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Clients Showing Signs of Dementia: The Advisor’s Role

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Are you feeling caught between a rock and a hard place with your aging clients who may have dementia? They may ask you to do dangerous things or take ridiculous risks. They may no longer follow your advice as they once did. They can readily be victimized by telemarketing scams, Internet thieves and other clever con artists. At the early stage of Alzheimer’s disease, there is already moderate cognitive impairment, according to research by Dr. Daniel Marson at the University of Alabama, Birmingham.

You may realistically fear being on the receiving end of accusations that you should not have complied with a client’s outrageous demands for releasing funds to obvious crooks. The family of your client would likely be outraged if all the money is gone and you knew your client was being scammed. But is firing the client the only solution?

At, we think you have good alternatives to dropping your elderly client at the first sign of dementia or other cognitive problems. These alternatives exist if you have anticipated that some clients will develop dementia and you are prepared ahead of time. 

First, you need to educate yourself.

What exactly should you look for and how should you interpret a client’s behavior? We advise that you don’t have to be a doctor or a diagnostician to figure that out. Anyone can learn the warning signs of dementia with appropriate instruction. You need to act reasonably: that is what the law requires of all of us. If your client is departing from long-standing patterns, putting himself in financial danger, and you do nothing, that is not acting reasonably. 

If you see warning signs you need to take action. That will inevitably mean that you  must  involve an appointed third party. That is at the heart of what we teach. Any well-planned senior-specific policy that you adopt as an individual planner or as a firm should involve a proactive plan to have your client appoint a successor to make financial decisions while your client is fully competent. Privacy is waived by your client’s permission, so that you can, under circumstances that are spelled out in the policy, contact the appointed person with your concerns. 

That means you can’t wait until you see a problem.You go through the exercise of appointing the third party for every client at a certain time. It could be at age 65 or at retirement or at any point you and your compliance department agree upon. The document you use for the appointment should be a more than a casual letter; that may not stand legal muster if there is ever a later controversy. You need to have a specific legal document created especially for you, for this purpose, to address management of the funds you control for the client.  

Freezing the client’s account will not solve the problem of cognitive impairment. If you freeze accounts  long enough, the matter could escalate to the courts and that is not the best outcome for anyone. 

Instead, wouldn’t it be best if you think about this now, devise a new policy for yourself for protecting every client and then standardize it? There is no reason why you as a competent and concerned advisor have to drop your aging clients. If you do nothing more than you are now doing, you are going to be dropping large numbers of them. Our population is living longer than ever and the number of aging people with Alzheimer’s disease continues to grow.   

And what will happen next? Someone else is going to have figured out what to do and will take on the aging client, with the help of a third person, perhaps a family member or trusted fiduciary. 

The vulnerable elderly client needs financial management more than ever when cognitive impairment develops. You can become part of the solution.