Jun 15, 2016 | aging, aging investor, Alzheimer's disease, diminished cognition, elder investor, elderly, financial capacity, senior citizen investor, senior investor
Aging clients are an inevitable part of the landscape these days. People are living longer than ever. That’s great, but age brings risks to one’s mental capacity. And those risks put a burden on you the business professional to be aware of where to draw the line. When is it just not safe to rely on what an older client tells you to do?
Bear in mind that by age 85 one in three people will have Alzheimer’s Disease. This brain-destroying and progressive condition comes on slowly in most folks and begins to take its toll of judgment about financial matters quite early in the disease process. The person might seem perfectly fine in social discourse. That is not a guarantee of financial capacity.
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Mar 25, 2016 | aging, aging investor, elder investor, elderly, handling money for seniors, investment news, investor, senior investor
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?
Get your Fact Sheet for Financial Advisors and learn the red flags of diminished capacity and what to do about them by clicking below.
Click here to get your free downloadable Checklist “The 10 Red Flags of Diminished Capacity”
Jan 16, 2016 | aging, diminished cognition, elder investor, elderly, handling money for seniors, investor, long term care, senior citizen investor, senior investor
“Best Practices For Communication Challenges With Senior Investors”
Summary of course:
Aging clients present many challenges for their financial advisors. There are physical changes in hearing, vision and mobility as well as memory issues. This course shows the advisor how to accommodate for the changes that normally accompany aging so they can best serve older clients. It also offers strategies to address changes that are not normal, such as cognitive decline and loss of capacity for financial decisions. Talking to clients about these is likely to be uncomfortable. With the expertise of the psychologist who helped author this course, conversation scripts are offered on how to bring up and talk about delicate subjects tactfully. We illustrate advisor-client dialog with videos and demonstrate the best ways to talk to a client about giving up decision-making authority when impairment sets in.
Learning objectives:
- Identify ways to accommodate a client who has physical impairments that are barriers to advisor-client communication.
- Plan and know how to rehearse the words to use when it is time to approach a client with memory loss about getting a third party involved in financial decisions.
- Manage client resistance to discussing these difficult subjects.
- Use basic rules of communication that are proven success techniques to approach any difficult conversation with your client.
Jan 16, 2016 | aging, aging investor, Alzheimer's disease, diminished cognition, elder investor, elderly, financial capacity, investor, senior citizen investor, senior investor, the gray zone
“Best Practices For Managing Clients With Diminished Capacity”
Summary of course:
Our population is living longer than ever. The risk of dementia rises with age. That means that most of us are going to encounter problems of aging in our clients.
We need to recognize the red flags of impairment that will affect financial capacity. These include:
- Cognitive signs, such as memory loss and difficulty understanding the conversation
- Communication, calculations and orientation problems
- Emotional signs that are out of character for your client.
It is essential for every financial professional to understand the complexity of financial capacity and appreciate how many parts it has. There are 9 domains of financial capacity. You cannot determine if a person is impaired or not just by talking on the phone with her or having a brief meeting in which you give information.
A normal social conversation with the client is not a measure of whether or not the client has diminished financial capacity.
The more aware you are as a professional, the better chance you have of protecting your client from loss and protecting yourself as well.
Learning objectives:
- Prepare yourself for the wave of aging clients by understanding the demographics of our aging population and the risks of dementia associated with aging.
- Understand the 9 domains of financial capacity and learn how to spot problems with any one of them.
- Be able to identify red flags of impaired cognition that should prompt you to act.
- Develop a personal plan for what to do when you see warning signs of diminishing financial capacity
Nov 24, 2015 | finances for elders, financial capacity, finra, NASAA, SEC, senior citizen investor, senior investor, seniors finances
FINRA, together with the SEC and NASAA are on a joint mission to keep seniors and impaired adults from being financially abused. FINRA has proposed new rules that will allow a firm to put a temporary hold on financial transactions when abuse is suspected, and will allow the firm to contact a trusted other during this hold period.
Where’s the flaw? No rule yet mandates that every financial firm and every individual advisor obtain information for a trusted contact person for every client. Not only should this be required for all new accounts, it should be mandated that such trusted others be identified for every client over age 65. As the risk of dementia doubles approximately every five years after age 65, the reasons for the advisor to have someone to call when concerns arise is obvious.
As to the subject of the trusted other, the elder usually names an adult son or daughter as the trusted one. Sometimes that is all the information the advisor has. At the same time, the studies on elder financial abuse show us that family members are the most frequent abusers. Do you see the contradiction here? Every advisor should be required to obtain not only one “trusted person” but two or three so that if abuse is going on or seems to be a threat, the advisor can involve more than one person in the effort to stop it.
Another flaw in the proposed rule is that is it assumed that something helpful will occur during the hold period when the institution is excused from liability for not acting. But there is no clear evidence that either advisors or institutions are being trained to spot financial abuse warning signs before the money is all drained from the account. As we see it, the proposed rule focuses on doing something after abuse is clear and the institution has “a reasonable belief” that financial abuse is occurring. We think the industry can do much better than reacting by being required to call someone after the client has been taken advantage of or had the portfolio plundered.
Here’s the truth: getting an unwilling aging person to step down from financial authority over his portfolio takes more than a few days or a couple of weeks. If there is a trust in place and the elder is the trustee, the terms often state that at least one doctor, or two must say that the client is no longer capable of handling financial matters. Getting a doctor or two to see the client, do an assessment and produce something in writing with the needed findings can take months. And we’ve witnessed this exact scenario when it did take three months to oust the impaired, demented senior who wanted to give his predatory adult child a debit card for his cash management account.
At AgingInvestor.com, where we educate both financial institutions and independent advisors about stopping financial abuse, we think the effort to keep elders financially safer needs to go to the front end of abuse, not the back end after it has happened. Proactive steps can be taken. We urge every financial professional to know the warning signs of diminished capacity so you can engage the trusted third party when the signs emerge, rather than waiting until someone, whether family or outside predator seizes the opportunity to exploit diminished capacity.
To learn more about what you or your institution can do that we think is much better than simply being allowed to hold transactions for a bit when you believe abuse is going on, contact us at AgingInvestor.com. We have an entire program outline ready for you with focus on prevention.
If your client is being manipulated, holding transactions when you’re pretty sure it’s gone on can do little to protect your client. The predators and thieves can empty an account faster than it would take you to fill out the forms FINRA will inevitably give you. Think the way you are trained to think about finances generally: plan ahead, anticipate problems before they get here, and take protective action.
Carolyn Rosenblatt, RN, Elder Law Attorney, Founder AgingInvestor.com
