Advisor Perspectives welcomes guest contributions. The views presented here do not necessarily represent those of Advisor Perspectives. 
Memory loss should be a concern when it comes to the wellbeing of your aging clients and their investments. Are you prepared?
By 2030, there will be 72.1 million people in the U.S. over age 65, or “elders.” More than 10%, 7.7 million, will have Alzheimer’s disease (AD). A large number of impaired clients will execute or attempt to make financial transactions and decisions. Some of those transactions could be with you.
According to respected researcher, attorney and neuropsychologist at the University of Alabama, Burmingham, Dr. Daniel Marson, we need to be ready to help those who lose the capacity to make financial decisions, as Alzheimer’s affects a huge part of our population. The problem is growing. Financial institutions, organizations and banks need to take preventative steps to avoid financial losses and exploitation of their clients.
What are the implications of aging and memory loss for the financial services industry? Demographics and dementia demonstrate that policies need to change and institutions need to explicitly plan for diminished financial capacity with their investors. We’re not just talking about escalating a matter to compliance when a client seems to be behaving oddly. Institutions and organizations must get over the brick wall excuse that it’s not their problem, it’s the family’s problem.
Financial professionals need to change the thinking that privacy concerns prevent them from doing anything unless the client gives permission. A client whose decision-making is impaired may not be willing or able to give permission for you to discuss a problem with family until it is too late. Getting permission needs to be a proactive mandate. Reporting mandates are reactive and will not often stop exploitation and fraud until it is too late – the money is gone.
Privacy does not have to be a problem if your organization, institution or you, as an individual, plan for the possibility of diminished capacity with every client. Planning includes obtaining a special authorization for the financial services professional to contact a designated trusted person when certain criteria are met. That means thinking through, with the input of aging experts, the criteria that would trigger the use of the special authorization. Getting a trusted contact person should not be optional or something one just “tries” to get. You must require it of your clients for their own financial safety and your legal safety. Doing this at the point of retirement is ideal.
Further, one should develop an agreed-upon plan of action for the financial professional when the criteria that demonstrate diminished capacity are identified. This will take collaboration among all the players, so that policy development is uniform, regulation-compliant and fair to the aging person who may be developing impairment.
Most importantly, a secure path of communication and action for the institution needs to be in place. No one with a questionable aging client should be left wondering:
- Should I escalate this to compliance now, or does it take more?
- Do I have the authority to reach out to the trusted contact, or does that violate my client’s privacy and the laws about privacy?
- What steps should I take now to protect myself?
Clients with memory loss will become impaired for financial decisions at some point. Do you want to lose the assets under your management because your aging investor can’t figure out what you are saying and can’t approve what you need to do to protect them from disaster? Getting rid of the client does not need to happen if you plan properly for decline. There is an absolute connection, based on very solid research, between memory and financial loss.
If you have heard the term “silver tsunami,” you may know that it refers to the massive wave of aging folks in our population. Indeed, it has already hit and your feet are getting wet.
To be more secure about what signs to look for in aging clients whose memory loss could signal further cognitive decline, get a one-page checklist to help yourself. Memory loss is just one indicator. My ten red flags of diminished capacity checklist is here. Be ready for aging clients and know what to do!
Carolyn Rosenblatt, RN, is an elder law attorney. More information about her and her services can be found at AgingInvestor.com.
Read more articles by Carolyn Rosenblatt
