Dec 8, 2017 | aging, aging investor, Alzheimer's disease
The Federal Trade Commission makes every effort to warn consumers about the latest scams and the information is important. However, your investors are not likely to spend time browsing through the FTC website for scams. We at AgingInvestor.com are passing on a warning for you to share with your clients. We want them to love you for how much you take care of them. When they get a friendly letter or email from you, that shows you’re paying attention to them.
Let them know about the fake U.S. Marshal scam. Here’s how it works:
The scammers get phone numbers from lists of potential targets. It is no secret that telephone numbers of seniors, in particular, are bought and sold by unscrupulous people. This scam is not limited to elders, but they are especially vulnerable, having been raised to generally respect authority. The scammer has a fake phone ID and number and perhaps even a real badge number stolen from the Marshal’s office. So your client might have caller ID and see “U.S. Marshal” on it. It’s intended to scare them. It works.
The caller says the target is delinquent in reporting for jury duty and there is a fine due immediately which must be paid. The caller threatens that the Marshal will arrest the target if he or she does not pay immediately. Of course, there is no such consequence for failing to report for jury duty and there was no summons for Federal jury service the target ever got. Never mind that, the target reacts out of fear.
When we react out of fear, we’re not logical. Why would a U.S. Marshal insist that anyone buy a pre-paid gift card for cash or wire money? That never happens. This may sound very obviously phony to you, but your aging client can be fooled by it. Perhaps the client is a bit forgetful and is terrified that he forgot about a jury summons. Or she thinks she is about to be taken away and she complies, feeling she has no choice but going to jail.
The takeaway is this. Please send a communication to all your clients that warns them of this scam and advises that you are looking out for their financial safety. You need to tell them:
- Don’t ever wire money or buy a prepaid card for anyone who contacts you by phone making threats, no matter who they say they are.
- Thieves get phony caller ID and can look real but they are not.
- Never give out any personal information such as your address, date of birth, your credit card number, your social security number or any other private data to a caller. If you call a company on your own and need to give this information that’s different. If anyone calls you and asks for it, hang up.
Your client can report attempts made by scammers to the Federal Trade Commission online. However, these thieves are hard to catch. They change states and phone numbers faster than law enforcement can track them. Finally, do not, as a financial advisor, assume that your smart, educated or savvy clients would never fall for these phony calls. Over $36B is stolen from elders every year in this country. Even the smartest people can be caught off guard. Warning everyone is a small thing but could save one of your clients from painful loss and ID theft.
We have form letters you can use, YouTube videos and lots of other tips to help you help the older clients in your book. Check us out at AgingInvestor.com.
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Dr. Mikol Davis and Carolyn Rosenblatt, co-founders of AgingInvestor.com
Carolyn Rosenblatt, RN, Elder Law Attorney offers a wealth of experience with aging to help you create tools so you can skillfully manage your aging clients. You will understand your rights and theirs so you can stay safe and keep them safe too.
Dr. Mikol Davis, Psychologist, Gerontologist offers in depth of knowledge about diminished financial capacity in older adults to help you strategize best practices so you can protect your vulnerable aging clients.
They are the authors of "Succeed With Senior Clients: A Financial Advisors Guide To Best Practice," and "Hidden Truths About Retirement And Long Term Care," available at AgingInvestor.com offers accredited cutting edge on-line continuing education courses for financial professionals wanting to expand their expertise in best practices for their aging clients. To learn more about our courses click HERE
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Apr 3, 2017 | aging, aging investor, Alzheimer's disease, diminished cognition, elder investor, elderly, investor, senior investor
Have you ever found yourself in a situation with an older client who can’t seem to remember anything any more? You may have known the client over a number of years and feel responsible. But you are at a loss now. What are you supposed to do with this client? She’s pleasant and just loves you. But you are worried.
You are pretty sure your client is experiencing a slow, but steady cognitive decline. She has a daughter in another state but maybe she isn’t paying attention to what is going on with mom. She has a son she’s not close to, though he lives in the same area she does. You asked her once if she had someone to be her agent, her power of attorney. She hadn’t gotten around to that yet.
No one acts. No one insists that your client choose a relative or friend and sign the Durable Power of Attorney document. She says he doesn’t want to talk about it and you just back off and never mention it again. You suspect she may have Alzheimer’s disease, from your experience with your own family member.
Here is what can happen to your client.
She steadily loses judgment about what is a good thing to spend money on or invest in; therefore, bad decisions happen. We have observed savvy and intelligent clients who were once financially comfortable start falling for obvious scams. They buy worthless coins or stamps or fly-by-night property investments that take their money and disappear. Perhaps no one knows because the elder is in the secrecy habit. Time passes and the client’s cognitive ability declines even more. There is no stopping dementia caused by Alzheimer’s disease. The predators find an easy mark. As long as there is cash to spend or credit cards to run up, the elder keeps getting into deeper and deeper trouble. Unquestionably, financial decimation can result.
These situations are real. Here at AgingInvestor.com, we’re in the consulting business. We have talked to the families of elders who have probably been impaired for years, hearing them say they wished someone had done something sooner. No one but the financial professional knew what the client had nor where his money was going. The family thought the elder’s finances were fine. Now, with too much drained out by excessive giving, the family may well end up having to support their aging relative just at the time when extensive care is needed and the expense of it skyrockets.
How do you prevent the worst? By engaging in discussion with your client’s family or appointed other early in your relationship. If you have an ongoing connection with that trusted person in your client’s life, you stand a better chance of protecting her from dumb and destructive decisions if her mind starts to go, later on in life. Even if you can’t imagine how a perfectly alert, intelligent person could get dementia, it happens to millions of people as they live longer. 5.6 million of them are diagnosed with the disease right now in the U.S. alone. The risk rises with age.
If you have never had conversations with your older clients’ families, now is the time to start. You need to educate your client about the importance of having someone else named by her for you to reach out to if she gets sick or has an accident.
You need to develop the skill of conducting family meetings while each client is fully competent. Even if a client has a few memory lapses now it is not too late to have a meeting with family to figure out the path forward in case of trouble ahead. This is a “soft skill” every advisor needs. If you want to learn how to conduct a family meeting or get better at this, you can learn the techniques in a hour.
Putting these skills to work takes some practice. It is especially important to know what to do when a client’s family is difficult, or there is a history of conflict among them. That’s tricky and you will need some outside help. Get a one hour accredited crash course on conducting successful family meetings by clicking here.
By Carolyn Rosenblatt, RN, Elder Law Attorney, & Dr. Mikol Davis, Gerontologist co-founders of AgingInvestor.com
Mar 20, 2017 | aging, Alzheimer's disease, diminished cognition, financial capacity, senior investor
Diminished capacity is sort of a catchall term that can mean different things. A person can have the capacity, for example to create a will or a trust, but at the same time that person might not have the capacity to understand the risks of buying a complex financial investment. Capacity is on a continuum. The more sophisticated the decision needed the more capacity it takes.
Is there any way to measure capacity? Is there a blood test or any other test? We have a number of things in the medical field that help give us clues and data, but there is no one, single thing that tells us for sure. We can’t see inside a person’s thoughts. What we do have is testing of the various areas of the brain, with standardized instruments, that give us information about how a person thinks. We call it neuropsychological testing.
What is neuropsychological testing?
Neuropsychological testing (using groups of related paper and pencil and verbal question and answer tests) can provide useful information to take the question of capacity outside the realm of speculation. Test data provides numbers, scores, something specific.
This kind of testing can give useful information about which tested parts of a person’s cognitive function do or do not compare normally with the tested function of people of similar age and education. When a person falls below a measure of what is normal, and we have test scores to tell us where and how, it can give us guidance about whether to allow a person to keep making financial decisions.
