Jun 17, 2016 | aging, aging investor, diminished cognition, senior investor
And yet, these elders seem so oblivious. If you point out logically that they’ve forgotten the earlier phone call, there will either be an embarrassed excuse or a denial. Even if you read her your notes of the earlier phone call you both had and that the question was answered, she will not going to accept that and she might get very angry with you for suggesting that she isn’t fine. Why is this? Why can’t a person who is forgetful just say it and admit it? Are they being purposely difficult?
The best way to handle an aging client with memory loss is to make use of that permission your client gave you to contact a third party to contact (often an adult child) so you can discuss the problem and then take protective action.
But, I don’t have permission to contact a third party, you say? Now that’s a significant problem. Here at AgingInvestor.com, we urge every advisor anywhere and in any setting to first have a policy to guide you in the event that a client develops memory loss or dementia at any time. As a part of that policy, you will have a special document that allows the client to make a choice of what will happen if you see cognitive impairment or diminished capacity at some point in the future with that client. In that same document, the client waives the usual right to privacy over their financial information, and allows you to share it with the person they appoint. That will help you do the right thing.
For any advisor, lawyer, real estate professional or insurance broker, the same applies. If you don’t have a senior-specific policy in place, you need to develop one. If you don’t have a special form to use with clients in which you ask them to appoint a third party you can contact in the event you observe diminished capacity in your client and at the same time have them waive confidentiality if the time comes, you need to do this now. If you aren’t sure how to go about developing a senior-specific policy, we understand. It’s a little complicated and you need guidelines and a format.
We have just the thing for you. We have created a Ten Step Policy Development Template, complete with forms and instruction in how to create a great policy at AgingInvestor.com. Get yours and you will be ready to go in a very short time. We’ve taken the guesswork out of the equation and that will save you time and money. It’s almost done for you. Your particular goals will be met.
Until next time,
Carolyn Rosenblatt, RN, Attorney, Mediator
Jun 15, 2016 | aging investor, elder investor, financial capacity, finra, FINRA Rule 3110(a), investor, NASAA, SEC, senior investor, seniors finances
Do you supervise anyone in your office or firm? Beware of supervision over improper mutual fund switching, especially with older clients.
FINRA Rule 3110(a) requires each member to “establish and maintain a system to supervise the activities of each associated person that is reasonably designed to achieve compliance with applicable securities laws and regulations, and with applicable FINRA rules.”
An individual supervisor may be held liable under Rule 3110(a) for failure to provide reasonable supervision. When a supervisor is charged with a failure to supervise, it’s because of not acting on the red flags the examiners felt were evidence of wrongdoing. Those red flags could include switching to up-front sales loads with a number of elder investors and unusually high commissions that result. When this happens with a number of older clients, it will alert them to scrutinize you more closely.
If older clients have shown signs of diminished capacity and this sort of switching is going on, it is asking for trouble from FINRA. This agency is focused on a lot of compliance issues but they are particularly interested in anything that appears to be taking unfair advantage of seniors. They want you to understand diminished capacity and to be able to identify the warning signs. Every supervisor should know this information well.
One of FINRA’s persistent recommendations matches the stated goals of both the SEC and NASAA as well: it is that you keep your aging clients safer. Given that shared regulatory mission, it is understandable that they are looking for places to hold you accountable in your transactions with seniors.
To learn more about diminished capacity, the red flags and what you can do when you spot them, take advantage of an opportunity to get a quick online primer at your convenience. AgingInvestor.com offers Best Practices for Managing Clients With Diminished Capacity.
Click here to learn more: https://www.aginginvestor.com/courses/
Jun 15, 2016 | aging, aging investor, diminished cognition, elder investor, finances for elders, financial capacity, financial elder abuse, finra, handling money for aging parents, handling money for seniors, scammers, senior citizen investor, senior investor, seniors finances
Is financial abuse happening to YOUR clients right now? Of course it is. There is no escaping it. A recent study puts the amount stolen from elders every year in our country at over $36B. With a problem as big as this, no group of elders is immune.. If you took a survey of your existing clients all age 65 or older, and asked them how many have ever been taken advantage of financially, you would be sure to get some clients who would admit to this. If you look at your own experience and count up any instance you know of, whether it is in your family, your neighborhood or your book of business, you will likely find some financial abuse as well.
