Nov 13, 2019 | ageist, aging, aging investor, declining health, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, financial judgement, handling money for aging parents, handling money for seniors, investor, retirement, senior investor, seniors finances
At its Senior Protection Conference on November 12, 2019, FINRA took a cell phone poll of broker-dealers. They wanted to find out how many were worried about aging registered representatives at their firms. The result: 65% were worried, according to the report published in Financial Advisor. Yes, aging B-Ds are a problem.
Here at AgingInvestor.com, we’ve been sounding the alarm about this problem since 2016, when we published our book, Succeed With Senior Clients: A Financial Advisor’s Guide to Best Practices. “The Elephant in the Room” chapter dives into how impairment in advisors affects the industry and how that most definitely will affect their work with clients. A B-D or advisor whose memory and judgment are impaired, even in the early stages, can expose the firm to liability for mistakes these folks make. Cognitive decline should not be taken lightly.
The speakers at the conference offered attendees very little concrete advice on how to address the problem of an impaired advisor. What could one expect of them? They have no training nor skill set in identifying diminished capacity themselves. Without expertise, their discussions lack action plans.
As aging experts ourselves (RN, Elder law attorney and geriatric psychologist) and a resource to the industry, we question the suggestion that one should wait for “performance issues” to surface before any firm does anything about an impaired professional in its midst. If there is a “performance issue” visible to management, it is likely that it existed for some time and harm to clients already could have occurred. The notion is reactive, not proactive. Isn’t that contrary to the essential philosophy of financial planning itself to look ahead, strategize and don’t wait for a crisis??
Waiting for a manager to call a special team assigned to address the problem is not the best approach, as we see it. For one thing, most firms don’t have a special team that would serve the purpose of knowing what to do with an impaired advisor. Yes, every firm would be well protected if such a team were formed and that is something we always recommend. However, failing to screen advisors with any in-house tools when impairment is suspected is to ignore the lurking possibility of harm to clients. What do we mean by an in-house tool? Start with a checklist.
On our website is a free downloadable Financial Advisor’s Checklist: 10 Red Flags of Diminished Capacity to help you spot the warning signs in clients. There is no reason any firm could not use relevant parts of the same tool to spot signs of diminished capacity in its own employees. It is not across-the-board applicable to the professional as compared with a client showing red flags but some points do apply to anyone. For example, memory loss, failure to appreciate the consequences of decisions, confusion, loss of ability to process basic concepts are all on the checklist and are universal warning signs.
What Can You Do With An Advisor You Think Is Impaired?
Proactive steps are essential. Here are our recommendations:
- First, record your observations of changes in the advisor’s behavior. For example, forgetting appointments, failure to meet on schedule with clients, seeing too many blank stares in your interactions with him or her, becoming withdrawn from interactions can all be signs of trouble a manager must address. They could be associated with cognitive impairment or with other health conditions. Managers need to ask the advisor about what they and other colleagues see that looks like a possible red flag.
- Ask about general health issues, which can directly impact how an advisor does the job of handling clients. Is it nosy? Yes. Is client financial safety at stake if you don’t ask? Yes. Take the risk of opening the conversation. That is smart. Waiting for a disaster is not.
- Establish an in-house policy for what should be recorded by colleagues and reported to managers about possible signs of cognitive decline and the direction you want to take after signs are identified. The policy should be in writing and distributed.
- Have a plan to closely watch the apparently impaired advisor.
Asking the advisor to work with someone to supervise transactions is one option. Reviewing how the advisor is managing his or her work at short intervals is another option. And with obviously impaired folks who do not themselves recognize their own cognitive changes (not an uncommon thing), have a suspension or graceful exit means to stop the impaired person from putting clients at risk. This falls under what those conference speakers vaguely referred to as “other arrangements”. Be specific.
This is uncomfortable territory for managers, compliance officers and for colleagues of older advisors in firms. However, the FINRA poll is telling. If this problem were not rising in our midst, 65% of those polled would not be worried. If you are concerned where you work, get your copy of Succeed With Senior Clients: A Financial Advisor’s Guide to Best Practices, now or get a live or online presentation from us at AgingInvestor.com. Don’t put your firm and your clients at unnecessary risk.