Testing is underused in helping us find out about a person’s mental capacity for numerous kinds of things, such as memory, following verbal instructions, understanding information and learning a new task. Not enough families know about it and request it and not enough others refer clients to the right source for considering it as a tool to give us more information. Perhaps older people resist it out of fear not “passing the test”. If clients secretly know that they are losing their memory and do not want to be found out, they will strongly resist any suggestion of testing.
What can the advisor do?
If you are worried about a client who seems to be “losing it” and you aren’t sure you have enough information about that, you can suggest that the client get a medical checkup, and that he ask the doctor to check into his memory. This is not a sure path to neuropsychological testing, to be sure. Unfortunately, doctors spend very little time with patients these days and a brief visit may not result in the follow-up testing you would like to have done. But in some cases, clients are willing, particularly when encouraged to do so by a concerned spouse or other family member. In spite of obstacles, know that this objective way of measuring things does exist and it can help everyone involved in the senior’s life.
The client’s primary care doctor may refer your client to a neurologist. The neurologist may prescribe this testing which is done by a licensed psychologist or neuropsychologist, who gives the results back to the neurologist.
You’re not a doctor. But you don’t have to be one to see the red flags of diminished capacity. If you are not sure just what to look for, learn all you need to know in an hour by clicking here. Learning best practices for diminished capacity can help you right away.
By Carolyn Rosenblatt, RN, Elder Law Attorney & Dr. Mikol Davis, Gerontologist co-founders of AgingInvestor.com
Mar 13, 2017 | aging, Alzheimer's disease, diminished cognition, elderly, finances for elders, handling money for aging parents, long term care, seniors finances
All his life Philip worked hard and was successful. He amassed wealth beyond expectations. He gave generously to all of his kids, buying them homes and bestowing money gifts. In fact giving kids money was the only way he really knew how to show he cared. Expressing love in other ways was not his thing. He and his wife lived a luxurious lifestyle: country club, exotic vacations, lavish parties, fancy cars. She ran the house and he ran the flourishing business.
It all looked great when he retired. Until his wife developed Alzheimer’s disease. Things began to fall apart when he was78, with a wife becoming increasingly dependent and in need of care. He wasn’t used to running the house. Things descended into disrepair. Then his vision got cloudy and his hearing started to go.
He expected his adult children to step up and be there. But entitled kids, used to having Dad hand them things without having to work for them, never did take much responsibility. If they needed something, Dad would just buy it for them. Now Dad needed more from them but none of them had ever learned about giving back. Communication was poor. If the conversation wasn’t about money, no one had much to talk about.
Things broke down among the family members. They were never good at talking to each other or to their parents about anything of substance. Now that the parents were both in need of help they could not rely on their adult children to work on household management, or budgeting for care or doing needed repairs.
Philip found himself depressed. He looked at what he had created, all the wealth, all the things and somehow he felt a loss. Financial success had not led to family success.
But he decided to act. He decided that this part of his life was going to be meaningful before his end and he set to work.
He gathered his adult children in his home for a meeting. He was frank with them and revealed how sad and disappointed he felt. He revealed his fears, something he had never done. He told them he expected more from them. The kids looked at each other somewhat sheepishly. They admitted that they had been off in their own worlds. They told their father how much they wanted to be closer but just didn’t know how. They asked him to be open to telling them he loved them. He asked them to express more caring by showing up and pitching in. The paid caregivers for the parents were great but they were not there all the time.
Agreements were made. Some stumbling and awkwardness happened at first. But as the next month passed, the kids finally started to show up with a schedule. And empty talk was replaced by family history, expressions of thanks and acknowledgment to each other of the changes they were making.
The last years for Philip were much better. He was able to express his feelings in ways he had never done before. Maybe age just made him not care about what people might think. It had a profound effect on his family. All of them grew closer, in spite of their differences. They learned to accept each other far better, led by Philip.
Philip passed away in peace at age 84. His story is one to share with any child who grew up in wealth and any parent who did not expect enough of the kids in a younger day. Adult children can learn to give more to parents as they age and become more vulnerable. Parents can learn to express love and affection apart from cash and objects. It’s not too late in your advanced years to change for the better.
Carolyn Rosenblatt, RN, Elder Law Attorney, & Dr. Mikol Davis, Gerontologist co-founder of AgingInvestor.com
Feb 20, 2017 | aging, Alzheimer's disease, diminished cognition, elder investor, elderly, financial advisors, handling money for seniors, senior investor
Every profession is facing a common dilemma: what to do about your own impaired colleagues. When there is no mandatory retirement age, there is no one to say, it’s time to quit. Do you think a colleague has dementia?
People are living longer than ever, continuing in their work longer than ever and sometimes they start to “lose it” before they decide to retire. As none of us are absolutely immune from Alzheimer’s or other dementia, or anything that causes cognitive decline, we all need to consider what we would want if it happened to us.
Would you want a friend or colleague to tell you that you’ve got a problem with memory and maybe it’s time to hang it up and rest? Would you want your legal department to embarrass you and tell you to stop handling other people’s money because everyone knows you’re no longer competent? It’s a frightening thought.
Longevity can be great, but not when you are impaired. As a consultant with expertise in aging, I have seen cognitive impairment to a dangerous level in numerous professionals. One was a trial lawyer colleague, high profile and famous. No one stopped him from practicing law until he had nearly destroyed things. I have seen it in a business owner who founded his company and had been going to the office for 50 years. He was kicked out of his favorite restaurant and was physically harassing employees, his Alzheimer’s had gotten so bad. No one made him stop until outsiders (myself and my partner, Dr. Davis) came in and created a plan to prevent him from entering the office again.
I have seen a judge with dementia fall asleep on the bench in the middle of lawyerly argument in court.
I spoke with the sister of a former bank president who had become a financial advisor. He had lost most of his wealth because he could no longer keep track of it and he was being taken advantage of. He was living in squalor before family intervened. During that time, he was still working as a wealth manager.
These are real cases. The message is that we need a strategy and a policy in any office with advisors who work into their senior years, to address the possible impairment that might occur.
There is a way to do this so as not to needlessly embarrass the affected person. There is a way to require that a person with memory loss confirmed by colleagues should step down and give up managing anyone’s assets. This should thought out in every office. Clients need protection. It takes construction of a reasoned policy to address the impaired advisor confidentially by first requesting retirement and then mandating retirement if the advisor refuses to go along.
Pilots have a mandatory retirement age of 65. That would not work for many other kinds of professionals. But something has to be done. If you want some concrete action steps to put in place in your office, you will find them in our book, Succeed With Senior Clients, A Financial Advisor’s Guide to Best Practices. Get your copy today by clicking here.
By Carolyn Rosenblatt, RN, elder Law Attorney, & Dr. Mikol Davis, Gerontologist co-founder of AgingInvestor.com
Jan 12, 2017 | aging, aging investor, Alzheimer's disease, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, financial elder abuse, financial judgement, handling money for seniors, investor, scammers, senior citizen investor, senior investor, seniors finances, wealth transfer
A Lurking Danger You Need To Warn Your Clients About
There is nothing wrong with putting on a dinner or lunch for prospects while you give them a pitch about a product you like. But unfortunately, a free meal brings people out, especially older folks and they become sales targets for unscrupulous people. FINRA, in seeing how these seminars are too often a vehicle for fraud and exaggeration preying on unsuspecting elders, has issued a warning to seniors. You can be the messenger to provide a heads-up for your own clients about this.
Too many unethical people are using the setting of a free lunch to sell inappropriate investments. The annuity scams are notorious for this. And the scammers love impaired elders who are so easy to fool.
