Amid the onslaught of media coverage respecting Glenn Neasham’s conviction for selling an annuity to a 83-year-old senior diagnosed with Altzheimer’s Disease, many of our readers are asking how they can guard against a similar fate. One place to look for guidance, clearly, is your annuity carrier.
Unfortunately, many annuity providers don’t have well-developed programs to aid agents in dealing with clients or prospects suspected of being cognitively impaired and, thus, not wholly competent to consummate a product sale. This is a significant oversight for an industry that has devoted much time and resources to helping producers determine the suitability of an annuity given the client’s age, financial resources, life goals, risk tolerance and other criteria.
Knowing how to custom-fit a product to the client profile is all well and good. But if the prospect doesn’t seem to fully understand or remember what the agent discussed during a product presentation, then the insurer in question needs to be able to invoke procedures to decide whether or not the producer should proceed with the sale.
For agents, the issue is likely to grow more urgent in coming years, as many of the estimated 13,000 of 78 million baby boomers who are daily turning age 65 have some form of dementia. Topping the list: Altzheimer’s Disease, which is the 6th leading cause of death in the U.S. and the 5th leading cause of death for those aged 65 and older.
According to a March 2012 report of the Altzheimer’s Association, 5.4 million Americans are now living with Alzheimer’s—5.2 million aged 65 and over, but also 200,000 under the age of 65. By 2050, up to 16 million Americans will have the disease. Of Americans aged 65 and over, 1 in 8 has Alzheimer’s. And nearly half of people aged 85 and older have the disease.
These numbers add up to a minefield of potential lawsuits. Thus, producers like Neasham need to have a plan in place to recognize early warning signs of mental disease; and, once identified, to take their concerns up the chain of the command so as to minimize the possibility of civil or criminal actions after the sale.
One insurer with a program to help agents address mental cases is Prudential Financial. John Gordon, vice president of business quality for the Newark, N.J.-based company, says that Prudential’s Health and Wellness group spearheaded a training initiative in 2009 for its career agent field force, as well for its back-office/operations personnel.
“We wanted to know what the red flags are that our people should look for pertaining to diminished capacity in senior clients,” says Gordon. “Per a FINRA notice to member companies, we also wanted to indentify signs of physical or financial abuse that seniors may be suffering at the hands of family members, such as the use of coercion to make a particular individual the beneficiary of an annuity or life insurance policy.”
In respect to the first—diminished capacity—Gordon identified several warning signs that might point to early-onset dementia. Among them: a client’s inability to understand or recollect product features and benefits the agent described only a short while ago; waiting for the agent’s approval to speak; trouble in processing visual images and special relationships, such as documents to review; difficulty in solving problems, like working with numbers; and confusion as to the time or place of a meeting.
Should a client reveal any of these symptoms then, says Gordon, the agent is directed to contact his or her managing director. This individual will interface with others at Prudential as part of a mini-task force that addresses cognitive impairment cases. They include the company’s chief compliance officer, risk officer, and individuals within Prudential’s Health and Wellness Group.
If the task force concurs with the agent’s initial assessment, then Prudential will turn the case over to a state agency to handle. Often, state authorities will act to prevent agents at other insurers from prospecting to the client in question; or, as in one example Gordon cited that involved Prudential, to prevent a family member from engaging in financial elder abuse.
Gordon counsels agents to undertake additional measures on their own to protect themselves in the event of litigation. These include, for example, fully documenting conversations with clients so they can recollect decisions that may later be contested; and marketing themselves on business cards and literature using only carrier-approved professional designations.
Prudential, it seems, has a well thought-out plan to deal with diminished capacity issues. It remains to be seen how many other carriers—and their agents—will follow suit.