The Elephant In The Room: Financial Professionals With Diminished Capacity

The Elephant In The Room: Financial Professionals With Diminished Capacity

Feb 20, 2017 | aging, Alzheimer's disease, diminished cognition, elder investor, elderly, financial advisors, handling money for seniors, senior investor

Every profession is facing a common dilemma: what to do about your own impaired colleagues. When there is no mandatory retirement age, there is no one to say, it's time to quit. Do you think a colleague has dementia?

People are living longer than ever, continuing in their work longer than ever and sometimes they start to "lose it" before they decide to retire. As none of us are absolutely immune from Alzheimer's or other dementia, or anything that causes cognitive decline, we all need to consider what we would want if it happened to us.

Would you want a friend or colleague to tell you that you've got a problem with memory and maybe it's time to hang it up and rest? Would you want your legal department to embarrass you and tell you to stop handling other people's money because everyone knows you're no longer competent? It's a frightening thought.

Longevity can be great, but not when you are impaired. As a consultant with expertise in aging, I have seen cognitive impairment to a dangerous level in numerous professionals. One was a trial lawyer colleague, high profile and famous. No one stopped him from practicing law until he had nearly destroyed things. I have seen it in a business owner who founded his company and had been going to the office for 50 years. He was kicked out of his favorite restaurant and was physically harassing employees, his Alzheimer's had gotten so bad. No one made him stop until outsiders (myself and my partner, Dr. Davis) came in and created a plan to prevent him from entering the office again.

I have seen a judge with dementia fall asleep on the bench in the middle of lawyerly argument in court.

I spoke with the sister of a former bank president who had become a financial advisor. He had lost most of his wealth because he could no longer keep track of it and he was being taken advantage of. He was living in squalor before family intervened. During that time, he was still working as a wealth manager.

These are real cases. The message is that we need a strategy and a policy in any office with advisors who work into their senior years, to address the possible impairment that might occur.

There is a way to do this so as not to needlessly embarrass the affected person. There is a way to require that a person with memory loss confirmed by colleagues should step down and give up managing anyone's assets. This should thought out in every office. Clients need protection. It takes construction of a reasoned policy to address the impaired advisor confidentially by first requesting retirement and then mandating retirement if the advisor refuses to go along.

Pilots have a mandatory retirement age of 65. That would not work for many other kinds of professionals. But something has to be done. If you want some concrete action steps to put in place in your office, you will find them in our book, Succeed With Senior Clients, A Financial Advisor's Guide to Best Practices. Get your copy today by clicking here.

By Carolyn Rosenblatt, RN, elder Law Attorney, & Dr. Mikol Davis, Gerontologist co-founder of AgingInvestor.com

This Small Step Can Prevent Financial Disaster For Your Aging Clients

This Small Step Can Prevent Financial Disaster For Your Aging Clients

Jan 27, 2017 | aging, aging investor, declining health, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, financial elder abuse, financial judgement, handling money for aging parents, handling money for seniors, long term care, long term care insurance, medicare, senior investor, seniors finances

Do you have older clients who seem to be doing really well physically? Some of our aging folks are remarkably sharp and we can all be lulled into a false sense of security with them. This is a heads up warning about a real situation that you can perhaps help clients avoid by a simple step. Bear in mind that your older clients may be alert but still have trouble keeping track of the occasional bill. That can lead to a true financial disaster. Here's what happened to one person we met at AgingInvestor.com who could well be your client.

Ruth is 88, still quite independent, taking care of herself at home. She does her own shopping and cooking, drives and pays her own bills. Great at her age, right? But when it comes to memory, that's a problem from time to time. And forgetfulness plus an unforeseen glitch caused a financial nightmare for her. Here is what happened.

Ruth has Medicare and supplemental insurance. That extra 20% the supplement pays doesn't sound like a lot, unless you have a crisis and have to go to the hospital.

