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Financial Advisors: You Can Protect Your Clients With Dementia and Protect Yourselves

Most of us know of someone who has Alzheimer's disease. Sometimes it's a family member and sometimes it your clients. What can you do to help them? No one taught you about this when you studied finance. Most advisors feel awkward bringing up the subject with an older client who seems to have memory problems or cognitive decline.

When advisors realize a client seems confused, suffers from memory loss or begins to make unsound decisions there may be an urge to act. At the same time you don't exactly know what you are supposed to do.

Because of the awkwardness and lack of specific guidance from inside the industry, many advisors simply ignore what they see until the problems are so obvious they realize they could be in trouble ignoring the situation further. Best practices for practice management suggests that one should always "get to know the family". But getting to know a client's family after the client is already on the decline could be too late. The client with dementia can grow suspicious, secretive and unwilling to share any financial information. Their thinking gets impaired to the point of not knowing what is good for them anymore.

Neither the regulatory agencies nor advisors have put together the legal, health-related and emotional factors involved to give advisors a clear path to follow with clients who present those warning signs of diminished capacity. But you can find that path now in Succeed With Senior Clients: A Financial Advisor’s Guide to Best Practices .

No one with dementia should be permitted to make complex financial decisions without help. They simply aren’t safe any longer to judge risk and process the information an advisor gives them. Any one of the 5.4 million people who have Alzheimer's disease could be your client. In fact it is likely that you already have at least 7 of your clients that have cognitive decline .


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. Anyone 60 and older is 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 you pick up on that may arise between calls.
  • Enlist third parties to help with decisions. 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 in a legally sufficient document (not a mere letter) to contact these people under specific circumstances identified in the legal document. This kind of document protects the client as well as the advisor.
  • Get trained in senior-specific issues. Financial advisors need to be knowledgeable about the problems seniors have. 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. If you limit your information to that which comes only from other financial professionals, you may be lacking the expertise you need.
  • Financial advisors 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. Ultimately, their motivation isn’t as important as the actions they take.