As the population ages, financial advisors are likely to encounter cases of elder abuse and estate discrepancies between clients and their families, and they should ensure they’re prepared to deal with such scenarios, a panel of financial planners said on Friday.
At the Institute of Advanced Financial Planners’ (IAFP) annual symposium in Vancouver, planners said complex and uncomfortable situations can arise when dealing with elderly clients. For instance, when clients lose their cognitive ability to manage their money, advisors can end up in the middle of contentious family disputes.
These kinds of situations are likely to become considerably more common, according to Cathie Hurlburt, partner and senior planner at Integrated Planning Group, licensed with Assante Financial Management in Vancouver.
“It’s going to happen more and more,” she said. “People have longer lives, but they’re not necessarily always in the best health.”
Indeed, Warren Baldwin, financial planner and regional vice president with T.E. Wealth in Toronto, said he’s encountered several such situations, and he urges other advisors to approach them very cautiously.
“Be super careful – you don’t want to be on the wrong side of this kind of thing,” he said. “Get on guard, and get on guard fast, because it can really, really bite you.”
If the client’s memory begins to fail, for instance, Baldwin explained that investment decisions could later come into question, since the client may not recall conversations in which decisions were made. As a result, he recommends having another advisor sit in on all meetings with such a client.
“We never have a meeting with that client with anything less than two advisors, because if it’s just you, it becomes a ‘he-said-she-said’ situation, and you’re going to lose that all day long,” Baldwin says.
Contentious issues can also arise when powers of attorney (POA) come into the picture, the panelists said. If a client’s children or other family members are pushing to take control of their finances as POA, Baldwin suggests having them attend a meeting with the client, so that the decision can be made as a group.
It’s important to be wary of the possibility that family members could be taking advantage of a vulnerable, elderly client, the panelists added. “You have to be looking for elder abuse now,” said Hurlburt.
To be sure the appropriate process is being followed, ask for a copy of the POA document before the family members take control of the finances, suggests Melanie Twietmeyer, owner of Legacy Wealth Management in Calgary. She also requests certification from the client’s family doctor, verifying that they are no longer capable of making financial decisions.
As issues surrounding elderly clients become more prominent, it’s a good idea to develop written policies and procedures pertaining to such situations, the panelists said. In addition, they recommend consulting legal counsel in any contentious situations.