As the senior population continues to grow in size, more and more financial advisors will be confronted with cases of diminished capacity affecting their client’s ability to make complex decisions.
Notably, issues of diminished capacity can pop up during situations in which advisors serve their clients — sometimes long before a doctor’s diagnosis of incapacity occurs, said Dr. Carole Cohen, clinical director of community psychiatric services for the elderly at Sunnybrook Health Services Centre in Toronto, during a discussion at the Portfolio Management Association of Canada’s 2017 national Conference in Toronto on Wednesday.
There are multiple reasons why a client may have impaired cognition, the most common of which is dementia (such as Alzheimer’s disease), said Cohen. Other reasons may include delirium, depression, drugs (such as prescription drugs and their side effects) and poor hearing and eyesight, which also impacts cognition.
“As family structures are not as tight as they have historically been, a lot of weight with these issues are falling on [advisors],” added Arthur Fish, partner with Borden Ladner Gervais LLP in Toronto, during the discussion.
Some signs advisors can look for among their clients is the inability to process simple concepts, memory loss, decisions that are inconsistent with goals, erratic behaviour and concerns or confusion around “missing funds,” Cohen said.
Another observational red flag when serving senior clients is “head turning,” both Fish and Cohen noted. “Head turning” means that the client is bringing another person to client meetings and looking to that person for an answer or explanation during those meetings.
In cases such as these, in which decisions are deferred to another person, the advisor can forget, or never know, the client’s true needs.
“They have allowed someone else to enter the relationship and provide instructions,” Fish said. “That person may not have the legal authority to be doing that.”
Advisors should also be wary of letting existing clients provide instructions for any senior clients they introduce. Current clients may bring in elderly relatives in as new clients, and assume that they will be able to “run the show” by directing how that client relationship is handled, Fish said.
When advisors are speaking with senior clients who rely on the advice of a relative during meetings, it’s important they find time to meet with that elder client independently.
“If you’re dealing with an older person, at some point there should be a meeting alone with that person, creating a safe space so that the person can tell you what he or she wants without the chance of offending a child or alarming someone who is up to no good,” Fish said
Furthermore, if an advisor suspects they may be speaking to a client with diminished capacity, it’s critical to document all conversations properly by taking good, thorough notes during meetings with these clients, Fish added. That’s because if a conflict were to arise between an advisor and a senior client, the client will likely be believed over an advisor without good notes.
One way of documenting these conversations is to write down direct quotations and show them to the senior client for confirmation, he said. Advisors can also find ways to make use of technology to provide better records.
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