Why Is This Important for You?
The amounts stolen, fraudulently taken or just snatched from the unwary, are shocking. Remember that when your client loses assets, you lose fees. That is the most basic reason this should be important to you as a financial professional. Doing the right thing to keep your clients safe is certainly a motivator as well. It shows that you do care about them. And beyond that, the regulators are increasingly aware that financial professionals are in a position to take action and, sometimes, to stop and prevent financial abuse. They will soon get past merely urging you to take action and to report abuse. They will ultimately make it mandatory.
And we think you can do more proactively than merely to understand how to report abuse after the fact. It would be great to catch more criminals but that is extremely difficult in many cases because they are very clever at evading law enforcement. And since family members are the most frequent abusers, we have an added problem in that many elders are reluctant to report abuse by their own to law enforcement. Mom just won’t call Adult Protective Services on her son, even when she knows he has stolen from her. We have seen this with our own eyes There are many instances of scammers getting into relationships with aging folks by phone or on the internet. The “friendly” relationships become addictive. These thieves persuade the victim to withdraw funds from their accounts. This is where the advisor comes in. Unusual withdrawals are an important warning sign of elder abuse. And when the advisor notices this in a client’s account there are choices available about stopping abuse. They include contacting a trusted other the elder has identified and warning them of what is happening. There should be more than one trusted person identified for every client. And by all means, contact Adult Protective Services and report it if you suspect fraud.
If you are worried about privacy rules, don’t be. The regulators of your industry want you to report abuse. They want you to make every effort to keep aging clients financially safer. If you are not sure about privacy, we can help you create a special privacy document here at AgingInvestor.com that gives you permission to call that third party. Every advisor with any client over age 65 should have this and understand how to approach a client about signing it. With permission like this, you should never hesitate to tell APS and the trusted other that you are concerned about your client being financially manipulated.
You can get more details about this elder abuse issue and what you can do as an advisor in Succeed With Senior Clients: A Financial Advisor’s Guide to Best Practices. See particularly the chapter “Financial Elder Abuse: How You Can Fight the Crime of the Century“. It’s available right now so click HERE to get your copy today.
by Carolyn Rosenblatt, RN, Elder law attorney, AgingInvestor.com
Jun 15, 2016 | aging, aging investor, Alzheimer's disease, diminished cognition, elder investor, finances for elders, financial capacity, handling money for aging parents, handling money for seniors, senior citizen investor, seniors finances
Capacity and competency are terms loosely thrown around these days. How can you tell if your client has financial capacity? This kind of capacity is the most complex and requires intact judgment. You must have a good working knowledge of it or you could come under scrutiny for giving advice or selling products to an individual who is impaired. One thing is certain: you can’t tell if your client has the capacity for making financial decisions just from a quick call or social chat when ominous signs already exist suggesting that some impairment is present.
What do we know about financial capacity? It is defined as “the capacity to manage money and financial assets in ways that meet a person’s needs and which are consistent with his/her values and self-interest.” This seems straightforward, but it is not. Some people develop brain disease as they age, and with dementia, the erosion of mental capacity can take place over years. During the earliest stages of dementia, the brain cells are being damaged by the disease process, but the person has other brain cells “in reserve” and can still function in many areas without impairment. However, research has found that for people who are developing Alzheimer’s disease, financial capacity is already impaired even at the beginning stage.
If you have an elderly client who is still in charge of his finances, not unusual at all in our aging society, be aware that some clues may point to loss of financial judgment. To see those clues, you will need to observe your client over time and document the warning signs of diminishing capacity. Overall diminished capacity often means that a person does not have financial capacity any longer.
Financial capacity is divided into nine distinct areas. All nine must be intact for a person to have adequate judgment to act in his own best interests. One of the most important of the nine is the understanding of investments.
