Preparing clients for the possibility of cognitive decline

Even though Alzheimer's Awareness Month came to an end on Thursday, it’s imperative to remember that the disease is with us all year-round.

That’s one message that Phil Reynolds, a managing member at TBH Advisors, wants advisors to take away.

“Alzheimer's and dementia have flown under the radar for so long in not being recognized as something that will, in my opinion, become the disease of our generation as the number of people that, unfortunately, are diagnosed with it,” Reynolds said.

He knows the disease all too well. His mother was diagnosed with Alzheimer’s when she was 54 and passed away at 62. Watching her battle the disease for 8 years is one of the reasons Reynolds works diligently to educate and inspire advisors to have discussions and work with their clients when it comes to cognitive decline.

More than 6 million Americans of all ages are living with Alzheimer’s, and that number will only increase. The Alzheimer’s Association projects that by 2050, the number of people over 65 with Alzheimer’s will double, to almost 13 million, barring the development of medical breakthroughs to prevent or cure the disease.

While the results look grim, there are several things advisors can do that will help clients remain in good health and be in good hands should they succumb to the disease.

First of all, there are preparations that should occur — the sooner, the better. “Ideally, you want to look into three things: Have estate documents in order, stress-test their portfolio to see if it can handle a long nursing home stay, and/or get long-term care insurance,” Chris Cybulski, a certified financial planner and investment advisor at Chisholm Trail Financial Group, wrote in an email.

One thing advisors stress is knowing your client. Having a good understanding of their family history and knowing whether the disease runs in their family helps advisors understand what clients may be at risk for, Reynolds and Cybulski said.

“From an advisor perspective, clients should have wills and power of attorneys done,” Nicholas Bunio, certified financial planner at Retirement Wealth Advisors, wrote in an email. “That way, whoever has POA for finances can quickly take over their affairs.”

One of the things Reynolds said has been put in place at his firm is having a trusted contact on client accounts, “so we have a reference point in the event that we begin to be concerned about the potential of cognitive decline.”

If an advisor senses elder abuse going on with their client, there are a few strategies to take that will also help protect assets, Reynolds said.

“It’s watching behaviors, seeing if there's deviation from what has been the normal relationship behaviors, in the time in which you've worked with that client. Being able to have a conversation with them [will] get to the reason in which they may make an unusual request. Typically, with older clients, they're going to tell you why. Family can, unfortunately, try to take advantage of [other] family members,” he stressed.

Costs associated with cognitive decline and home care can vary. However, clients should expect to draw down an extra $50,000 to $200,000 a year from assets, Cybulski wrote.

Reynolds encourages clients to go “on the record” with family members who suffer from cognitive decline.

“Take video, have them tell their stories and things that you can reference when things get really bad, [like] go nonverbal and have a low quality of life at the latter stage of the disease,” he said.

 “My mom passed away before my brother and sister had children, so being able to show those family members their grandmother and who they were and hear their story, that hadn't come from someone else,” Reynolds added. “It’s an invaluable piece of maintaining their legacy and honoring them going forward.”