How Financial Advisors Can Protect Clients With Dementia – And Themselves

No one with dementia should be making complex financial decisions. They simply aren’t safe any longer to judge risk and process the information an advisor gives them.

With 5.4 million Americans suffering from Alzheimer’s disease, financial advisors face a formidable challenge that their wealth-management training didn’t prepare them for – providing advice to aging clients with diminished mental capacity.

It can create a host of thorny issues to navigate when advisors realize a client seems confused, suffers from memory loss or begins to make unsound decisions.

Many advisors are unsure what their role should be in such scenarios, but ignoring the situation isn’t a good option for the client or the advisor, says Carolyn Rosenblatt, an elder law attorney and registered nurse.

Advisors simply must deal with it, says Rosenblatt, who is co-author with her husband, Dr. Mikol Davis, of Succeed with Senior Clients: A Financial Advisor’s Guide to Best Practices.

“No one with dementia should be permitted to make complex financial decisions,” she says. “They simply aren’t safe any longer to judge risk and process the information an advisor gives them.”

Even worse, Davis adds, they become an easy mark for ruthless people who can trick them into signing over checks and property, or otherwise take financial advantage of them.

Rosenblatt and Davis say financial advisors can take several steps that will help protect both their aging clients and themselves. Those include:

• Increase the frequency of communication with older clients. Rosenblatt and Davis include anyone 60 and older in this group. By increasing the amount of communication – either in person or by phone – an advisor can be more aware of changes the client may be experiencing and head off problems. “Essentially, you are looking for special vulnerabilities that may arise between calls,” Davis says.
• Enlist a third party. In fact, advisors should enlist several third parties – trusted individuals who could be called on if the client begins to display problems with diminished capacity. The advisor should get the client’s written approval to contact these people whenever the advisor sees fit.
• Get trained in senior-specific issues. Financial advisors and their staffs need to be trained in issues related to seniors, something that’s not a normal part of an advisor’s education. The training should come from people with aging expertise, such as gerontologists, lawyers who work with elders, psychologists, physicians and social service providers, among others.

“A financial advisor may decide to look out for the welfare of aging clients simply because it’s the right thing to do, or they may be driven by a desire to keep the client’s assets under their management,” Rosenblatt says. “Really, their motivation isn’t as important as the actions they take.”

About the Authors: Carolyn Rosenblatt and Dr. Mikol Davis

Carolyn Rosenblatt and Dr. Mikol Davis are co-authors of Succeed with Senior Clients: A Financial Advisor’s Guide to Best Practices. Rosenblatt, a registered nurse and elder law attorney, has more than 45 years combined experience in her professions. She has been quoted in the New York Times, Wall Street Journal, Money magazine and many other publications. Davis, a clinical psychologist and gerontologist, has more than 44 years’ experience as a mental health provider. In addition to serving his patients, Davis creates online courses and products to assist professionals and the public with understanding aging issues. Rosenblatt and Davis have been married for 34 years.