Editorial

Be prepared for coming Alzheimer's crisis

As stewards of clients' financial hopes and dreams, advisers must learn to recognize signs of Alzheimer's and formulate procedures for dealing with clients who have trouble remembering and reasoning

May 25, 2014 @ 12:01 am

Every 67 seconds, someone in the United States develops Alzheimer's. That means by the time most of you finish reading this editorial, almost 4 Americans will set foot on a path that ends in death for more than 500,000 people a year, making Alzheimer's — a form of dementia — the No. 6 cause of death in this country. 

The number of Americans with Alzheimer's is expected to more than triple by 2050, to 16 million, up from 5 million today.

Research shows that one of the first signs of Alzheimer's is an inability to manage money or grasp financial concepts, which puts financial advisers and planners firmly at the epicenter of this impending crisis. As stewards of their clients' financial hopes and dreams, advisers must learn to recognize signs of Alzheimer's and formulate policies and procedures for dealing with clients who have trouble remembering and reasoning.

FINANCIAL RUIN

Advisers who refuse to deal head-on with clients exhibiting signs of Alzheimer's put those clients in danger of financial ruin. That's because investors with diminished capacity are at high risk for financial exploitation, both by fraudsters and less scrupulous — or uninformed — members of their own families.

That said, the care and protection of those with Alzheimer's disease must extend beyond financial advisers and planners. Broker-dealers, insurers, mutual fund companies and others in the financial services industry must do their part to establish protocols that balance clients' privacy with the protection of their financial interests. Regulators, legislators and other policy makers must also step up to establish rules and regulations that guard those with diminished capacity.

Unfortunately, most financial advisers and planners are woefully unprepared for the coming wave of Alzheimer's cases. 

Sixty-two percent of advisers report that working with clients with diminished capacity is a problem for them, according to a survey released in 2011 by AARP. Even so, only about one-third of advisers are required by their firms to undergo formal training on issues related to diminished capacity — despite the fact that 83% of advisers believe such training should be obligatory, the AARP survey found.

That is unacceptable.

Financial advisers and planners of every ilk should be required to undergo a minimum number of hours of training every year on recognizing and dealing with diminished capacity among clients. If a client shows signs of cognitive decline, advisers should have a policy in place for ensuring that a spouse or other family member participates in decision making, and that all decisions are confirmed and well-documented.

TRAINING ADVISERS

Financial services companies should follow the lead of Wells Fargo, which recently launched a program called Elder Client Initiatives. The effort focuses on instructing advisers on the signs they should watch for and on then making the tough decisions, such as whether to freeze the account of a client who is making questionable withdrawals.

At the very least, financial services companies should be required to have protocols for including power-of-attorney documents in client files and making sure those documents are up to date.

Financial advisers and the companies they are affiliated with cannot afford to ignore the impending Alzheimer's crisis.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

INTV

Here's how we came up with our list of undiscovered talent in mutual funds

Senior columnist John Waggoner talks with assistant managing editor Susan Kelly about how hard work, curiosity and passion landed some fund managers on our list.

Latest news & opinion

SEC advice rule hearing updates

Commission says a lot of work ahead, public will have 90 days to comment.

SEC advice proposal unveiling: Here's what to expect

Chairman Jay Clayton will initiate momentous action Wednesday, as the commission meets to debate a rule on broker and adviser standards.

How active are the largest actively managed funds?

Active-share measures for the 15 largest actively traded mutual funds.

Morgan Stanley's success looks long in the tooth to analyst

Sanford C. Bernstein & Co. analyst Christian Bolu, concerned over stalled adviser growth and what it means for lending and deposit growth, believes the stock will "under perform."

Retirement coverage gap, 401(k) rollovers are big emerging threats for plan advisers

Proliferation of state retirement programs approaching the 'tipping point' where it will lead the federal government to step in.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print