As people age, about a third of them will develop Alzheimer’s Disease. Most of the victims of this insidious disease are women. When the earliest signs of the disease emerge, research tells us that impairment of financial judgment is already underway. The predators have no trouble talking a senior who lacks the ability to see a scam coming into buying whatever they’re selling. It happens every day, not just in the free lunch seminar.
FINRA’s alert for investors about “free lunch” investment seminars is specific. Your older clients might not get that alert unless it comes through you. Here’s the gist of what FINRA wants seniors to know.
The FINRA Investor Education Foundation researched people over 40 to find out how many have been solicited with offers for a free meal seminar. 64 percent of respondents had been solicited, which means that the odds are, your clients will be among them. What the research also showed was that half of the sales materials contained claims that were apparently exaggerated, misleading or otherwise unwarranted. 13 percent of these seminars appeared to involve fraud, such as unfounded projections of returns and sales of nonexistent products
Slick and unscrupulous “advisors” and sellers have been at this for years, pitching unsuitable products. They’ve stepped up their game as the population ages. They want every target they can get. An easy way to warn your clients is to give them a one-sheet Client Update we have created for you. Get yours here or by clicking below and send it out to everyone in your book of business. Some of them are older clients and some have aging parents or grandparents who need to know about this.
You’ll look good by showing that you care about what happens to your clients and they’ll appreciate the message.
You can improve your expertise with your older clients in a book written especially for you, Succeed With Senior Clients, A Financial Advisor’s Guide to Best Practices. Get your copy by clicking here.
Carolyn Rosenblatt, RN, Elder Law Attorney, AgingInvestor.com and AgingParents.com
Oct 13, 2016 | aging, aging investor, Alzheimer's disease, elder investor, financial elder abuse, investor, scammers, senior citizen investor, senior investor
Lots of sellers of products are trolling for new clients, new prospects and older investors with substantial assets. They use a proven technique that could trap your client. You can educate your clients early and often about the technique, which is the “free meal educational seminar”. These seminars are not, by themselves, a bad thing. Perhaps you’ve even put one on yourself, or considered doing so. But too many unethical people are using these to sell inappropriate investments to older people. The annuity scams are notorious for this
checker informative hints.
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Sep 28, 2016 | aging, aging investor, Alzheimer's disease, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, handling money for aging parents, handling money for seniors, senior citizen investor, senior investor, seniors finances
The Inner Workings of Clients’ Financial Decision-Making Ability
Whether you have a lot of older clients or just an occasional one, it’s critical for every financial professional to understand whether a client can safely make decisions about money. It might seem straightforward when your client is able to carry on a conversation, talk about current events or make a joke. You assume she’s fine, but it’s not that simple. Conversational ability can mask a true disabling brain condition we call dementia. It does not reveal itself easily, particularly at the earliest stage.
The insidious onset of Alzheimer’s disease or other dementia can sneak up on a client and affect the ability to exercise judgment about finances. To help your clients, you need to know the red flags of diminished capacity, a basic skill anyone can learn. You can get a free checklist to help your do that at AgingInvestor.com. But beyond that, it is critical to understand just how complex our capacity to make safe financial decisions is.
Research shows us that with the most common form of dementia, Alzheimer’s disease, financial capacity is moderately impaired even at the very beginning of the disease process. By the time a client gets to the middle stage when symptoms are more obvious she is already severely impaired in her financial capacity. No one should be making independent decisions about finances with severe impairment of this capacity.
This financial ability is defined as “the capacity to manage money and financial assets in ways that meet a person’s needs and which are consistent with his/her values and self interest.” It is broken down into nine areas or “domains”. These include cash management, basic money skills, bill payment, and financial conceptual knowledge. The ones an advisor is most likely to see and assess are knowledge of personal assets and estate and investment decision-making.
You may not discuss with your client whether he understands what a money market is but you will be ethically obligated to discuss the pros and cons of various suggested investments and the effect they will have on your client’s overall financial picture. This is the area where older clients with impairment will not be able to process the information you are offering them. When they are affected by brain disease like Alzheimer’s (over 5.5 million people are diagnosed now, with that number expected to rise dramatically) they will not be able to “get it”. You are on dangerous ground if you proceed to recommend or sell any financial product in the face of serious doubt about a client’s financial capacity.
Granted, many financial products are complicated and the average person may not grasp all the nuances. But when you believe your client is probably impaired and cannot understand any carefully worded explanation you give, you are exposing yourself to liability by going ahead with transactions for that person.
How could this get you in trouble? All of the regulatory agencies want you to keep your older clients safer and they have issued guidelines for how to do that. All of them want you to know the red flags of diminished capacity. Financial capacity is the most complex of the kinds of capacity a person can have. If you do not involve a third party to assist the client with financial decisions, you risk a bad outcome and regulatory prosecution. You also risk the heirs coming after you in civil lawsuits, charging that you should have known what everyone else knew at the time, that their mother/father was impaired and you should never have sold that, done that or caused the bad outcome.
This is a very real problem among financial professionals– the failure to recognize and act on the warning signs of diminished capacity. If you are managing a retirement account for that client, beware even more. Acting in the client’s best interest means that you need to understand when the client’s financial decision-making capacity is going downhill.
This article just touches on the complexity of financial capacity. Everyone deserves to have a deeper understanding so you can avoid prosecution or questionable accusations about your recommendations or the client’s investments. When the investment an impaired client went for at your suggestion loses money, you can bet someone will blame you if they can. Don’t set yourself up. Don’t make it easy for them to attack you.
The way around this risk of working with an impaired client is to have your client’s permission to involve a trusted third party as a surrogate decision maker for all financial transactions. How you get that permission is the subject of another article and it needs discussion. In the meantime, take a deeper dive into the nuts and bolts of financial capacity in Succeed With Senior Clients: A Financial Advisor’s Guide to Best Practices, available here. Chapter Two explains all you need to understand about the components of financial capacity. And the privacy question and how to get that trusted other involved is answered in the book too.
By Carolyn Rosenblatt, RN, Attorney, AgingInvestor.com
Aug 31, 2016 | aging, Alzheimer's disease, elder investor, elderly, finances for elders, financial advisors, handling money for aging parents, handling money for seniors
Are Advisors Miscalculating Retirement Medical Costs?
According to CNN Money, a 65-year-old, healthy couple can expect to spend $266,600 on out of pocket costs for Medicare premiums in retirement. If that’s the advice you give clients about what needs to be set aside for medical expenses you’re missing some major facts.
Medicare premiums are a relatively small part of what it can cost when health issues arise as people age. No one likes to discuss the subject of possible cognitive impairment, but it has to be done. We see it as the financial advisor’s responsibility to bring it up, include medical expenses in the overall financial plan and get the truth out on the table.
According to a Wealth Management article on August 30, 2016, Fidelity Investments did a survey of over 350 advisors and found that 96 percent felt unprepared to help clients who had Alzheimer’s disease. This is in contrast to the reality that a person’s chances of developing the disease are at least one in three from age 85 and above. And we are living longer than ever in history. More centenarians, more Alzheimer’s.
What is the real cost of caring for a person with Alzheimer’s? I interviewed a high end home care agency owner about this question. Many HNW people do not have long term care insurance as they plan to pay for whatever they need out of pocket. Most are not aware of the cost of best quality 24/7 care they could need with their own longevity. In our work at AgingInvestor.com, we have encountered this scenario and have seen what best quality care looks like. It’s not your average home care agency.
The cost for caring for one person at home with Alzheimer’s from that agency is $300,000 per year. The workers are specially trained and well supervised. A care manager develops a plan and the workers take their shifts, prepared to deal with all manner of difficult dementia-related behavior, including violent acts and words, wandering out the door, refusing to bathe as well as those who are unable to express themselves verbally any longer. Non-specialty home care agencies do not accept this degree of client behavioral difficulty out of fear of their workers being harmed.