Ruth paid her bills by check each month. But sometimes her mail carrier made mistakes and put envelopes in the wrong box. That's just what happened with Ruth's supplemental insurance bill. She didn't pay the bill one month because she never got it. That was the glitch. Unfortunately that is exactly the month that she had a major health crisis and had to be hospitalized. She never knew that her supplemental insurer had missed a premium payment from her until they denied payment to the hospital for the amount due after Medicare paid the hospital in full. She was very upset and called them but they brushed her off when she told them what happened. She had never paid late nor had she ever missed a payment. They didn't care. Her bill for the amount Medicare didn't cover was over $80,000. They flatly refused to pay it.

She tried to call again and again but got nowhere. She sent a letter but received no response. Ruth's case is not the first time we've seen a situation when an older person fails to pay an insurance premium notice either because of illness, dementia, not receiving the bill or other valid reason. Some companies will allow reinstatement of coverage when the amount owed is paid in full. But Ruth's former insurer has been horrible; clearly to get out of the large bill they would have had to pay. They're probably happy about it but of course Ruth is distraught.

Now imagine that Ruth is your client. Most write checks by hand for paying bills, as they have done all their adult lives. Lots of people in their 80s don't use a computer or are only able to do so with many limitations. They don't use auto debit for paying bills automatically.

There is one thing you, the advisor, can do to prevent a disaster like Ruth's. Work with your aging client and their family to get them set up so that payments for ongoing, recurring expenses are auto debited from a bank account. This applies most especially to insurance premiums. As long as you are overseeing the finances for these older clients, think about this simple preventive strategy you can urge them to use to protect their financial safety. Sometimes no one thinks of it. Sometimes the family is also lulled into a false sense of security because the elder is so independent in other ways. Bill paying is a vulnerability and you can think of measures to make it less so.

That medical bill coming to a client because of a simple error, forgetfulness, or glitch can be a source of extreme stress. Take the time now to talk with your client about the prospect of auto pay for all of their recurring bills. Even if they are unsure of how to set it up, a family member, a friend or money manager can offer to do this for them. It's a small, basic measure but hugely helpful to prevent financial loss

The Emotional Impact of Financial Elder Abuse

The Emotional Impact of Financial Elder Abuse

Oct 4, 2016 | aging, diminished cognition, elderly, finances for elders, financial elder abuse, handling money for seniors, scammers, seniors finances

The Emotional Impact of Financial Elder Abuse
When older persons are deceived financially by hose they trust the most, the emotional effects can be devastating. The problem of financial elder abuse costs our older population over $36 billion per year in the U.S. alone. The reasons for this rampant problem some call  “the crime of the century” are  complex. Many victims cognitively impaired in some way, and are therefore subject to the undue influence of greedy relatives, caregivers, professionals, or criminal  predators who strategically seek out  older victims. However, not all seniors who fall victim to financial abuse are affected by cognitive decline. Some competent people are seduced by unscrupulous sales pitches promising  big  rewards. Some are cheated by the Bernie Madoffs of the world and their cohorts who take advantage of  seniors  who  are  worried  about  having enough  money. These victims see the pitch or offer as a  way  to alleviate their money insecurity and they  give up  their  cash  to  those who  want  nothing more than  to take  it  and  run. Sometimes, the senior  may want to  get something  for  nothing  or  get  a  “great  deal’  with  very little  perceived risk.

Abusers are not always shady characters or unscrupulous family members. Sometimes they are legitimate organizations that simply find an opportunity to take advantage of someone with whom they already have a relationship. Using a relationship of trust to manipulate an older adult is called undue influence. The laws protecting them from being victimized by undue  influence  vary  considerably  from state to  state,  with  some defining it  so  vaguely  that enforcement  is  difficult. However, whether the law is used to convict  abusers  of this crime or not, the effect on an aging  person is  devastating.  It is hard enough to realize that one has been duped by a stranger.  When one understands that the manipulator is a trusted relative, friend, an organization in which  a  person  truly  believes  or  contributes to,  the  pain  is  even  worse.