By Carolyn Rosenblatt, RN, Elder law attorney, Consultant, AgingInvestor.com
Sep 5, 2019 | aging, aging investor, cost of aging, declining health, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, financial elder abuse, financial judgement, handling money for seniors, investor
Attempts to scam money from seniors never stop. And the thieves keep getting better at thinking up ways to extract information from older folks. Here’s another one—a different phony Medicare trick.
People hear ads on TV about genetic testing and how it can predict disease and protect them. They also hear ads that they’re not getting all the Medicare benefits they deserve. Who doesn’t want to get all the benefits they should get? It’s a perfect moment for scammers.
They may call your retirement-aged client and tell them that new genetic testing is available that Medicare will pay for, worth thousands of dollars. Of course, all your client has to do is to give them their Social Security number and the free testing kit, signup papers, or other inducement will be mailed to them immediately.
Let’s be clear: Medicare does not pay for genetic testing as a “new benefit”. If for any reason such testing were needed, a physician would order it and explain why it was needed. Such testing would not be ordered without any discussion with one’s MD.
Your client should never, ever give out a Social Security number or other personal information such as date of birth or address over the phone. Your client must never accept a genetic testing kit not ordered by one’s own doctor. If it is accepted and the cheek swab, DNA test or anything else is given to the sender, your client may be billed directly, potentially incurring a debt for thousands of dollars. It would be a sad day for your client to mail in a claim for reimbursement to Medicare for a fake benefit and realize that the claim is denied. They’re on the hook for the full price.
These kinds of scams are used to get information to commit identity theft and Medicare fraud. No matter how smart your client is, anyone can be caught off guard and tricked.
What Advisors Can Do
Here are some ways to let your client know you care about their financial safety.
- Prepare a friendly form letter to send to all clients over age 65 and inform them about this scam. Warn them not to fall for it.
- Keep abreast of all the latest scams in over 30 categories at the Federal Trade Commission, which explains what they are and how they work. Keep clients advised.
If identity theft has happened, direct your client to the Federal Trade Commission website for instruction on what to do.
Carolyn Rosenblatt, RN, Elder law attorney, AgingInvestor.com
About Carolyn Rosenblatt and Dr. Mikol Davis
Carolyn Rosenblatt and Dr. Mikol Davis are co-authors of The Family Guide to Aging Parents (www.agingparents.com) and Succeed With Senior Clients: A Financial Advisors Guide To Best Practices. Rosenblatt, a registered nurse and elder law attorney, has more than 45 years combined experience in her professions. She has been quoted in the New York Times, Wall Street Journal, Money magazine and many other publications. Davis, a clinical psychologist and gerontologist, has more than 44 years experience as a mental health provider. In addition to serving his patients, Davis creates online courses and products to assist professionals and the public with understanding aging issues. Rosenblatt and Davis have been married for 34 years.
Jul 11, 2019 | aging, aging in place, cost of aging, diminished cognition, elderly, health, resources for senior, resources for seniors, retirement planning
Does The Advisor Have A Role With Aging Clients Who Become Unsafe Living Alone?
Carolyn Rosenblatt, RN, Elder law attorney, AgingParents.com
You’ve known the client for many years. As time passes and she lives longer than she thought she would, you see her inevitable decline. She loses her husband, on whom she depended. She doesn’t want to move to assisted living or anywhere, even if you think it would be best for her. Her vision is dimming and her hearing isn’t good either. She has refused all help even when you reassured her she could easily afford whatever she needs.
Is there anything you can do? You care about the client but you’re used to just managing the money, and it isn’t clear that you are obligated to go beyond that. But you know that your client just isn’t safe alone anymore.
In these situations, the most competent advisors and wealth managers can feel conflicted about their roles. They have over the years come to know the client well and there is a sense of wanting the client to be safe. At the same time, maybe it’s not an advisor’s problem. What about the family? What if there is no family?
The first thing every advisor should do is what the regulators make optional for you: “try” to get a trusted third party contact. From our vantage point at AgingInvestor.com and AgingParents.com, we think it’s ridiculous to consider it an option rather than a requirement to get a trusted contact on file. The advisor can be more trusted than family in some cases and has a unique vantage point. YOU are the one who may be first to see your client’s decline and need for greater safety in the client’s living situation. You need to have someone to call. If it’s family and they are willing to step in, good. If there is no family, the client must be advised to hire a licensed person who is capable of overseeing their care if needed and to assist with day-to-day finances. The term “fiduciary” has a different meaning in the context of your industry, but outside it, a fiduciary can be a person whom the state licenses to manage money for someone who is not able to do it alone. They serve in the capacity similar to that of a conservator, guardian or power of attorney appointee, but the aging person still maintains some control as long as he or she remains cognitively intact. For those with no family a licensed fiduciary can solve the question: who can the client count on to help?