The ultra HNW client can pay for these costs but for everyone else, the expenses incurred with care for a progressive disease that escalates in difficulty over time could be devastating. The cost of home care is in the category “long term care” an often poorly understood subject among those outside the health care and insurance fields.
If you have clients who are at retirement age or are retired, it is a necessity that you educate them about these risks to their savings. When you work with them on their plans, you need to include the possibility, very real, that one or the other of a retired couple could develop dementia and need expensive home care. If you think they should just go onto Medicaid, think again. Every state has different rules but in all states a person can’t have much left in the way of assets and savings in order to qualify for Medicaid. And most importantly, people typically want to stay at home as they age. The quality of care they are likely to receive on Medicaid for long term Alzheimer’s care is low, and likely to be in a nursing home. No one wants that!
The takeaways
- In developing retirement plans for clients consider the risk that your client may develop Alzheimer’s disease or related dementia. Bring it up and talk about it.
- Plan for significant savings to be set aside in case care is needed, not just for Alzheimer’s but for any long term condition or disabling illness requiring help. Use real numbers, not vague assumptions.
- Do not underestimate the real costs of caring for a person with this kind of dementia. It can last as long as 20 years. Do the math for your clients and show them what they would need to be cared for at home with a long term expensive illness like Alzheimer’s.
The responsibility to know about long term care costs is yours. To learn more about Alzheimer’s and how to spot the warning signs, get a free checklist to get you started at AgingInvestor.com.
Jun 15, 2016 | aging, aging investor, Alzheimer's disease, diminished cognition, elder investor, finances for elders, financial capacity, handling money for aging parents, handling money for seniors, senior citizen investor, seniors finances
Capacity and competency are terms loosely thrown around these days. How can you tell if your client has financial capacity? This kind of capacity is the most complex and requires intact judgment. You must have a good working knowledge of it or you could come under scrutiny for giving advice or selling products to an individual who is impaired. One thing is certain: you can’t tell if your client has the capacity for making financial decisions just from a quick call or social chat when ominous signs already exist suggesting that some impairment is present.
What do we know about financial capacity? It is defined as “the capacity to manage money and financial assets in ways that meet a person’s needs and which are consistent with his/her values and self-interest.” This seems straightforward, but it is not. Some people develop brain disease as they age, and with dementia, the erosion of mental capacity can take place over years. During the earliest stages of dementia, the brain cells are being damaged by the disease process, but the person has other brain cells “in reserve” and can still function in many areas without impairment. However, research has found that for people who are developing Alzheimer’s disease, financial capacity is already impaired even at the beginning stage.
If you have an elderly client who is still in charge of his finances, not unusual at all in our aging society, be aware that some clues may point to loss of financial judgment. To see those clues, you will need to observe your client over time and document the warning signs of diminishing capacity. Overall diminished capacity often means that a person does not have financial capacity any longer.
Financial capacity is divided into nine distinct areas. All nine must be intact for a person to have adequate judgment to act in his own best interests. One of the most important of the nine is the understanding of investments.
The person with this area intact is able to engage in and actively participate in developing an understanding of any financial investment decision. Knowing the value of a proposed transaction and the attendant risks are part of this area of competency.
If this sounds complicated, it is. You may be wondering if any of your clients are essentially competent in all nine areas. Some are not. Most people, if you wanted to take the time involved to patiently explain things like risk of an investment in simple terms, would get it. But when a client can’t tell the difference between a twenty-dollar bill and a five-dollar bill, that client is not competent financially, even if he can carry on a perfectly normal conversation about his favorite sports team or politics.
One clue to ask your client about is whether she is able to keep track of and pay all her own bills. If family or any other helper are doing this for her there is a reason. That may be that she forgets bills or pays them twice. That is a sign that financial capacity may be eroded. You need to take the next step and look at other areas of financial capacity before your client makes any further financial decisions.
If you aren’t sure what the nine areas of financial capacity are and you want to find out about this, you can do that fast in a chapter of our book, Succeed With Senior Clients: A Financial Advisor’s Guide to Best Practices. The chapter that will quickly give you the answers you need is “Nuts and Bolts: What Are the Components of Financial Capacity?” Get your copy today by clicking HERE.
By Carolyn Rosenblatt, RN, Elder law attorney, AgingInvestor.com
Jun 15, 2016 | aging, aging investor, Alzheimer's disease, diminished cognition, elder investor, elderly, financial capacity, senior citizen investor, senior investor
Aging clients are an inevitable part of the landscape these days. People are living longer than ever. That’s great, but age brings risks to one’s mental capacity. And those risks put a burden on you the business professional to be aware of where to draw the line. When is it just not safe to rely on what an older client tells you to do?
Bear in mind that by age 85 one in three people will have Alzheimer’s Disease. This brain-destroying and progressive condition comes on slowly in most folks and begins to take its toll of judgment about financial matters quite early in the disease process. The person might seem perfectly fine in social discourse. That is not a guarantee of financial capacity.
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Mar 25, 2016 | aging, aging investor, Alzheimer's disease, diminished cognition, elder investor, elderly, finances for elders, financial capacity, financial elder abuse, handling money for aging parents, handling money for seniors, investor, senior citizen investor, senior investor, seniors finances
Have you ever wondered about one of your
own client’s capacity for making financial decisions? Professionals who directly or indirectly sell services and products to aging people may not be clear about financial capacity. It is indeed a complex thing, and one should not underestimate how difficult it can be to make a determination about whether a client is impaired. Does the client seem “out of it” sometimes? Forgetful? Is he acting strangely? Maybe you just dismissed it if you noticed those things. You may have thought, “he’s just getting old”. Maybe you didn’t think it was any big deal. But was it? Diminished capacity may not be obvious at all. Small warning signs can be missed. And every warning sign is a clue. The clues can mount up and paint a picture. You need to be able to see it. And first you need to know what to look for in your aging clients. How do you decide whether someone has diminished capacity for financial decisions? Ultimately, the question of capacity is a
legal decision, aided by lawyers, medical professionals and sometimes by judges. And lawyers also have a difficult time seeing the grey areas and the nuances of thinking that comprise financial decision-making abilities. One thing every professional working with seniors should know are the warning signs of dementia. If you see enough of these warning signs, your client is likely to be impaired in her financial judgment Excellent information for the public is available on the Alzheimer’s Association website at
alz.org. Memory loss is often the first sign of dementia. There is a difference between memory loss a non-demented person experiences and the memory loss that evolves in to dementia. As an example, forgetting a person’s name is common and we usually remember the name later. (Does this ever happen to you, “it’s on the tip of my tongue, but I can’t remember right now”?) People who are developing dementia don’t remember these things later. Their short term memory is eroding steadily. They forget what was said in the middle of a sentence. They forget appointments. They don’t remember that you spoke with them yesterday.
Confusion is another sign. They may forget where they are going or get lost. They may exhibit unusual behavior from what is normal for them. These are the kinds of things that tip you off that a cognitive problem is looming. A person who shows you these signs may be impaired for making safe financial decisions. Beware of drawing general conclusions about dementia or Alzheimer’s Disease from a single case with which you may have personal experience. If your client is not doing what your grandmother with Alzheimer’s did, you can’t be certain that your client does not have dementia. Have you as a financial professional had any personal experience with dementia in a family member or client? Let us know about what you did to handle the issues affecting so many. We welcome your input.