Wanda’s  Case

Wanda was eighty-nine years old at the time her daughter, Janis, contacted an attorney. Janis reported that Wanda had been a member of her large church all her life and had been an active participant in the congregation. She had always made modest contributions to the church and trusted all of the other members. But over time, Wanda’s memory began to decline and she got confused easily.The church began a fundraising campaign for new construction. Wanda was asked for a donation, which she gave. Then another request came and Wanda once again complied. Wanda gave larger and larger donations to the church over the next year, with the checks totaling over $100, 000.  Janis grew increasingly alarmed, because her mother clearly  was  in  need  of  help.  Wanda was found lost and wandering near the church after one day. The church itself had recorded the incident and a church worker had taken  Wanda  home. Janis was concerned that Wanda would run out of?money. She was physically ok, but her mental condition was becoming  a  serious enough  problem  that Janis believed  she  should no longer  live  alone.  And Wanda trusted the church, to the point that she did not believe that anyone  there  would  do  anything  wrong. This was a case of the church using its position of influence over an  impaired  member  to  elicit  larger  and  larger  financial  contributions  from  her. They took advantage of an older adult who had become lost and confused after church, and they knew it. Wanda could not perceive that she needed care, which was going to be expensive, and that she could all  her  reserves  by  these overly  generous  donations.  She was not able to act in her own best interests.  She ?believed  that  she  could  not  possibly  run out  of money. When her daughter, Janis, tried to explain that she had to stop giving to the building fund,  Wanda  was incredulous. She simply could not process the reality that she was going to lose all her savings if she kept up the contributions.? She became angry with her daughter for even suggesting that her actions were not  right and that  the  church was  out  of line  doing  what  it  did.

Wanda’s emotional response to the abuse was to be in denial about it. She likely not able to fully process what had happened and felt that Janis was  being disloyal  to  the  church. The matter did get resolved. When the church was contacted  to  meet  and  discuss  the  pattern  of  solicitations they  had  sent  to  Wanda  and  their  record  of  her being  lost  after church  services,  they  immediately contacted  an  attorney  who put  a  stop  to  their  actions. Janis was able to watch over Wanda  after  that  and  she  did obtain  help  for  her. Wanda’s anger at Janis was an unfortunate effect of stopping the abuse. Wanda would likely have been angry at the church had she been able to perceive that she was being manipulated.  However, she was cognitively impaired and did not see?the full  picture.

The Emotional Impact of Abuse

Undue influence is not the only means of taking advantage of seniors. Any kind of elder abuse can be devastating. Denial is common after older victims discover financial abuse. When a scam is underway, they tend to keep  up  hope  and  continue engaging  with  the  scammer. Despite warnings from family, friends, and advice from knowledgeable  others,  they  continue to  believe that  the  big  payoff  is  coming. Or they are unable to embrace that  they  have  made  a mistake  and  trusted an  untrustworthy  person. Sometimes, even after the evidence of fraud mounts, the  victim  continues  to  give money  to  the  predator. They have put their trust in someone whom they very much want to believe  was trustworthy. When the payoff does not come, or nothing that  was  promised  materializes,  they  eventually  realize they  were duped. The effect is sometimes intense shame and embarrassment.  Living with this shame often leads to depression.

Suicides resulting from financial abuse have been reported.  Some never recover emotionally  from  the feeling  of  horror  that  they  were  “so  dumb”  as  to  fall for  a  scam  that  in  retrospect  looks a  lot  more  obvious.  It damages a person’s sense of self, and sense of being able to  trust  one’s  own  judgment.  It can go to the core of a  person’s  self-esteem,  leaving  the  victim with  a  belief  that  he  can  no longer  trust  himself with anything  financial. When a senior loses most or all of her assets and is left impoverished, it becomes a constant reminder of the  shame  of being  duped  by  someone  else. Losing a home can force the person to live somewhere he does not choose to be. That can be with relatives if available,  but  it  can  also  land  him in  a  Medicaid  bed  in a nursing  home  where  few  would  ever  want  to live  out their  last  years.