Even when there is family the aging client can still resist moving to a senior’s apartment in a community rather than struggling on living alone. It happened in our own family. It took two years for Dr. Davis’ mother, Alice to make up her mind to give up living alone in a house. To see a short video, Alice’s perspective of her decision. Click HERE.
At age 90, she had vision and hearing problems, arthritis, leg pain, unstable blood pressure, kidney and bladder issues and she took 14 pills a day. That by itself was not enough to get her to agree to move. She ultimately reached the decision because she got tired of the daily difficulty she had trying to maintain independence.
Even with your efforts to persuade a client that he or she ought to consider some new choice like assisted living, remember that a person who is competent can’t be forced to move anywhere. Logic has nothing to do with the fear of losing one’s independence. But keep trying and do work with the client’s family on a joint plan to help your client get to a safe decision.
What Action Can You Take?
Can you tell your client’s family about your observations? We see no ethical dilemma at all here. This is not about financial matters necessarily though it can be. The cost of moving and paying for care is a factor. But no one says you have to talk about what’s in your client’s portfolio. To be in the best position in anticipation of a client who is declining with age, get your client to identify any family or friends who could be called upon “in case of emergency”. Get more than one trusted contact. If you have a few people on the list identified by your client, call a phone meeting and discuss strategy. Gentle persuasion can work over time as it did with 92 year old Alice, who finally decided to move into a senior’s apartment. She was mighty stubborn but it did work out in the end, absent disaster. We were fortunate.
The takeaways from AgingInvestor.com:
Anticipate that long-lived clients may become unsafe living alone. Most people over age 80 need some kind of help in their lives.
You as the trusted advisor can be ready for age-related decline in your clients by having several trusted contacts in your client’s file whom you know and can call upon when safety is an issue.
If you become aware that your client is losing independence and should not be living alone, call a phone meeting with the trusted contacts to develop a strategy for working together to help your client make a good decision about moving or bringing help in.
Expand your role of merely managing the money and use your position of trust to help your client and the family keep the client physically safer.
If this all seems to be an awkward and uncomfortable thing to address, get a consultation from experts on aging at AgingInvestor.com. Our nurse-lawyer, geriatric psychologist team offers you expertise in how to approach a problem with an unsafe client and even what words to use to help them with important safety decisions.
May 9, 2019 | aging, aging investor, cost of aging, declining health, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, financial elder abuse, financial judgement, handling money for aging parents, handling money for seniors, resources for senior, resources for seniors, scammers, senior citizen investor, senior investor, seniors finances
The Senior Safe Act allows you to hold transactions when you suspect financial abuse of a client. The Act is designed, at least in theory, to allow time for the trusted contacts you have on file to take appropriate action. Many of those victimized by predators or manipulated by unscrupulous family have dementia and have lost their judgment about what makes sense financially. The Act urges you to get trusted contacts and provides that you are not breaking privacy rules to contact them in the reasonable belief that your client is being financially abused. The length of time you can hold a requested transaction can be as long as a month. This is where the Senior Safe Act has missed the mark.
Let’s look at the reality of impaired elders who are in charge of their wealth on the family trust. The trust is in order, and if the elder recognizes that he or she is experiencing decline in mental ability, that trustee may choose to resign. Simple. But that is not what happens in too many cases. For many persons who have cognitive decline and dementia, the elder does not recognize that he is impaired at all. “I feel fine!” he tells his worried family. When asked to resign as trustee, having total control over (theoretically) millions of dollars in a trust, the elder flatly and stubbornly refuses. Meanwhile, financial abuse by predatory people can continue unabated.
