Fading Minds
I. Case; Financial-Planning.com; January 1, 2011

While Americans age, more planners are working with clients who have dementia. They need to protect their clients-and avoid law suits.

Frank Moore, the principle investment officer at Vintage Financial Services in Ann Arbor, Mich., remembers a longtime customer, a man in his eighties, who proclaimed that he had won the Canadian national lottery. He wished to wire money to a Canadian brokerage firm to be able to collect his reward.

"I attempted to conserve his dignity by saying congratulations, that sounds good, but allow me to look into this for you," Moore says.

The lottery, not surprisingly, was a scam. "The client wanted us to send the money anyway, and I told him flat out that I wouldn't do it," Moore says, and the client backed down.

Only 6 months later, Moore found that he had been pulling out lots of money. "This time, he'd won the Australian lottery, " Moore says drily. "We stopped him just before he despatched a sizable sum."

Moore's client was in the first phases of Alzheimer's, an illness that frequently first comes on when people fail to understand fiscal concepts. Financial planners, who work closely with clients, frequently for many years, can be among the earliest to notice worrisome developments. In several cases, no husband or wife is at hand. Clients with dementia are typically single or widowed; most are women whose husbands managed family investments in the course of their wedded lives.

In the best conditions, families inform planners when an older person is no longer able to make independent fiscal choices. In less clear-cut scenarios, where possibly no one else has observed cognitive variations, planners are confronted with the need to balance between respecting an adult's monetary decisions and delicately, diplomatically intervening.

A customer's financial security may be at stake; the advisor may also be risking a lawsuit if a client is producing financial choices without completely comprehending them.

To help professionals manage clients who have problems reasoning and recalling, FINRA met recently with financial service organizations and with the Alzheimer’s Association to create recommendations. A sensitive adviser will take steps to protect everyone concerned as soon as the initial symptoms appear.

A good number of dementia victims may exhibit dramatic character modifications, going from sensible to gullible, as Moore's client did, or from trusting to paranoid. Other people might exhibit lesser alterations.

"One of the first things I see is when a client who would normally be able to make fast decisions with regards to portfolio changes isn't so ready to make those judgements anymore," says Lea Ann Knight, a principal at Garrison Knight Financial Planning in Bedford, Mass. "They say that they are still thinking about it, but they can't articulate what it is that they are contemplating about."

Some of those clients may go slowly because they are unable to understand changes. Knight recalls a widowed customer whose fiscal lifestyle changed significantly following her husband's passing. "She kept parroting the details of his plan, though it no longer actually applied," Knight recalls.

Other people don't have the short-term memory necessary to remember new information. "I had a client who asked me a question, had written down the answer, then looked up and asked me exactly the same query. We did this 5 or 6 times. It was clear that his short-term recollection was absent," says Mimi Hackley, director of monetary planning for Sharkey, Howes & Javer, Inc. in Denver.

Still other early-stage dementia patients continue the interests and pursuits they've continually loved, but take them to a new, more intense degree. "People normally go off the track in the same direction they were already going " states Kathleen Kuehl, a fiscal principal at wealth supervision company Lowry Hill in Minneapolis.

Kuehl recalls an elderly customer who had usually followed right-wing radio and talk shows. "Up to and after the last presidential election, it got to the point where she was sending out vitriolic emails and video clips," recalls Kuehl, who received 3 CDs. "For me, this was a tipping point. She'd always had the idiosyncrasy, but at this point we were going over directly into paranoia."

When clients fall short, it's crucial to bring another person-perhaps the customer's grown child, lawyer, accountant, sibling, or close friend-into monetary selections. Although planners aren't bound by the similar confidentiality expectations as an attorney or a health care provider, it's nonetheless best to get permission to speak to others.

Many planners now ask clients for authorization to seek advice from others as part of the routine sign-up procedure. "We produced a piece of paper that we present to each client," Hackley states. "It says, 'If we notice any decline in your performance or something unusual taking place within your account, who should we contact?'"

