As our population ages, more and more financial advisors will have to deal with clients who have dementia or get dementia. If a client gets dementia, your options may be limited; it may be too late.
The question all firms should consider is are there things a firm can do before its clients show the signs of dementia. Fortunately, the answer is yes. Firms should consider things such as:
- Require account holders of a certain age have authorized third party fiduciaries to act on their behalf;
- Establish an elder abuse unit to monitor accounts held by elderly clients;
- Place all accounts of clients over a certain age under heightened supervision;
- Provide enhanced training to financial advisors to address elder issues as they arise;
- Require elderly clients undergo screening from a medical professional to ensure they can handle their finances;
- Require client trade confirmations in writing from the client; and
- Consult with you clients about what to do in the event of dementia and document that discussion.
None of these options are perfect and there are many more to consider. But the point is that it is better to plan for the worst to avoid those situations where the firm is forced to go to court over what should be done with the client account.
A little planning now will hopefully go a long way to avoiding the time and expense associated with a client who gets dementia where the firm has no tools to address that situation.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