When an older person experiences cognitive decline, it typically has a very slow onset. Short-term memory loss does not raise enough red flags for those closest to the elder to take any action. “She’s just getting old” they say dismissively. But memory loss is often the first and earliest warning sign of Alzheimer’s disease, the most common form of dementia. The odds of having Alzheimer’s disease by age 85 are at least one in three. Think about your own older clients. Some live well beyond age 85. The risk of dementia rises with age. Short-term memory loss interfering with daily life is not a normal part of aging. Financial abuse and cognitive impairment often go together.
When financial abuse reaches a visible level, the advisor may do what the law allows and call the trusted contact person, usually an adult child. The advisor hopes that the call will somehow trigger something and the abuse will be stopped. But here is a reality check: The family can’t accomplish anything needed in two weeks or even a month if you hold transactions then. Here is a real case example of just such a situation, showing how long it really did take.
In our work with a family at AgingParents.com we saw rampant financial abuse of an elder by a family member. The elder had dementia but had not been formally diagnosed by his doctor. Over 70% of his income was going to the predator. He was asked to resign as trustee by his two adult children, who were reasonably worried that he was going to give away all his cash and further encumber his home. The dad, whom we’ll call Gene, had been developing dementia for at least two years. He felt obligated to the predator and was totally powerless in resisting her demands for money. He just kept writing checks, draining his own resources. It was clearly a case of financial manipulation.
We were involved in working to persuade Gene to allow what his family trust provided: to have his daughter, Jennie, become the successor trustee. He agreed, then reneged. He accepted the logic and then refused to accept it. The kids had no choice but to use the law to take over control. Their father was too stubborn to resign as trustee when asked, even with the entire family presenting a united front, asking and respectfully begging.
The trust, like many such documents provided that Gene could be removed as trustee by his appointed successor, his daughter, after two physicians had declared him to be incapacitated for handling his own finances. A court decision was not required. However, getting him to two doctors willing to assess him and put their observations in writing was a challenge that took months to accomplish. The total time spent getting the change of trustees accomplished according to the terms of Gene’s trust was eight months.
His children were the trusted contacts in the advisor’s file. They knew about the abuse and were in agreement with the advisor that Gene had to stop being the trustee. The adult children had to hire consultants (AgingParents.com), have meetings, hire an attorney, and try various methods to get the job done. Their time energy and thousands of dollars were expended to prevent an even worse outcome, which was being left to support their aging father if he were to totally deplete his own funds.
The takeaways:
- Though well intended, we do not expect that the Senior Safe Act will do much to stop financial abuse because of the short time allowed for a financial professional to hold transactions. In Gene’s case, the predator would have been happy to wait a mere two weeks or a month before resuming the financial manipulation of Gene.
- Know that any older impaired client may not understand that he or she is cognitively impaired and will ignore pleas to resign as trustee with total control over any family trust.
- If you see that an older client is showing signs of cognitive decline, do not wait until it gets worse. Reach out at the time of your first suspicions of trouble. The family or other trusted persons may well have a better opportunity to persuade an elder to transfer power over finances to the appointed successor before complete loss of capacity. Expect this to take time.
In the case described above as a result of ongoing financial abuse, nearly all of Gene’s cash was depleted during the eight months of effort on the part of his adult children to have him removed. The advisor did the right thing but too much of Gene’s cash was depleted in the period when the abuser could keep manipulating him for those months of effort by family to have him removed as trustee.
By Carolyn L. Rosenblatt, RN, Elder law attorney, AgingInvestor.com
If you are seeing abuse and feel lost about how to stop it, contact us at AgingInvestor.com for a confidential consultation with our nurse-lawyer, geriatric psychologist team so you can do everything possible to protect your vulnerable client.
Apr 25, 2019 | aging, aging investor, declining health, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, financial judgement, handling money for seniors, health, senior investor, seniors finances
Clients Without Family: Financial Planning With “Elder Orphans”
Every financial advisor will eventually come across an aging client who is essentially alone in the world. The elder may be single, widowed, or otherwise without a partner. Some are members of the LGBTQ community and never had children. Others were childless, or have lost children and significant others in their long lifetimes. The end result is that the usual support systems that exist for others are not available to these clients when they may need support the most.
Some refer to these elders who are alone with no family as “elder orphans”.
