Dementia and Alzheimer's are robbing our elderly — and sometimes younger people — of their mental capacity. But they also are putting financial advisers in a bind when they try to intervene on behalf of impaired clients.
As
reporter Mason Braswell's story illustrates, advisers are increasingly finding themselves in the middle of family feuds or at the mercy of clients who are hurting themselves and their loved ones financially because they no longer have the ability to make sound decisions.
Advisers are not doctors, but they often are being forced to make medical judgments on their clients' mental capacity. And in cases where it is clear there is an impairment, laws often forbid advisers from withholding their clients' money, even when it is headed to con artists and fraudsters.
Then there is the question of liability. Many advisers are so afraid they will be held liable for the questionable decisions of clients that they are simply dropping them at the first hint of cognitive impairment. That's not good for clients and it's certainly not good for the industry.
Our editorial package,
at InvestmentNews.com/unraveling-minds, contains a wealth of information that sheds light on this important topic, and we urge every adviser to read it. As part of our research, we conducted a survey of advisers and asked them to tell us about their experiences with dementia in their practice. We were surprised at how many replies we received, some of which appear online, and how emotional the comments were.
Until laws are passed that give advisers some measure of protection in dealing with the cognitively impaired, advisers must take steps to protect themselves. First, they must learn the warning signs of dementia and Alzheimer's and be able to discern between someone who is just showing the normal signs of aging as opposed to someone who has a serious mental impairment.
Advisers also should have a protocol to follow with all their elderly clients that includes having a durable power of attorney in place and a list of trusted family contacts who can be notified in case of an emergency. These measures should be taken well before they are needed, while the client is still of sound mind.
As the ranks of the elderly swell with more and more baby boomers, the problems of dementia and Alzheimer's are going to get worse. Advisers should move now, and move quickly, to protect themselves and their clients.