Prevention Strategies

No one is totally immune from fraud and financial abuse.  Anyone can be victimized. Many a sad tale is told by an adult child of a victimized aging parent that  “I trusted my father and didn’t want to question him.”  Or,  “I thought since my mom was a CPA, she would never fall for  that.”  Part of the problem is the perception adult children and even some professionals have that certain  folks  are  never going to  be  abused  financially  because  they  are  smart,  or experienced with money  matters. It is simply not true that education or experience protects everyone.  Working with older adults puts professionals in a position to  be  vigilant,  to  educate  about  the  risks of  abuse  out there,  and  mainly  to  pay  attention.

Using Resources to Help Victimized Clients

While the criminal justice system prosecutes the relatively small number of abusers who are reported to authorities, it does not  do  much  to  help the victims of abuse. Money stolen from older people is often long gone by the  time a predator is brought to justice. When a criminal is prosecuted successfully, the  court will  order  that  he  make  restitution  of stolen  monies  to the  victim,  but  enforcement of  restitution  orders  can be  problematic.

What is almost entirely lacking is any resource to help a victim of financial abuse manage the emotional effects of the crime.  We simply do not fund this in our justice system.  If victimized seniors wish to get emotional support or mental health help to recover from the impact  of  financial  abuse,  they  would  have to  do  so  on  their  own. The cost is clearly a barrier, though Medicare does provide for  psychological  services.  However, the benefit has limitations. A diagnosis is required for  the  provider  to  get  payment.  And many people attach a stigma to getting mental health help, which is an unfortunate perception that stops some from obtaining the needed  psychological  support  for  recovering. If there is a civil case of elder abuse with a successful outcome, and financial damages are actually awarded to the victim as a result, the award may include expenses for psychological treatment for the victim. Therapy is one means a victimized person  can learn  to  cope with  the  emotional distress, shame, and? humiliation of being taken advantage  of by any financial abuser. There is little doubt that those who receive supportive services after victimization  cope  better  and have  a  better  chance  of healing from  the  trauma.

Professionals’ Roles with Abuse Victims

Professionals who work with aging adults in any capacity will likely encounter someone who has been victimized or is in the process of  being taken  advantage of by  another.  It is important to know their own community resources to provide information to anyone who may need help. Understand how difficult it must be for the person who has been victimized, and offer a respectful referral  to  a  local  resource. Local mental health providers can be found through the American Psychological Association, Psychologist Locator, community service agencies such as Jewish Family  Service Agency  (serving people of all faiths), the  Alzheimer’s Association, or senior centers throughout the U.S. Most offer information and referral to local providers in the  senior’s  county.

Warning  Signs

When suspecting financial elder abuse, those working with them  should be  aware  of these warning  signs:

1.  The presence of a new “friend” in a client’s life who has an inordinate interest in the older person’s accounts  or  assets,  and who  gains access  to any  of them.
2.  Sudden change in a Durable Power of Attorney document.
3.  Isolation of the older adult from friends, family, and others close to them.
4.  Large gifts to strangers or people they don’t know well.
5.  Complaints about having reached maximums on credit cards when this has never happened  before.
6.  Frequent email or telephone contact with any stranger who establishes a relationship  with  the senior  that  seems  addictive.

With the effort of those in the community surrounding older adults, we can all  take  steps  to  intervene  and  prevent  or  stop  abuse. If something seems odd to you, speak up, ask questions, step  in  where  you can. You just might be the key to keeping a senior financially safe.  And if you learn of abuse in the  course of  doing  business  with  a  senior  client,  a  kindly  approach  in  offering emotional  health  resources  lifts both  you and  the  victim.

BY CAROLYN ROSENBLATT, RN, ELDER LAW ATTORNEY
Carolyn Rosenblatt has over forty-five  years of  experience in  her combined professions  of nursing  and  legal  practice. She is co-founder of AgingParents.com, a resource  for families, and Aginglnvestor.com, offering educational training and products. She can be contacted at  (415)  459-0413,  carolyn@aginginvestor.com.