Heidi is an example. She has a financial advisor who has worked with her over decades. He referred her for advice, which she wanted and I visited her at home. She is 90 and lives alone in her own house, which she owns outright. She has a modest portfolio and is comfortable. She was widowed 20 years ago and she has no children, nor any relatives in the U.S. She relies on her best friend and neighbor when she needs help. This need is increasing now that her vision is impaired. When I spoke with Heidi I asked her about her one best friend. She mentioned that this neighbor is 86, but is “doing pretty well”. Heidi had recently fallen twice in her home, but fortunately escaped serious injury from those falls.
Heidi has a will and a trust, power of attorney and healthcare directive. The appointed person on those documents is her cousin who lives in another country. If an emergency occurs, it is not at all clear who would be available to assist her.
This situation is a disaster waiting to happen. The risk of another fall, vision problems that will likely prevent her from driving, and the age-related risks to her friend the 86 year old who could also become disabled or unavailable are all looming. I ask if her financial advisor has discussed the future with her, possible other living arrangements, a local person for a healthcare agent and what to do when she can no longer drive. “No” she replies, “we’ve never gotten into that”.
I urged Heidi to contact her financial advisor right away so plans could be made and her safety assured. She also needed to speak with her estate planning attorney to update her documents, ensuring that an appointed local person had authority to assist in any crisis or if Heidi loses independence. She is close to needing help now.
Think about your book of business and whether you have any “elder orphans” in it. If so, there are things any responsible advisor should address with such clients. Here are three essentials for every advisor’s discussion.
- First, the legal documents. The advisor can get permission from the client to contact the estate planning attorney and find out what plans exist for an appointed person to step in and take over the reins when or if the client becomes impaired. a local appointee is critical. Someone has to be able to make financial decisions if the client loses the ability to make them independently.
- Next, alternative living arrangements. A 90 year old with impaired vision who has fallen at home may need to consider options of where to live with help available onsite. The financial advisor knows what assets are available to pay for a choice such as assisted living. The advisor should bring this up and ask the client about what he or she wants.
- The need for a local appointed person to be not only the advisor’s trusted contact, but your client’s person to reach in the event of an emergency. An appointee in another country is not going to be of immediate help. Explore other choices.
The advisor needs to expand the limits of the usual role of simply managing the money with elder clients who do not have any family. To keep you on track and aware of the special planning these aging investors need, get your free checklist of points to address at AgingInvestor.com. With it, you can be sure of what you need to cover in your planning conversations with you “elder orphan” clients. Download Your Advisor’s Seven Point Checklist— Best Planning For Aging Clients With No Family now so you can excel in appropriate future planning.
Carolyn Rosenblatt, RN, Attorney, AgingInvestor.com
Jan 30, 2019 | aging, aging in place, cost of aging, cost of long term care, declining health, diminished cognition, elderly, finances for elders, financial advisors, financial capacity, handling money for seniors, long term care, nursing home
Most advisors who even ask this question of their retirement-aged clients never spend time on it. About 90% of those asked say they want to remain in their own homes as long as possible. That sounds fine. Until one faces physical decline, cognitive impairment or both. The advisor providing competent guidance about financing aging at home had better know the facts.
None of us like to think about losing physical ability or needing help. We abhor the thought of losing our total independence. In our view at AgingInvestor.com, the only advice clients are getting is about the long term picture is whether or not to purchase long term care insurance. Since most people don’t do that, the actual costs of living at home can boggle the mind. It’s the best advisor’s obligation to educate your client about the risks of the plan to age in place, just as it is your obligation to educate them about balancing their portfolios. You are giving the client added value if you take the time to talk them through the risks and dollars they may need to have available.
Here are some briefly stated facts from a real case in which an 89 year old wanted to age in place and his wife promised he would never have to leave home.
At the outset of his declining health, he had about $3M in invested assets. His portfolio was healthy and balanced for his age, according to conventional wisdom. He began to lose his ability to walk due to multiple medical problems. His wife hired home helpers, three days a week at first. As his conditions progressed he needed more and more help. He had to have a wheelchair, and a special van. A stair chair was installed in their two-story home. By the time he reached age 95, he was spending over $150,000 a year on care and assistance around the clock. In the space of time during which he was steadily losing independence until he passed away at 95, his assets were depleted to the tune of $2M. He lived in a higher end market for the needed help but the reality is that in any market, the kind of care he needed would be very expensive.
