Frank Moore, the chief investment officer at Vintage Financial Services in Ann Arbor, Mich., remembers a longtime client, a man in his eighties, who announced that he had won the Canadian national lottery. He wanted to wire funds to a Canadian brokerage firm in order to collect his prize.
"I tried to preserve his dignity by saying congratulations, that sounds great, but let me check into this for you," Moore says.
The lottery, of course, was a scam. "The client wanted us to send the money anyway, and I told him flat out that I wouldn't do it," Moore says, and the client backed down.
Just six months later, Moore noticed that he had been withdrawing a lot of money. "This time, he'd won the Australian lottery," Moore says drily. "We stopped him just before he sent a sizable sum."
Moore's client was in the early stages of Alzheimer's, a disease that often first shows up when people fail to understand financial concepts. Financial planners, who work closely with clients, often for many years, may be among the first to notice worrisome developments. In many case, no spouse is at hand. Clients with dementia are typically single or widowed; many are women whose husbands handled family investments during their married lives.
In the best circumstances, families tell planners when an older person is no longer able to make independent financial decisions. In less clear-cut situations, where perhaps no one else has noticed cognitive changes, planners are faced with the need to balance between respecting an adult's financial decisions and delicately, diplomatically intervening.
A client's financial security may be at stake; the planner may also be risking a lawsuit if a client is making financial decisions without fully comprehending them.
EARLY SIGNS
To help professionals deal with clients who have trouble reasoning and recalling, FINRA met recently with financial service companies and with the Alzheimer’s Association to create guidelines. A sensitive planner will take steps to protect everyone involved as soon as the initial symptoms appear.
Some dementia victims might show dramatic personality changes, going from sensible to gullible, as Moore's client did, or from trusting to paranoid. Others might show smaller changes.
"One of the first things I see is when a client who would typically be able to make quick decisions about portfolio changes is not so willing to make those decisions anymore," says Lea Ann Knight, a principal at Garrison Knight Financial Planning in Bedford, Mass. "They say that they're still thinking about it, but they can't articulate what it is that they're thinking over."
Some of those clients may move slowly because they're unable to understand changes. Knight recalls a widowed client whose financial life changed substantially after her husband's death. "She kept parroting the details of his plan, even though it no longer really applied," Knight recalls.
Others lack the short-term memory necessary to recall new information. "I had a client who asked me a question, wrote down the answer, then looked up and asked me exactly the same question. We did this five or six times. It was clear that his short-term memory was gone," says Mimi Hackley, director of financial planning for Sharkey, Howes & Javer, Inc. in Denver.
Still other early-stage dementia patients continue the interests and activities they've always enjoyed, but take them to a new, more intense degree. "People often go off the rails in the same direction they were already headed," says Kathleen Kuehl, a financial principal at wealth management company Lowry Hill in Minneapolis.
Kuehl recalls an elderly client who had always listened to right-wing radio and talk shows. "Up to and after the last presidential election, it got to the point where she was sending out vitriolic emails and videos," recalls Kuehl, who received three CDs. "For me, that was a tipping point. She'd always had the idiosyncrasy, but now we were going over into paranoia."
MAKE IT ROUTINE
When clients fail, it's crucial to bring another person-perhaps the client's grown child, attorney, accountant, sibling, or close friend-into financial decisions. Although planners aren't bound by the same confidentiality expectations as an attorney or a physician, it's still best to get permission to talk to others.
Some planners now ask clients for permission to consult others as part of the routine sign-up process. "We created a piece of paper that we give to every client," Hackley says. "It says, 'If we notice any decline in your functioning or anything strange going on in your account, who should we call?'"
By making the question routine, Hackley says, her firm avoids suggesting that client is fading. Clients are more likely to treat the question as commonplace when it's asked of younger and older people, and if the planner requests updates at every meeting. It's also a good idea to discuss the possibility of identity theft while the clients are away on a vacation and difficult to reach.
When it's not possible to name an adult child to contact, Hackley says her firm pushes clients to pick someone else. "Sometimes you get clients who are really reclusive, and we have to insist that they indicate someone," Hackley says. "This is something we feel is really quite necessary."
But what if the client hasn't given permission? Knight faced just that question when a widowed client with six adult children began frequently calling her office. "She had a very simple financial portfolio and we weren't making changes, yet she was becoming more and more paranoid and agitated," Knight recalls. "It became clear that she had stopped paying her bills and that she really didn't understand what she needed to pay."
Knight contacted one of the woman's adult daughters, "but I didn't know these adult children, and they were initially very hands off," she says. "They were very reluctant to be their mother's parents, because they still thought of themselves as her kids."
Finally, Knight says, she contacted the woman's estate planning attorney, though with some trepidation. "I didn't want to cause trouble in that relationship," she says. "I said, look, here is my concern, and I don't know what to do. The kids don't seem to recognize this as an issue."
In addition to her desire to protect her client, Knight also wanted to protect herself. "I documented every conversation with her. I felt vulnerable as a planner continuing to provide any advice, because I knew she wasn't making rational decisions. I thought it could have come back and bitten me in the form of a lawsuit from the adult children."
FAMILY MEETINGS
Even planners with contact information for a client’s adult children and trusted friends can use a few additional techniques when working with impaired clients. Susan McCants, a financial planner at Abacus Planning Group in Columbia, S.C., encourages family meetings for all her clients. She particularly likes family meetings for older clients, she says, because they can serve a double purpose, making sure that someone close to the client understands the discussion as well as educating an heir about the client’s finances.
McCants schedules family meetings well ahead of time and gives clients an agenda so that they can gather their thoughts. She also provides a written summary of everything discussed at the meeting and tries to offer other information in writing as well.
Handled this way, McCants's family meetings protect her firm's planners by offering a written record of discussions and decisions. They also build a ready-made support team in case the client's cognitive skills decline.
Mark Ziety, a financial planner at Shakespeare Wealth Management in Pewaukee, Wis., has a clever way to request a family meeting, one that avoids any suggestion that a client is deteriorating. "I tell them that they have a complicated financial situation," Ziety says. "We acknowledge that it's not their fault that they can't mentally keep track of their finances."
"Often the client agrees that bringing someone else into the next meeting would be really helpful," Ziety continues. "When we approach it in that matter, instead of as, 'Boy, you're slipping, you need to get help,' it turns into a positive thing."
HELPING OUT
Once other professionals or family members are involved, planners can take extra steps to help everyone. “We make sure we know what resources are available in the community and pull those together for families when necessary,†says Kuehl, who has helped clients continue to live independently or in their own homes.
Kuehl has also put credit freezes on client accounts so that people can't take out new credit. That protects assets from clients who are deteriorating-such as Moore's lottery winner-and makes it more difficult for a dishonest caregiver to steal a patient's financial identity.
Ziety encourages clients to let trusted friends or family use view-only access to the customized financial websites that every Shakespeare client receives. "It's better to have two sets of eyes on something, to help monitor a complicated situation," he says.
None of these planners charge additional fees for helping older clients and their families. "It's part of our overall service," Moore says. "We think it's important to look out for our clients, and this is a way we can add some value. And as human beings, we couldn't stand by and watch scammers take our clients."
Ingrid Case is a financial writer based in Minneapolis.
