many cases will save them from dying but they then live with disabilities. And yes, they will be very likely to need expensive long term care. Neither health insurance nor Medicare  will cover long term care. Such help as a part time caregiver at home is how most folks start out with long term care. Your client pays out of pocket most of the time. Did you calculate how much it costs as well as how long they will likely need it? If they have multiple medical conditions, and have started long term care, they'll probably continue to need some form of it for all their remaining years.

 Find out what you may not know from simply observing your client's appearance by asking questions.  You can make your own list or get a health care provider to help you with a few targeted questions. You will need to educate your client as to the reason why you need this information. It's to help them plan for how much to save in their retirement years.

 Here are some examples of basic questions that can help you predict the need for possible long term care:

  1. How's your health these days? Has a doctor told you that you have any long term conditions?
  2. Are you taking medications? What are they for?
  3. Do you smoke?
  4. Are you concerned at all about any health issues you have at this time?

Do you recall your parents' ages when they died?Your aging clients will not be eager to talk about the potential need for long term care. When you told them about what to expect for "out of pocket medical costs in retirement", you did not give them a figure that included long term care. Long term care is not "medical" according to Medicare. Rather, it is called "custodial care". The client probably will not bring it up, so you must do this.

 When you have done your observations and gotten answers to your health-risk related questions at least there is a place to start a meaningful conversation. You can give them figures as to the cost of typical kinds of care, such as a non-medical home care worker. We at AgingInvestor.com recommend starting your projections at age 80 as to when a person might need physical help. Many of us know someone who did require help with at least some part of his or her life at that age. Then you can talk about how any condition your client identifies for you, such as high blood pressure, diabetes, etc. as shortening normal life expectancy and increasing the risk for needing help.  If your client already has difficulty with some normal daily activity such as walking or bathing, they are definitely at high risk for needing paid help sooner than a person without these problems.

Clients may be completely unaware of such things as the hourly cost of a home care worker, what assisted living costs each month and what home modifications cost if they are able to remain in their own home. You can find a thorough discussion of these and many other parts of long term care in our book, Hidden Truths About Retirement & Long Term Care, written specifically for financial advisors like you.

 Every conscientious advisor needs to wake up to the reality that your retirement income calculator omits the reality check of health problems. We're not talking about nursing homes, but every other kind of care and help most people will need as they age. If you do want to help clients who are reaching retirement age to plan realistically, include the health risks you can see or learn about by asking.

By Carolyn L. Rosenblatt, RN, Elder law attorney, AgingInvestor.com