For him, aging in place was more costly than a skilled nursing facility would have been. Home modifications, private caregivers, (none of whom were licensed nurses), equipment, medications, adaptive devices, etc. drained his resources by 2/3. And not everyone has as much invested as he had to even start the journey. His wife had her own assets and she paid the cost of household maintenance, taxes, food, and utilities with her funds. Had she relied on him for those things too, there would likely have been little left at the end of his life.
It is not all doom and gloom however. Many clients live rather well in their last years without all the care this gentleman needed. Some get by with family caregiving help, and some have fewer medical conditions. But if you are going to competently help your clients plan for longevity, it’s essential to understand the real out of pocket costs of aging in place or anywhere else outside the home. If you want to add value to your services to older clients, know what they need to know to properly anticipate what can happen with living into one’s 90s and beyond.
Learn all the actual costs of care for every aging client option in our book, Hidden Truths About Retirement & Long Term Care. Be well prepared to walk your client through the scenarios they could face in their futures. You distinguish yourself from other advisors when you sharpen your knowledge in planning for longevity.
By Carolyn Rosenblatt, RN, Attorney, AgingInvestor.com
Jan 28, 2019 | aging, aging in place, aging investor, cost of aging, cost of long term care, custodial care, declining health, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, financial elder abuse, financial judgement, handling money for seniors, health, long term care, nursing home, resources for seniors, seniors finances
Your clients are getting ready for retirement. You’ve done the calculations, balanced the portfolio and advised them of what income to expect. You’ve discussed how much spending is ok. You used your program and your analysis was thorough. You’ve done your job, right?
Not exactly. There is probably no algorithm nor program that will calculate your client’s individual profile of health risks that will likely lead to the expense of long term care. That can be a whopper. Maybe you’ve suggested long term care insurance. Most people don’t choose to buy it. For those who do, the benefits are limited and the “elimination period” (deductible) is thousands of dollars. There go your careful calculations. At least 90% of folks don’t have that coverage. Now what?
But how can you predict what’s going to happen to anyone’s health in retirement, you ask. You can’t be precise, but you surely can make some rational observations and give advice accordingly. Those observations consist of two parts: what you can see with your own eyes and what you can glean by asking a few basic questions. If you think asking any client about their health conditions is too nosy or not your job, consider that if the client needs long term care and runs out of money because of it, they’re not going to think much of you. And the cost can wipe out their security.
Asking about health issues is not nosy at all. Rather, it’s what any smart advisor planning for longevity must do. Let’s not keep pretending that everyone stays the same physically and mentally from the start of retirement to end of life. Our bodies go through wear and tear and things break down. Cognitive decline affects at least a third of people who reach the age of 85. The risk of Alzheimer’s disease keeps climbing after that. Now, what was that life expectancy you were using in your calculation? Was it age 99?
Let’s start with what you can see in your client with your own eyes. (If they’re not in front of you, perhaps Skype is an option). Is your client obese, as about 40% of the U.S. population is? This leads to heart disease, stroke, and diabetes, among other diseases and conditions. The medical care people receive in many cases will save them from dying but they then live with disabilities. And yes, they will be very likely to need expensive long term care. Neither health insurance nor Medicare will cover long term care. Such help as a part time caregiver at home is how most folks start out with long term care. Your client pays out of pocket most of the time. Did you calculate how much it costs as well as how long they will likely need it? If they have multiple medical conditions, and have started long term care, they’ll probably continue to need some form of it for all their remaining years.
Find out what you may not know from simply observing your client’s appearance by asking questions. You can make your own list or get a health care provider to help you with a few targeted questions. You will need to educate your client as to the reason why you need this information. It’s to help them plan for how much to save in their retirement years.
Here are some examples of basic questions that can help you predict the need for possible long term care:
- How’s your health these days? Has a doctor told you that you have any long term conditions?
- Are you taking medications? What are they for?
- Do you smoke?
- Are you concerned at all about any health issues you have at this time?
Do you recall your parents’ ages when they died?Your aging clients will not be eager to talk about the potential need for long term care. When you told them about what to expect for “out of pocket medical costs in retirement”, you did not give them a figure that included long term care. Long term care is not “medical” according to Medicare. Rather, it is called “custodial care”. The client probably will not bring it up, so you must do this.