Need a quick checklist to use to identify the 10 red flags of diminished capacity in your clients? Get yours now by clicking below. It’s free. Click here to get your free downloadable Checklist “The 10 Red Flags of Diminished Capacity” Dr. Mikol Davis & Carolyn Rosenblatt, R.N., Elder Law Attorney
Jan 16, 2016 | aging, aging investor, Alzheimer's disease, diminished cognition, elder investor, elderly, financial capacity, investor, senior citizen investor, senior investor, the gray zone
“Best Practices For Managing Clients With Diminished Capacity”
Summary of course:
Our population is living longer than ever. The risk of dementia rises with age. That means that most of us are going to encounter problems of aging in our clients.
We need to recognize the red flags of impairment that will affect financial capacity. These include:
- Cognitive signs, such as memory loss and difficulty understanding the conversation
- Communication, calculations and orientation problems
- Emotional signs that are out of character for your client.
It is essential for every financial professional to understand the complexity of financial capacity and appreciate how many parts it has. There are 9 domains of financial capacity. You cannot determine if a person is impaired or not just by talking on the phone with her or having a brief meeting in which you give information.
A normal social conversation with the client is not a measure of whether or not the client has diminished financial capacity.
The more aware you are as a professional, the better chance you have of protecting your client from loss and protecting yourself as well.
Learning objectives:
- Prepare yourself for the wave of aging clients by understanding the demographics of our aging population and the risks of dementia associated with aging.
- Understand the 9 domains of financial capacity and learn how to spot problems with any one of them.
- Be able to identify red flags of impaired cognition that should prompt you to act.
- Develop a personal plan for what to do when you see warning signs of diminishing financial capacity
Aug 28, 2015 | aging, aging investor, Alzheimer's disease, diminished cognition, elder investor, elderly, finances for elders, financial capacity, financial elder abuse, handling money for aging parents, handling money for seniors, scammers, senior investor, seniors finances
The professional crooks are at it again. The U.S. Attorney’s office recently charged six defendants with yet another telemarketing fraud scheme targeting the elderly. The allegations are that the con artists sought out and preyed upon the elderly through their lottery scam. We see these reports often in the news, to the point that they seem very repetitive. The characters and the amount of money stolen from elders changes but the methods are the same over and over. They caught the scammers this time and charged them with theft of a total of $400,000 from various victims. That’s the least of it. Other scams bring in millions from their vulnerable victims.
Why do elders fall for these things? Why don’t they get that the “Nigerian prince” or the “Jamaican Lottery” are clearly bogus and not to be trusted? (more…)
May 5, 2015 | aging, Alzheimer's disease, diminished cognition, elderly, financial elder abuse, senior investor
This really happened. If you had this 91 year old client, what would you do?
Emma liked to play the sweepstakes. But her memory was starting to decline. A lot. When it came to her bank account, she forgot to check her statements as she had always done. Odd withdrawals began. Hackers had gotten in. Before she realized what had happened, someone had withdrawn a total of $40,000. It was time for her family to act. Emma was a planner. She had trusted her son and put his name on her trust, her durable power of attorney and her health care directive. But her son needed cash. He became an opportunist.
She had a daughter too, but she was old fashioned and thought the man should take care of the money. Her son, Jonny knew his mother needed to stop handling her finances. So, he rushed her off to the clinic and told the doctor what happened with her bank account. After 15 minutes, the doctor, without doing any psychological testing on Emma decided that she was no longer capable of handling her affairs. He and another clinic doctor signed a handy form letter to that effect and gave them to Jonny. Jonny then went to both Emma’s banks with a copy of the trust appointing him to take over when Emma could no longer handle her affairs. He produced the two form letters from the doctors and was instantly given access to Emma’s account. He withdrew all of her cash, a total of $20,000.
Jonny then informed Emma that she was coming to live with him. He would charge her $1000 a month to live there. Emma was very angry. She admitted that she could no longer keep track of finances, but she did not want to give up her home, her community and the things she loved to do. She was alert, and knew what losing her home would mean. Jonny worked full time. His idea of a life for his mother was to take her to adult day services early every morning and leave her there until after 6pm when he returned from work. She wanted none of it. She felt betrayed, duped into giving Jonny all the power and furious that he could run her life without any interest in what she wanted.
There is danger in assumptions. Loss of the ability to handle finances safely does not mean in every case that a person can’t make decisions about where to live, what she wants and who should be in charge of her affairs. Emma had the strength to stand up to her son. She contacted us with her daughter at AgingParents.com. Was Emma too impaired to change her trust? The only way to safely answer this controversial question was to have Emma undergo psychological testing and some interviews with Dr. Davis, my partner here.
Testing was done and two interviews on different days were conducted. Result: Emma had mild cognitive impairment and still had the ability to decide who should handle her affairs. She did indeed have significant short term memory loss but many of her other abilities were intact. Her daughter then took her to a local attorney and she immediately changed her trust to appoint an independent, licensed fiduciary to be her new trustee. I doing so, Emma removed all power from her son. She put her daughter on the trust too, but only for oversight of the fiduciary. The fiduciary would have complete decision making ability as to how Emma’s funds should be spent. And she gave authority to her daughter on her healthcare directive to decide where she would live, as she knew that her daughter would honor her wishes to remain in her home, with a helper, for as long as possible.
The risk of making the assumption that loss of capacity for financial decisions means total loss of the ability to think or decide everything else can lead to disaster. Emma was nearly kidnapped by Jonny who was determined to make his little scheme work, all to his benefit ($1000 a month). With total power in his hands, he likely would have immediately sold her house as well. She was fortunate to have escaped a fate that would have made her both frustrated and miserable.
The takeaway here is to beware of too hasty conclusions that an aging parent is completely incapable of decisions other than financial ones. Financial capacity may be the first intellectual ability to go when impairment begins but it is not a sign that the person has no ability left for anything else. While it is true that many impaired elders grossly overestimate their own ability and insist on living in unsafe conditions, some elders are not as impaired as circumstances might suggest. Psychological testing can provide important objective data to help families make the right choices. Emma was willing to do whatever it took to stay in her own home. At 91, we at AgingParents.com thought she deserved that dignity, at least. Emma has regained her sense of control and we’re glad for her.
Apr 13, 2015 | aging, Alzheimer's disease, diminished cognition, elderly, finra
Thwarting Elder Abuse: Who Should You Call When You Suspect It?
Imagine this: it happens. Abuse seems to be going on right in front of you with an aging client. A family friend is manipulating her, and you’re pretty sure about that. What would be the first thing you could do?
Perhaps you’ve taken a class or training in senior specific issues like dementia. (You’ll be especially knowledgeable if you’ve gotten training with our Aging Investor.com webinars!) You’re determined to stop it if you can.
You may think of calling Adult Protective Services, but you also know that APS is limited, and addresses situations that are criminal in nature. Sometimes when an elder seems to be going along with the abuse, APS may have its hands tied. For example when a friend close to the elder is pressuring an elder into giving him large amounts of cash and draining the elder’s bank account, the elder may not show concern. The aging person could be subject to undue influence or perhaps intimidated and afraid to say “no”. When the victim seems willing, you have to look beyond APS to try to thwart the abuser.
One thing every professional needs to have in every file is a list of contacts your client has provided to you, as you have requested, to use when something seems amiss or when your client shows signs of memory problems. You need specific written permission from your client to communicate with the people on the list. The list should include trusted family members, the client’s estate planning attorney, a long term friend, clergy or trusted other professional such as the client’s accountant.
When you have the client’s permission to contact these individuals, you can start asking questions about the suspected abuser. If the abuser is someone on the list, ask everyone else their impressions. People do change and financial desperation or greed can cause someone to misuse the trust the elder has in them.