By making the issue routine, Hackley says, her company eliminates hinting that that client is fading. Clients will handle the question as common when it's asked of younger and elderly people, and if the adviser asks for updates at every conference. It's also a good idea to discuss the likelihood of identity fraud while the clients are absent for a vacation and hard to reach.

If it is not feasible to name an adult child to contact, Hackley says her organisation pushes clients to pick someone else. "Sometimes you get clients that are really reclusive, and we have to insist that they specify somebody," Hackley states. "This is one thing we really feel is absolutely quite important."

But what happens if the client hasn't given permission? Knight confronted just that problem when a widowed client with 6 grownup children started regularly phoning her business. "She had a really simple financial portfolio and we were not making alterations, but she was getting increasingly more paranoid and upset," Knight recalls. "It became clear that she had stopped paying her expenses and that she really didn't understand what she needed to pay."

Knight called one of the woman's grownup daughters, "but I didn't know these adult children, and they were initially quite hands off," she says. "They were pretty reluctant to be their mother's parents, simply because they still looked at themselves as her kids."

Finally, Knight says, she contacted the woman's estate planning attorney, though with some trepidation. "I didn't want to induce trouble in that relationship," she says. "I said, look, here is my problem, and I don't know how to proceed. The children don't seem to recognize this as an issue."

Along with her desire to protect her client, Knight additionally wanted to protect herself. "I documented each and every discussion with her. I felt vulnerable as a planner continuing to provide any assistance, because I understood she had not been making logical decisions. I believed it could have come back and bitten me by means of a court action from the adult children."

Even planners with contact information for a client’s grownup children and reliable associates may use a couple of additional strategies when dealing with impaired customers. Susan McCants, a financial planner at Abacus Planning Group in Columbia, S. C., encourages family meetings for all her clients. She especially favors family meetings for older clients, she claims, for the reason that they can serve a dual function, ensuring that somebody close to the client recognizes the discussion as well as instructing an heir about the client’s finances.

McCants schedules family meetings well ahead of time and provides customers an agenda to enable them to collect their thoughts. She additionally delivers a prepared summary of everything discussed in the conference and attempts to provide other details in writing as well.

Handled this way, McCants's family gatherings protect her firm's planners by providing a prepared record of conversations and conclusions. Additionally, they build a ready-made support team in case the client's cognitive competencies decline.

Mark Ziety, a financial planner at Shakespeare Wealth Management in Pewaukee, Wis., includes a clever method to request a family meeting, one which avoids any suggestion that a client is deteriorating. "I tell them that they have a complicated financial situation," Ziety says. "We acknowledge that it's not their fault that they are unable to psychologically keep an eye on their financial situation."

"Often the customer concurs that bringing another person into the upcoming meeting would be really helpful," Ziety continues. "When we approach it in that matter, rather than as, 'Boy, you're slipping, you need to get help, it turns into a positive idea."

Once additional specialists or family members are involved, planners can take additional steps to help everyone. “We ensure that we know what assets are available in the local community and pull those together for families when necessary, " says Kuehl, who has helped customers to continue to live independently or in their own homes.

Kuehl has also put credit freezes on customer accounts to ensure that people aren't able to take out new credit. That defends assets from clients who are deteriorating-such as Moore's lottery winner-and causes it to be tougher for a dishonest caregiver to steal a patient's financial personality.

Ziety encourages consumers to let responsible close friends or family members use view-only access to the personalized financial websites that each Shakespeare customer is provided with. "It's much better to have 2 sets of eyes on something, to help monitor a complicated situation," he says.

None of these planners charge extra fees for assisting elderly customers and their families. "It's part of our overall service," Moore says. "We think it's important to look out for our clients, and this is a way we can add some value. And as humankind, we couldn't stand by and watch con artists take our clients."




“Under the care of Leo J. Borrell, M.D. since December 2001, I have seen a remarkable improvement in my mother’s condition. She is responding dramatically to the new regiment Dr. Borrell has prescribed”

- Beth Rose


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