The person with this area intact is able to engage in and actively participate in developing an understanding of any financial investment decision. Knowing the value of a proposed transaction and the attendant risks are part of this area of competency.
If this sounds complicated, it is. You may be wondering if any of your clients are essentially competent in all nine areas. Some are not. Most people, if you wanted to take the time involved to patiently explain things like risk of an investment in simple terms, would get it. But when a client can’t tell the difference between a twenty-dollar bill and a five-dollar bill, that client is not competent financially, even if he can carry on a perfectly normal conversation about his favorite sports team or politics.
One clue to ask your client about is whether she is able to keep track of and pay all her own bills. If family or any other helper are doing this for her there is a reason. That may be that she forgets bills or pays them twice. That is a sign that financial capacity may be eroded. You need to take the next step and look at other areas of financial capacity before your client makes any further financial decisions.
If you aren’t sure what the nine areas of financial capacity are and you want to find out about this, you can do that fast in a chapter of our book, Succeed With Senior Clients: A Financial Advisor’s Guide to Best Practices. The chapter that will quickly give you the answers you need is “Nuts and Bolts: What Are the Components of Financial Capacity?” Get your copy today by clicking HERE.
By Carolyn Rosenblatt, RN, Elder law attorney, AgingInvestor.com
Jun 15, 2016 | aging, aging investor, diminished cognition, elder investor, finances for elders, financial capacity, handling money for aging parents, handling money for seniors, investor, senior citizen investor, senior investor, seniors finances
Many older people have a bit of difficulty remembering. We often dismiss this when we see it in a client, thinking it's "just getting old". It may be part of aging, as we do process things more slowly as we age and recall may take longer. But, there is a point when a problem recalling things should be a red flag for diminished capacity for you, the advisor.
What are those red flags anyway? How do we label them?
There are numerous signs of diminished capacity, more extensive than this article allows, but we'll look at one category, which we call cognitive signs. Here's a breakdown of what you should look for when your client has a lot of difficulty remembering things.
What to note and document about memory loss
This is one of the first things most advisors may notice in a client that causes concern. Perhaps she does not remember important meetings, decisions and discussions. Here are some examples of what you may see:
Multiple telephone calls in one day that are repetitive and do not make sense. The client forgets that she has already talked with you and is calling about the same thing in another call to you. She repeats a question she already asked you and that you already answered.
Client forgets why he has an appointment with you. This can be by telephone or in person. Perhaps the client himself asked for the meeting but then he forgets why. Or perhaps you wanted to discuss a proposed transaction with him and told him that, but when you call or he comes into your office, he has no idea why he is there. Trying to refresh his memory about it does not help.
Complete forgetting of an event that just took place. You just spent a hour with your client telling her some important information about upcoming changes to her portfolio. She seemed to understand when you were talking but an hour later she asks you questions as if the meeting you just had never took place. She had totally forgotten about it.
No shows.
You have arranged meetings, appointments with others or events that require your client's participation. He agrees on the pre-arranged date and time but then does not show up. When you call him, he has no recollection of the event, that others are involved nor that he had agreed to this.
If your client demonstrates any of these indicators you need to be paying close attention and make an effort to contact your client more often than you did before you noticed these problems. Any or all of them might be warnings of developing dementia. The only way to determine if you have a serious problem here is to track these signs over time and keep good records of it.
If the problem gets worse, it is time to take it to the next level. In your organization that might mean escalation, or having the documentation reviewed by a committee. Ideally, as we see it, the next step should include contacting the client's appointed trusted third party who would step in when the client became impaired.
To learn more about the other red flags for diminished capacity in your clients and how to document them, get a copy of Succeed With Senior Clients, A Financial Advisor's Guide to Best Practices. See the chapter "Know Your Aging Client's Red Flags". It comes with an easy to use checklist you can put to work right away. Click HERE for your book!
By Carolyn Rosenblatt, RN, Elder law attorney
AgingInvestor.com
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