Thinking it’s really none of your business that your client has a person who is taking advantage of her is not the answer to our massive problem of elder abuse in our country. We all must do something when we can. We have to speak up, get nosy, ask questions and take an active role. In asking the client’s list of contacts about the issue, you may learn a lot. Perhaps the “friend” has a gambling or drug problem. Perhaps your client just lost a spouse and is very vulnerable. Others on the contact list who may not see what you see can get involved in looking into the situation after becoming aware of your suspicions. Working together, a group can present a united front and create a strategy to stop the thefts and manipulation.
A very helpful resource for any professional is to search for and know competent elder abuse lawyers who have the skills, knowledge and will to step in and try whatever is possible to protect the aging person or her heirs. You can find one by searching your local county Bar Association website. Most have a directory or lawyer referral service. Lawyers are listed by specialty area. For example, in San Francisco, the Bar Association has a listing for the category of elder abuse. Under it there is a sublisting “Financial Abuse by Family or Friends”. That category will likely lead to someone who can help evaluate a case.
When the abuser has talked the elder into changing her will and disinheriting her children in favor of the so-called friend, that gives the elder abuse lawyer something to work with. Elder abuse litigators will generally listen to a possible case and give you an opinion about whether it is a matter they can handle. And aggressive proactive steps can be taken to thwart an abuser determined to clean out the assets of a supposedly willing victim.
If the abuser is a bad apple within the financial services industry, there are specialty lawyers who prosecute claims handled in FINRA arbitrations. They can be found through the Public Investors Arbitration Bar Association.
Not every senior who is being abused financially is able to see it. But those who have a role in the elder’s life can do much to at least try to stop the abuse. Loss of financial judgment is a reality that can occur as people age. If we don’t want to see more destitute seniors who were victimized, think of how you can help. Ask questions, call contacts and refer to an elder abuse attorney if you see this problem.
Until next time,
Carolyn Rosenblatt, RN, Attorney, Mediator
Dr. Mikol Davis, Psychologist, Gerontologist
Feb 3, 2015 | aging, aging investor, Alzheimer's disease, diminished cognition, elder investor, elderly, financial elder abuse, senior investor
Prior studies put the extent of financial elder abuse at $2.9 billion a year. A recent study finds that the actual amount stolen from elders is $36.48 billion a year. It’s no wonder that some call financial abuse “the crime of the century”. And yet, too many financial professionals see the warning signs and don’t know what to do or think that privacy concerns prevent them from doing anything.
I hope I can change your mind about the privacy issue. It should not stop you from doing the right thing.
According to the report of this recent study by True Link, a financial services company, the design of this survey was guided by recommendations of an expert panel of fraud researchers convened by the Financial Fraud Research Center at the Stanford Center on Longevity. That gives it credibility. No one has yet commented on any flaws in the study and I cannot say if there were any specific shortcomings, but the figure of over $36 billion is indeed startling.
Some of the most surprising study conclusions are that seniors who are younger, urban, and college-educated lose more money than those who are not. That somewhat defies the stereotype in other research suggesting that the isolated, lonely and unsophisticated senior would be the most vulnerable to loss. Another surprising finding is that legal but misleading tactics used to get a senior’s permission to take money from them leads to losses of $16.99 billion per year. The senior may be tricked into giving consent to credit card charges, for example and not realize how deeply or how long that consent ends up costing them.
So it’s not just the unsophisticated investor who gets taken by scammers. It can easily be your well educated client who thinks he knows more than you do and takes very foolish risks because he feels so capable of making decisions. Maybe he is impaired and doesn’t know it.
Or she gets sucked into long term contracts for things she doesn’t want or need. Once she gives approval for a credit card charge, she may be stuck with it. The study shows that people who start out losing a little each year tend to suffer increasing losses over time. A $20 a year loss can turn into a $2000 a year bilking and so on.
One thing every financial professional can do now is to develop a privacy waiver document specific to your organization or your management as an independent advisor that allows you to contact a trusted other whom your client has chosen, in the event that you see some red flags suggesting elder financial abuse.
If you’re unsure about what will give you a legally appropriate form for doing this, we can help you create one at AgingInvestor.com. Education and prevention of elder abuse are our mission. Everyone’s take on privacy may be different, but one thing is clear: you can’t continue to hide behind privacy as an excuse for doing nothing while your very own clients may be victims. Anything from telemarketer scams to undue influence by family to abuse by slick and unscrupulous salesmen of financial products that exploit older investors are everywhere around you.
One thing the study doesn’t explain directly is that it is also up to families to monitor their loved ones. True Link offers a product that allows monitoring of all an individual’s accounts in one place. Great, but what if the aging person won’t let family have access to the account information? That is a major issue. If you, as an advisor want to get involved, you can work with your client early enough that you have a clear policy in place when the time comes that your suspicions of abuse are raised. With a privacy waiver, you have the right to contact family or the person your client appointed to get the ball rolling on stopping abuse.
Caring and honest family need your help as a trusted professional to keep them alerted to any signs of trouble with an elder’s judgment about financial decisions. Some families are scattered all over and they may not have contact with your client about finances. You may not be able single-highhandedly to wipe out every abuse problem, but it seems clear that if you develop a clear policy for reporting danger signs and your suspicions of abuse, you can change the status quo.
You can sharpen your knowledge of an aging client and their financial capacity by completing one of our 6 C.E.
courses at AgingInvestor.com. Try the one on
understanding the signs of diminished capacity. Sign up today and get an hour of CFB accredited continuing education. Click
HERE.
Until next time,
Carolyn Rosenblatt, RN, Attorney
AgingInvestor.com and AgingParents.com
Nov 22, 2014 | aging, aging investor, Alzheimer's disease, diminished cognition, elder investor, elderly, financial elder abuse, investor, senior citizen investor, senior investor
We know that abuse of seniors is a growing problem. Based on information from the National Center on Elder Abuse, the majority of abusers are family members. However, only 44 out of 1000 instances of abuse are reported to authorities. Why aren’t more cases reported to the very authorities capable of stopping the abusers?
It seems to me that most family members are simply unwilling to “rat out” another family member even when they know that abuse is going on. When it comes to the seniors themselves, there is shame and embarrassment associated with being taken advantage of by someone close, especially someone they surely trusted. There is hesitation and fear. They want to talk about it but not do anything about it. The reluctance to report the abuse to Adult Protective Services is not limited to the seniors who can’t bear to call the authorities about a son, daughter or other relative.
I recently received a call from a distressed sister of a brother that she was convinced was stealing from their parents. He had total control over their parents, one of whom had dementia. His parents had appointed him as the agent on both the Durable Power of Attorney and the Advance Healthcare Directive. This gave him the legal authority to make both financial decisions without being accountable to anyone else and all healthcare decisions as well. I listened patiently to all the reasons she thought her brother was taking her parents’ money and using it for himself. I asked her if she had called Adult Protective Services.” No”, she said. When I asked why not she said “I don’t want to get my brother in trouble”. Where is the logic in that?
In another case, the elder herself had called. “I gave my grandson a big loan and he hasn’t paid it back,” she said. “But now I need the money to live on”. She described how her favorite grandson had taken title to her mobile home and gotten a loan, even after she had “loaned” him most of her savings. I explained that her chances of getting paid back were probably not very good, but the least she could do was to report what had happened to authorities. I advised her that taking a “loan” from an 80 year old and not paying it back would likely be considered elder abuse and it should be reported to APS. “Would my grandson go to jail?” she asked. I told her I didn’t know but it can happen when someone has committed this crime of elder abuse. She said, “I don’t want my grandson to go to jail”. Unfortunately, I am sure she did not follow up or do anything more about the problem.
Seniors like the 80-year-old woman are typical of why elder abuse does not get reported and therefore prosecuted more often, even when a family member is well aware of what is going on and knows that it is wrong. They would rather suffer impoverishment than be the one to report abuse. In fact, these same victims may refuse to testify against a relative who has abused them, even when these cases are prosecuted. Charges may not stick when the victim is unwilling to testify, unless there are independent records to prove the case in court.