When you have done your observations and gotten answers to your health-risk related questions at least there is a place to start a meaningful conversation. You can give them figures as to the cost of typical kinds of care, such as a non-medical home care worker. We at AgingInvestor.com recommend starting your projections at age 80 as to when a person might need physical help. Many of us know someone who did require help with at least some part of his or her life at that age. Then you can talk about how any condition your client identifies for you, such as high blood pressure, diabetes, etc. as shortening normal life expectancy and increasing the risk for needing help. If your client already has difficulty with some normal daily activity such as walking or bathing, they are definitely at high risk for needing paid help sooner than a person without these problems.
Clients may be completely unaware of such things as the hourly cost of a home care worker, what assisted living costs each month and what home modifications cost if they are able to remain in their own home. You can find a thorough discussion of these and many other parts of long term care in our book, Hidden Truths About Retirement & Long Term Care, written specifically for financial advisors like you.
Every conscientious advisor needs to wake up to the reality that your retirement income calculator omits the reality check of health problems. We’re not talking about nursing homes, but every other kind of care and help most people will need as they age. If you do want to help clients who are reaching retirement age to plan realistically, include the health risks you can see or learn about by asking.
By Carolyn L. Rosenblatt, RN, Elder law attorney, AgingInvestor.com
Jan 24, 2019 | aging, aging in place, declining health, diminished cognition, elderly, financial advisors, health, long term care, resources for seniors
Apr 18, 2018 | aging, aging investor, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, financial elder abuse, financial judgement, handling money for aging parents, handling money for seniors, seniors finances
It seems that regulators are fond of creating new mandates for you without telling you how to implement them and what risks might be involved. The new FINRA rule that says you must “try” to get a trusted contact person (TCP) for new clients is illustrative.
First of all there is no firm requirement that you actually get a TCP for anyone. All you have to do is make an attempt. If the client says “no”, you’re out of luck in trying to solve any problem that may exist without anyone to call in the event of an issue you see. Such issues might include someone ripping off your client or your client really losing his marbles. The intent of the rule was good. The idea was to increase protections for vulnerable elders. It’s just that the way clients act and the issues you are sure to see with one TCP have been ignored in regulators’ creation of this mandate.
Research has given us important information about protecting elders from financial abuse. We know that family members are the most frequent abusers of elders. Guess who most elders would think of as a TCP? The family member, of course. The idea of a single TCP is flawed from the outset. If the idea is to keep your client financially safer, you don’t want to be limited to the potential abuser as the TCP. That defeats the purpose.
Here at AgingInvestor.com we are on a mission to keep elders safer. We make every effort to fill in the blank places your regulators leave when they come up with a mandate like getting a TCP for your clients. Here are our recommendations on this subject and why we say what we say about TCPs.
First, we believe every advisor should not only “try” to get a TCP for every client–we think you should insist on it as a matter of your intelligent, proactive senior office policy. Every client, new and existing should be approached with a courteous, respectful explanation and request to name a TCP you can contact in case of need. You let clients know that you have a policy to protect them from potential predators who are out there trolling for your clients, particularly the seniors. You could write this explanation and request up and send it around or bring it up at every portfolio review.
Next, we recommend that you get not just one TCP for every client, but three. The reason for this is that since family members are often the abusers of vulnerable people, you need someone else to call if “sonny boy” is ripping off dad’s account and dad is too impaired to realize it. “Sonny boy” just might be the one TCP his dad, your client named and you would then be stuck with no way to protect your client in that situation. Someone outside the family would be ideal. This could be the estate attorney, a competent friend, or a clergy person your client trusts. Any of them would need to be able to intervene when learning of suspected financial abuse of your client. A third TCP could be another family member your client also sees as trustworthy. With information going from the advisor to three people at once, the risk of abuse is lessened and the chances of effective action in the event of abuse are increased.
Finally, we recommend that you consider all the risks involved in a decision to reach out to the TCP when you see red flags of diminished capacity in your client, or when you see warning signs of financial abuse of your client. You do need a written internal office policy that directs you as to the observations, documentation and steps to take when an issue comes to your attention. Legally, you are probably on firm ground, carrying out the intent of the FINRA regulation. However, you don’t want to set your client up for harm.