REFERENCES
Journal of Accountancy.  2015.  “Emotional harm of elder financial abuse outweighs  its financial  damage."  www.journalofaccountancy.com/news/2015/jun/elderfinancial-abuse-201512535.html.  Accessed January 2016.
MetLife Study on Elder Abuse, www.metlife.com/assets/cao/mmi/publications/studies/2011/mmi-elder-financial-abuse.pdf.  Accessed January 2016.
Rosenblatt, Carolyn. 2015. “Protecting Our Aging Parents from Abuse."  In The Family Guide  to  Aging  Parents:  Answers  to Your  Legal,  Financial  and  Healthcare  Questions.  Sanger, CA:  Familius, 284-296.,  2015.
“Common Elder Specific Issues." In Working With Aging Clients: A Guide for Legal, Business and Financial Professionals.  Chicago:  American Bar Association,  71-76.

This article was originally published in the CSA JOURNAL 66  / VOL.  2, 2016  / SOCIETY OF CERTIFIED  SENIOR  ADVISORS  /  WWW.CSA.US

Attention Financial Advisors: Do You Have A Colleague With Cognitive Impairment ?

Attention Financial Advisors: Do You Have A Colleague With Cognitive Impairment ?

Sep 22, 2016 | aging investor, elder investor, finances for elders, financial advisors, handling money for aging parents, handling money for seniors, investor, senior citizen investor, senior investor, seniors finances

Attention Financial Advisors:Do You Have A Colleague With Cognitive Impairment?

The financial services industry frequently shows concern about the problems of longevity and aging clients. Cognitive impairment, diminished capacity and dementia get air time with various solutions, mostly vague, offered by industry insiders. But one problem is not being addressed: the professional herself with cognitive impairment.

It's time to look at this as a real risk, not some unlikely possibility that can easily be taken care of by a succession plan for the professional's business. Dementia is a complicated disease. It sneaks up on people, with the early warning signs of short-term memory loss, followed by increasing difficulty with reasoning and judgment. If we had not witnessed this at AgingInvestor.com with impaired professionals ourselves, we might be fooled into thinking that professionals had figured out how to address it. Simply put, they haven't.

Let's look at the notion that all you need is a succession plan for your business and there will be no problem if you develop cognitive impairment yourself, or someone in your organization does. What's the flaw in this? It is that many people with early Alzheimer's or other dementia do not recognize that they are impaired. This phenomenon is called anosagnosia, an inability or refusal to recognize a defect or disorder that is clinically evident. Ironically, the part of the brain that reasons and analyzes is so affected by the disease that it is not able to process the information about one's own impairment.

How this plays out is that as a person ages and becomes more at risk for dementia, some will surely fall victim to brain disease. The odds are at least one in three by the time we reach age 85. The risk doubles about every 5 years starting at age 65. So some financial professionals are going to develop dementia and some will not know that they have any impairment. So they keep working. Others around them are afraid to raise the topic when alarming signs first appear. No protocol exists to ease a person out of the role to which they are accustomed, particularly when they tell you they're feeling just fine, thank you.

Busting The Myths

Myths exist. The first is that a financial professional, whether managing money for clients, selling products or addressing their taxes and accounting, will know that he or she needs to retire when the time comes. This is not what occurs. Many folks who have a good book of business and enjoy what they do will not look to retire by a certain age. They keep working, and consequently when they are impaired they put every client at risk.

Another myth is that somehow the doctor, the family or someone else will advise you when you have dementia and you will of course agree with their assessment. Denial is a frequent component of cognitive impairment, rooted deeply in fear of losing control over one's life. Even those who start to see and fear their own early difficulties with memory will cover it up, avoid facing it and carry on as if everything is fine. Even an annual physical checkup with the doctor is very unlikely to reveal the early warning signs of dementia unless the patient mentions cognitive problems to the examining doctor.

What Can Professionals Do?

As described in detail in Succeed With Senior Clients: A Financial Advisor's Guide to Best Practices, every organization needs a protocol to address the risk of diminished capacity in an impaired colleague. Few firms have a mandatory retirement age, but this option exists.