It is as much a problem of our emotions and fears as it is of the wrongdoing itself. We somehow justify the actions, we look the other way or we fear what justice will do to our abusive relative.
I wonder, where is the anger at a crime against a person who is easily taken advantage of by the abuser? Where is the advocacy for the vulnerable person who is also our relative? Why are we remaining silent in this growing, $2.9 billion dollar a year problem?
I would be willing to guess that there is someone reading this whose client has a financial abuser in a their family or knows of a family where this has taken place. I urge you to speak up. To my knowledge, you can remain anonymous in your reporting, just as you can with any crime. Whether or not the criminal justice system can prove the crime is not your problem. It is your problem to carry the knowledge of financial abuse with you and to do nothing to protect the elder. One day it could be you who is victimized.
We are all encountering an aging population and the crime of opportunity of abusing elders is not going away. I am hopeful that we will show enough concern, enough responsibility and enough guts to do the right thing when we see a wrong that needs our attention.
Aug 4, 2014 | Alzheimer's disease, diminished cognition, elder investor, elderly, investor, scammers, senior citizen investor, senior investor
Your elderly clients are ripe for scammers to pick. How is it that these clients, some very intelligent and accomplished, fall for these obvious ripoffs?
In a typical example the U.S. Attorney’s office charged six defendants in a fraud scheme targeting the elderly .This time it was a lottery scam involving theft of a total of $400,000 from various victims. . We see these reports often in the news, to the point that they seem very repetitive. The characters and the amount of money stolen from elders changes but the methods are the same over and over. Other scams bring in millions from their vulnerable victims. The thieves in this case were caught. Most are not.
Why do elders fall for these things? Why don’t they get that the “Nigerian prince” or the “Jamaican Lottery” are clearly bogus and not to be trusted? Isn’t it obvious?
There are various reasons why elders are such easy prey for these thieves. One root cause is isolation and loneliness, a fact of life for many seniors who are not closely monitored by loved ones. A pleasant, slick professional calls on the phone in a friendly and engaging manner and traps the vulnerable elder with kind words, attention and a feeling of connection. The thieves are trained and smart. They smell the kill. They know exactly what to say to get the elder to trust them.
Another very important factor is diminished cognition in the elder.The crooks know that if they have a thousand names purchased from magazine subscribers, U.S. lottery or state contests and they know the ages of those on the list, that their chances of finding victims are excellent. Some of the elderly on the lists will be just impaired enough that they can’t see a scam coming. At least a third of those aged 85 and above have dementia in some form. Scammers simply buy the lists and start calling. And there are no restrictions against selling the names and personal information such as ages, phone numbers, addresses, etc.to the highest bidder. They can acquire the name and age of every subscriber to The Reader’s Digest, for example, providing fertile ground for seeking victims. Research into the impairments of Alzheimer’s Disease tells us that financial judgment may be the first kind of judgment to erode, and it is not obvious at the beginning stages, though the impairment is significant.
Another reason why seniors fall for these ripoff schemes is that they feel financially insecure. If there is a downturn in the market or whatever investments an aging client holds, he may feel a need to get easy money or a high return, and when a con artist offers that, he’s likely to fall for it. The right combination of loneliness, isolation, early dementia and fear make him an easy target.
Can you do anything about the problem?
I think you can. If you do care about your aging clients and want to remain a trusted advisor, a first protective step is to be aware of the risk of scams targeting the elderly. At AgingInvestor.com, we recommend developing a policy for all aging clients that includes staying in more frequent contact with them than you are required to do. Here are 3 things that sort of policy might include:
1. Schedule monitoring of how the elderly client is doing in general on a regular basis, the frequency of which you determine by thoughtful planning. (Quarterly? less often?) Check in by phone. Reassure your client when investment losses happen, and ask how he’s feeling and what he’s doing in his personal life. This does take time, but it can be very helpful to renew the client’s trust in you and remedy somewhat the feelings of isolation that can accompany aging.
2. Pay particular attention to recently widowed aging clients. The aftermath of loss of a spouse can be a dangerous time because of grief. That makes people vulnerable to begin with and when you add some cognitive impairment to the mix you can see that thieves love the opportunity to cultivate these elders. Consider that deaths are public records and that scammers can easily collect lists of the recently widowed to pursue with their bogus offers. They may start the conversation by expressing their phony empathy for the person’s loss and work on a relationship after that.
3. Educate your client. She may have heard of scams and have a vague understanding of how they work, but not be ready to spot one when the phone rings with any scheme to defraud her. If you provide a respectful reminder, using a recent story of elder abuse by scammers published in news reports, which you can easily find any time, you just might cause your client to think twice before becoming engaged in conversation with a stranger who seems so nice and friendly. You can do your part to help your aging clients to beware of phone calls, contests and unknown people asking for personal information or money.
My mother in law, Alice is still quite sharp at age 91. Someone tried the “lottery winner” scam with her too. She called the number on the letter from the “Lottery Authority” and asked how she would know if they were legitimate. The accented voice on the other end of the call said “well if you think this is fake, you can hang up.” So she did. End of scam. Not all 91 year olds are so alert. Given that, the financial advisor may be one of the few trusted people in a position to help them create a line of defense.
Would you like to develop a policy specifically geared toward keeping your aging clients and keeping them safe from abuse? Get expert help with policy development and implement it with training at AgingInvestor.com.
Until next time,
Carolyn Rosenblatt
AgingInvestor.com
Aug 1, 2014 | aging, aging investor, Alzheimer's disease, senior investor
As just about everyone was outraged and offended by Donald Sterling’s racist comments, you might wonder how there could be anything to learn from what he said and did in the time that has passed since his story first broke.
To some people, Donald Sterling seemed rational. A horrible racist, but being that way in control of his faculties and choosing to do what he did. Was there something wrong with him or was he just being his racist and unreasonable self? I think his conduct is a good example of how a cognitively impaired person can seem logical and in control one minute and totally out of control the next. And he is an example of how an impaired person can destroy his chances, make bad decisions and have a massive loss. You just might find yourself with a client like that.
Here’s what I mean. Donald Sterling’s comments led to his wife insisting that he be examined by two doctors, psychologists. Both concluded that he had Alzheimer’s Disease. When you saw Sterling on TV, you might have thought, “well, he seems weird, but he apparently knows what he’s doing”. Did he?
A person with Alzheimer’s lacks judgment about finances. That issue was at the very heart of the case when he agreed to sell the L.A. Clippers, and then changed his mind and tried to block the sale in a court battle with his wife. Some might be skeptical about the diagnosis of Alzheimer’s. After all, two billion dollars was at stake and fights over anything that big can bring up just about anything.
But notice this: if you want to win in court, you are going to put on your best behavior. If a judge is looking at you to make a decision about whether you are financially competent or not, you’re not going to do anything that would lead the judge, holding enormous power with his decision, to rule against you. That’s what a reasonable person with ordinary good judgment would do. Even if you’re mad as hell, you’re not going to lose it and prove to the judge just how out of control you are. But lose it is exactly what Sterling did with his chance in court.
Imagine that someone with that much money would hire the most highly skilled lawyers possible. Imagine that they were ready with all possible evidence to refute the allegations of Sterling’s wife that Donald was not competent. And what did he do? He behaved erratically over several days of testimony. He raised his voice at his own lawyers and those opposing him. He called his wife a “pig” in court. In other words, he could not exercise enough good judgment to do what any reasonable person would do in his circumstance. H could not rein in his impulses. He blew it.
Of course, the judge ruled against him. He was found to be incompetent to make a decision to stop the sale of the Clippers and his wife won out.
