Financial advisors need to be aware of the proper way to work with older clients who are still capable of making investment decisions, but prefer to have a family member or close friend provide support in making those decisions, according to John Poyser, a wealth and estate lawyer who spoke at the Financial Planning Standards Council’s annual CFP Professional Symposium in Toronto on Wednesday.

Specifically, there are various types of these older clients who have diminished capacity but have not crossed the line into being completely unable to make their own choices, said Poyser, partner with Winnipeg-based Tradition Law LLP, Estates and Trusts.

The first scenario involves a client whose mental capabilities seem to be failing and has begun to bring a family member to meetings to act in a back-up role. This is an informal arrangement in which the advisor is still taking instructions from the client, but a family member could be there to take notes for the client or remind the client of certain details.

As long as there are not any signs of predatory behaviour on the part of the family member, the client is entitled to bring someone to the meeting to help him or her.

“You should get something in writing from [the client] indicating that it’s appropriate and they’re comfortable having that individual in the room,” recommended Poyser.

The second scenario is a more formalized one in which the client has named a power of attorney (POA) and tells the advisor that instructions should be taken from the POA. The client has not lost the capacity to make decisions in this example, but it may truly be his or her preference that day-to-day investment decisions are made by someone else. Still, this situation must be handled differently.

For one, every firm will have its own protocol regarding how advisors interact with a client and his or her documented POA. Thus, you should follow your firm’s policy and its various requirements, Poyser emphasized.

This includes getting your client to state in writing that he or she wants instructions to be taken from the POA and that the advisor and the firm will not be held liable for having followed those instructions.

But while you should adhere to your clients’ wishes and go to the POA when handling the client’s financial affairs, the advisor should also tell the client that he or she would like remain in periodic contact with the client, said Poyser. This will ensure that the client remains informed and comfortable with the overall direction of his or her finances.

“I recommend that [strategy] because, behind the scenes, the client can slip to a point at which they are no longer capable and that will change things in a real way,” said Poyser.

If the advisor believes the client has moved from having diminished capacity to no capacity, the situation changes and the rules for interacting with a client’s POA will change. The advisor should inform his or her compliance department of the evolving situation and seek guidance, Poyser added.