A protocol for advisors and others can look similar to the protocol every professional needs for aging clients. First, one needs a standardized way to spot the red flags of diminished capacity. Next, these must be regularly documented and contact with the potentially impaired client must increase. Third, a standard way to escalate the issue to knowledgeable others in the firm should exist. For clients who demonstrate the red flags, the organization must have a next step, which means contacting an appointed third party to become a surrogate decision maker. For professionals, a mandatory way to ease the person out of the job on a specific timeline should be in place, and this should become office policy.

It is time for every professional to look at the reality of the risk we all face with impaired cognition. It can happen to anyone. Your professional skill does not protect you from dementia. Wise planning for how you or your colleague would exit your job when you can't see why you need to must be on everyone's agenda.

By Carolyn Rosenblatt, RN, Attorney,  & Dr. Mikol Davis Geriatric Psychologist

AgingInvestor.com

Are Advisors Miscalculating Retirement Medical Costs?

Are Advisors Miscalculating Retirement Medical Costs?

Aug 31, 2016 | aging, Alzheimer's disease, elder investor, elderly, finances for elders, financial advisors, handling money for aging parents, handling money for seniors

Are Advisors Miscalculating Retirement Medical Costs?

According to CNN Money, a 65-year-old, healthy couple can expect to spend $266,600 on out of pocket costs for Medicare premiums in retirement. If that's the advice you give clients about what needs to be set aside for medical expenses you're missing some major facts.

Medicare premiums are a relatively small part of what it can cost when health issues arise as people age. No one likes to discuss the subject of possible cognitive impairment, but it has to be done. We see it as the financial advisor's responsibility to bring it up, include medical expenses in the overall financial plan and get the truth out on the table.

According to a Wealth Management article on August 30, 2016, Fidelity Investments did a survey of over 350 advisors and found that 96 percent felt unprepared to help clients who had Alzheimer's disease. This is in contrast to the reality that a person's chances of developing the disease are at least one in three from age 85 and above. And we are living longer than ever in history. More centenarians, more Alzheimer's.

What is the real cost of caring for a person with Alzheimer's? I interviewed a high end home care agency owner about this question. Many HNW people do not have long term care insurance as they plan to pay for whatever they need out of pocket. Most are not aware of the cost of best quality 24/7 care they could need with their own longevity. In our work at AgingInvestor.com, we have encountered this scenario and have seen what best quality care looks like. It's not your average home care agency.

The cost for caring for one person at home with Alzheimer's from that agency is $300,000 per year. The workers are specially trained and well supervised. A care manager develops a plan and the workers take their shifts, prepared to deal with all manner of difficult dementia-related behavior, including violent acts and words, wandering out the door, refusing to bathe as well as those who are unable to express themselves verbally any longer. Non-specialty home care agencies do not accept this degree of client behavioral difficulty out of fear of their workers being harmed.

The ultra HNW client can pay for these costs but for everyone else, the expenses incurred with care for a progressive disease that escalates in difficulty over time could be devastating. The cost of home care is in the category "long term care" an often poorly understood subject among those outside the health care and insurance fields.

If you have clients who are at retirement age or are retired, it is a necessity that you educate them about these risks to their savings. When you work with them on their plans, you need to include the possibility, very real, that one or the other of a retired couple could develop dementia and need expensive home care. If you think they should just go onto Medicaid, think again. Every state has different rules but in all states a person can't have much left in the way of assets and savings in order to qualify for Medicaid. And most importantly, people typically want to stay at home as they age. The quality of care they are likely to receive on Medicaid for long term Alzheimer's care is low, and likely to be in a nursing home. No one wants that!

The takeaways

  1. In developing retirement plans for clients consider the risk that your client may develop Alzheimer's disease or related dementia. Bring it up and talk about it.
  1. Plan for significant savings to be set aside in case care is needed, not just for Alzheimer's but for any long term condition or disabling illness requiring help. Use real numbers, not vague assumptions.
  1. Do not underestimate the real costs of caring for a person with this kind of dementia. It can last as long as 20 years. Do the math for your clients and show them what they would need to be cared for at home with a long term expensive illness like Alzheimer's.

The responsibility to know about long term care costs is yours. To learn more about Alzheimer's and how to spot the warning signs, get a free checklist to get you started at AgingInvestor.com.