The lesson here is that people who have dementia, the major symptom of Alzheimer’s Disease, lose their judgment about finances. They may make bad decisions against your advice. They may behave erratically. They may act out one minute and be apparently fine the next. When you have a client who has a history and a pattern of making certain kinds of choices about how to invest his money, and he begins to divert from that, you know it is a red flag that something may be wrong. You know that he could lose his wealth if this keeps up. What are you supposed to do?
Other than escalating the problem to compliance sooner or later, you may not think there are any choices. But we at AgingInvestor.com believe there are choices about how you are going to approach and deal with these problematic clients, whether they are as extreme as Donald Sterling or not. There are options for anticipating the realistic possibility that your clients who are aging are going to become cognitively impaired. You can create innovative policies to manage them in a proactive way, involving family, involving significant others, and complying with privacy considerations. You don’t have to fire the client and lose the assets under management. If you have a clear path that enables you to take protective action and engage a third party whom the client has identified and appointed far in advance, you may be able to work with the appointed person and continue to carry out the wishes and philosophy of your client even if he becomes impaired. We are here to help you craft those policies and we empower you to implement them.
This process can change and disrupt the old, outmoded ways of dealing with our aging investors. It’s radical. It’s different. We think it should be done. If you would like to explore this for yourself or your organization, contact us today at AgingInvestor.com for a preview. We will help you become a change agent and an innovator.
Until next time,
Carolyn Rosenblatt
Jun 12, 2014 | aging, aging investor, Alzheimer's disease, investor
Alice, The Unsophisticated Investor
Alice, my mother in law, is blessed with a great memory and pretty good health for a woman of her age. She works at it. She’s been a widow for 6 years now. Dad always handled their finances. Since she’s been on her own, she relies on her two adult children and an accountant friend to guide her about her investments. She was referred to a financial advisor known by a family member. She thought things were fine until a year went by, the market was doing well and she had no gains at all in her portfolio. She’s comfortable, but not wealthy by most measures. There is enough to take care of her, though full time care would eat up a lot of what she has. Luckily at this time, she is able to remain independent.
When She Discovered The Truth
Alice decided to change financial advisors. It was then that she learned, to her dismay, that her other advisor had done something that really got her angry. He had taken 10% of her investable assets and put them into a real estate investment trust (REIT) that could not be liquidated without a substantial financial penalty to her. She is not savvy about complex investments and relies on others for advice. She relied on her advisor a lot. She is clear that she needs to watch out for herself. She says the advisor never told her what he was doing with this investment and never explained that she would not be able to access the funds if she needed them unless she suffered a loss, in the form of a penalty. He, of course says he told her all about it and she agreed. She doesn’t believe him. My husband, Mikol, interviewed her about this and put it on YouTube. Here’s what Alice has to say. http://tinyurl.com/pmqf3j2
In the July 14, 2013 InvestmentNews, Dan Jamieson reported that the Financial Industry Regulatory Authority and the state regulator in MA are cracking down on exactly the kind of nontraditional, illiquid investment the financial advisor chose for Alice. Mr. Jamieson reports that In February, Massachusetts settled a case against LPL, which agreed to pay at least $2 million in restitution and $500,000 in fines related to the sale of nontraded REITs.
State regulators in Massachusetts settled their cases against five high profile firms who agreed to pay a total of $6.1 million in restitution to investors, and fines totaling $975,000.
FINRA CRACKDOWN
State regulators aren’t the only ones cracking down on alternatives.
FINRA also warned members in 2012 in its annual exam priorities letter that it was “particularly concerned about sales practice abuses [and] yield-chasing behaviors” that might lead investors into unsuitable complex products.
Products under scrutiny by FINRA in 2013 included business development companies, structured products, nontraded REITs and private placements.
“Finra grinds us on structured notes and commodity-linked notes,” said the president of a broker-dealer organization, who asked not to be identified.
The regulators are reported to have found out that in the REIT cases, people didn’t know what they were investing in. We think that is true for Alice. We also think her advisor, knowing her lack of sophistication, took advantage of her for the sake of his commission. His justification is that “she didn’t need the money” and that “she was investing for the benefit of her heirs”. Her family, particularly her son, thinks that is rather arrogant of him. How does he know whether she’ll live to be 100 and whether she will need the money? Furthermore, Alice is not investing “for the benefit of her heirs” when she is relying on her funds to take care of her own needs for the rest of her life.
What We Did
As soon as we found out about the REIT sold to Alice, then 90, and how illiquid it was and for how long, we confronted the advisor with a letter and sent him a copy of the Investment News article. He called shortly afterwards. He tried to justify his actions, but was told very politely by my husband that Alice was to get full restitution or a FINRA complaint would be promptly filed.
Permission of various kinds had to be obtained. The advisor had left his firm and gone with a large bank. This messed things up for him for a time, but I thought he deserved it. This was the threat of a claim. Two lawyers called and argued how great the investment was. We held our own and continued to insist on full restitution for Alice. More excuses. Months of lawyering and letters later, she got full restitution. You’ve never seen more butt-covering letters from them.
The lesson here is to be smarter than this guy was. It’s not that the investment itself was bad. It paid a decent return. It’s that at her age it was clearly unsuitable. So keep the age of your client in mind and don’t make dumb assumptions like, “she didn’t need the money”. That is a foolish statement for anyone to make about a 90 year old with a relatively modest portfolio who could need hundreds of thousands of dollars of care as some seniors do before the ends of their lives.
If you need private advice about any aging client whose behavior makes you question the client’s financial capacity for decisions, call us. We have the expertise to help you assess the client’s abillity and we can guide you.
Don’t wait for FINRA to come knocking.
Until next time,
Carolyn Rosenblatt, RN, Attorney, Mediator
AgingInvestor.com
So, when you get this properly written, be sure that you have garnered about proofreading and editing services 10 points.
Jun 12, 2014 | aging, aging investor, Alzheimer's disease, investor
When Competence Is Neither Black Nor White
Anyone who has spent time around older adults, whether they be family members, friends or your clients, probably knows someone who seems “with it” sometimes and “not with it” at other times. They can change from making sense to not making sense in a matter of minutes or hours. Do you think of this person as competent? Do you overlook all the little “slips” and signs of their not being able to track the conversation? Do you treat the person as if everything were fine and normal? Here at AgingInvestor.com, we refer to the in-between state of mind as the grey zone. It describes a person in a way that is neither black nor white, neither completely without decision-making ability nor completely safe in decision making. It is a variable problem and one nearly all of us are going to witness sooner or later. Why?
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Apr 7, 2014 | aging, aging investor, Alzheimer's disease, investor, senior citizen investor, senior investor
A Red Flag For Financial Advisors With Aging Clients
Hello there. I’m Carolyn Rosenblatt, RN, Attorney and family mediator for those with aging loved ones. My passion is working with older adults and their families, as well as those who serve them.
AgingInvestor.com is dedicated to helping those in the financial services industry learn more about aging from those of us with expertise in aging. Our purpose is to help you better serve your clients, keep your business as they age and serve them more competently as their aging begins to create issues for you.
Most of us, in general, do not have any specific knowledge about aging itself, much less how it can affect the brain and decision making ability. We base what we know on our family experience or what we have learned from friends. That’s fine, but it can really limit our perspective.
The fields of gerontology, medicine, healthcare, and other related disciplines have produced a great deal of research that can be helpful to all of us in a society where longevity is increasing so significantly. We are indeed in a changing environment when it comes to aging. Many of us are going to encounter or are already encountering issues with which we have no experience but which we have to face. Our parents, grandparents and our clients are living longer and having more problems related to aging. We may be unprepared. (more…)
