If you haven’t yet dealt with a client showing signs of diminished mental capacity, you will. Now is the time to prepare for that event, before you see the signs.
Amy Florian can deliver the alarming statistics on the likelihood that your clients — and you — will face that dreaded development associated with aging. In an interview with ThinkAdvisor.com, Florian provided steps advisors should take to protect themselves from liability, and when to take action.
First, the sobering statistics. Florian, CEO of the consulting firm Corgenius, which specializes in educating businesspeople on death and dying and “transitions” like divorce and retirement, reported that one in nine people age 65 or older and almost half of people age 85 or older have some form of dementia. There are 18 different diseases that can lead to dementia, with Alzheimer’s disease by far the leading cause, followed by vascular dementia. However, one common misconception is that Alzheimer’s and dementia are the same thing. They are not; you can have dementia and not have Alzheimer’s, but if you suffer from Alzheimer’s you do have dementia.
(Florian is speaking at the Schwab Impact 2016 conference on Oct. 28 in a session titled, ‘Guiding Women Clients Through Life Transitions.’)
“We don’t know the cause,” said Florian, and “if we knew, then we’d have a better idea on how to prevent or treat” dementia. Some people can get early onset Alzheimer’s in their 40s, and the “familial” variety of Alzheimer’s, she said, “is definitely genetic, but that’s a small percentage” of those affected by the disease.
Researchers do know what characterizes Alzheimer’s, in that “every Alzheimer’s person has beta-amyloid plaques” in their brain which, the Alzheimer’s Association says, “may block cell-to-cell signaling” in the brain’s synapses. Those clumps of protein “may also activate immune system cells that trigger inflammation and devour disabled cells,” the Association warns.
Florian noted, however, that while all Alzheimer’s sufferers have those beta-amyloid clumps, that condition is also found in people without dementia.
Current medications for Alzheimer’s, said Florian, can’t reverse the condition, but only delay the worsening of symptoms, and all too often they only work for a relatively short period of time before the condition worsens again.
One thing we do know about dementia, Florian said, is that it “strikes as we get older.” Moreover, “we can’t predict who will get it,” and Alzheimer’s in particular “literally shrinks the brain.”
The Challenges and Strategies for Advisors
The symptoms of dementia can start 10 to 12 years before a diagnosis, Florian said, but one important point for advisors is that “not every cognitive difficulty is due to dementia.” The symptoms common to dementia might be caused by medications interacting with each other, she said, like anti-depressants. Even a fairly common condition like a urinary tract infection “can wreak havoc with cognition,” she said, as can a B-12 vitamin deficiency.
Look for evidence of short-term memory loss, she counseled, along with changes in personality, such as when a person becomes “uncharacteristically inappropriate or angry.” Symptoms include changes in depth perception, so sufferers “when driving around a corner may hit the curb,” or they start tripping when walking up stairs. They might also mix up the names of common items, such as calling a toothbrush a “mouth cleaner,” or mistakenly use a similar-sounding word when they can’t remember the proper word, such as saying “amphibious” when they mean to say “ambidexterous.”
Math functioning also “seems to be affected very soon” by dementia, Florian said, which advisors might notice when discussing a performance percentage or an investment product and clients no longer can figure a percentage in their heads or understand concepts they previously did, such as how an annuity works.
So what should an advisor do? “What I recommend is that before there are any signs, have all clients complete a diminished capacity letter,” which Florian said is “basically a permission form to call certain people if you [the advisor] see anything wrong. The letter might say, ‘I, Amy Florian, give Joe Smith and Jane Doe of Smith-Doe Financial permission to call my powers of attorney and the following people if they notice any diminishment in my physical, cognitive, mental, or psychological capacity.’”
When raising the issue with clients, Florian also said it’s important not to use freighted words like Alzheimer’s in describing the conditions under which the letter could be implemented. Instead, the advisor can explain that any signs of cognitive deficiency could be caused by one of the physical conditions mentioned above.
The advisor could say, “‘I’ve noticed you repeating yourself,’” and suggest, “‘It could be a medical cause. What about your medications or a vitamin deficiency? If I’m noticing these signs, you might want to go see your doctor.’”
She also recommended that advisors document “every single time” a client shows symptoms of cognitive decline, and share that concern with their compliance officer or compliance department at a broker-dealer.
Financial Fraud and Dementia
Florian doesn’t buy the argument that older people are more likely to be targeted for financial fraud primarily because they have more money than younger people.
While older people have accumulated more money, they also tend to be “more vulnerable, more trusting,” and she pointed out that “the ‘Greatest Generation’ has a higher degree of trust than younger generations.”
There’s another reason why fraudsters might have more success with members of that generation. If they also have some dementia, those people may “lose the capacity to determine the risk” of fraud. That’s particularly the case if the fraudster presents himself as someone “with some authority,” who might say “‘I’m from the IRS,’” so the client doesn’t “want to offend them.” Florian said it’s the combination of having money, being vulnerable and not being able to accurately assess the risk of any action, and being respectful to perceived authority — another hallmark of the “Greatest Generation” — that makes them so susceptible to financial fraud.
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