For instance, if the client is in the middle of a contentious divorce and the ex- spouse is the TCP, do you want to release information about your client’s finances that could harm your client in the divorce proceeding? Give yourself time to discuss the options with other, knowledgeable people in your office, or group. The value of having a proactive office policy for aging clients in this situation is that you have others to ask and weigh in with their points of view.
If you are not sure about the red flags of diminished capacity and what you should look for, get your free downloadable checklist here. Likewise if you are not clear about classic warning signs of financial abuse get your free checklist for those here too.
Need help with that smart, proactive senior office policy? Ask for a consultation at AgingInvestor.com and get the guidance you need from our nurse-lawyer, geriatric psychologist team
Carolyn Rosenblatt, RN, Elder law attorney, AgingInvestor.com
<p><code> </code></p><div class="signature"><table style="border: 2px solid #999; border-style: solid; background-color: #f5fff5;"><tbody><tr><td style="width: 110px; vertical-align: text-top; align-content: center;"><div style="border: 1px solid #eee;"><img class="alignleft" src="http://www.aginginvestor.com/wp-content/uploads/2015/04/DavisRosenblattPublicityPhoto.jpg" alt="" width="123" height="116"></div></td><td><h4>Dr. Mikol Davis and Carolyn Rosenblatt, co-founders of AgingInvestor.com</h4><p>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.</p><p>Dr. Mikol Davis, Psychologist, Gerontologist offers depth of knowledge about diminished financial capacity in older adults to help you strategize best practices so you can protect your vulnerable aging clients.</p><p><a href="http://www.aginginvestor.com" target="_blank" rel="noopener">AgingInvestors.com</a> 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 <a href="https://agingparents.leadpages.co/ceu-choices/" target="_blank" rel="noopener">HERE</a></p></td></tr></tbody></table></div>
Feb 2, 2018 | aging, aging investor, declining health, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, financial elder abuse, financial judgement, scammers, seniors finances
You may have heard of the fake calls from thieves pretending to be from the IRS. It can be a threatening robocall. Or it can be a male with an aggressive manner telling the recipient of the call that they will be arrested for owing back taxes if they don’t pay immediately. These criminals carefully select older people and anyone they consider vulnerable to their fake pressure. Your aging clients could be a target and scammers want to terrify them.
How do they get the names of our aging parents? They buy them. Information is for sale, from lottery entry forms, contests, magazine subscriptions and from hacking whatever can be hacked. Identity information can even be purchased on the black market. “Information brokers” have been around for decades and so have these telephone scams. Supposedly, the entities that sell the names don’t care what the buyer does with them. There are likely millions of names and telephone numbers available to the scammers, given the nationwide nature of their ripoff efforts. Apparently, names and numbers are very easy for them to get.
Here’s how it works: The caller catches the unsuspecting older person off guard. The call is official sounding: “This is Officer James with the Internal Revenue Service and I am calling about an urgent matter! Do not hang up!” Sometimes they are even able to secure a fake caller ID that says “IRS” or looks like a legitimate government entity to those with caller ID. There were also reported cases when they used the name and email address of a CFPB employee.
They then tell the stunned elder that they or their spouse has an overdue debt to the IRS and if it is not paid immediately they will be arrested. Of course, they want the elder to use a wire transfer or a prepaid debit card so the thief can’t be traced. The frightened person will hurriedly comply and realize only later that it was a scam. In the moment of reacting to the threat, they are not thinking clearly. They are moved by fear–just what the thief was hoping for.
No matter how many public service announcements are sent out, and no matter how many Federal Trade Commission, AARP or National Center on Elder Abuse warnings are posted, the scam is still working. We at AgingParents.com think the best way to keep our aging loved ones financially safer is to personally warn them yourself about these scams. They will probably listen to family more readily than they would seek information from the internet or official sources trying to spread the word. Of course, the IRS will never, under any circumstances call someone and demand payment of a debt. Their official communications about taxes are by snail mail.
If these evil scammers were not successful, they would stop doing this. But sadly, it works and they are relentless. My neighbors, many elders, have reported that they have gotten these calls this week. Beware. Please take the time to alert your loved ones to this problem. And don’t think your mentally alert aging loved one is too smart to fall for this. No one is immune from being shocked and intimidated by a sudden call. It can happen to anyone.
We at AgingInvestor.com think the best way to keep your older clients financially safer is to personally warn them yourself about these scams. They will probably listen to family more readily than they would seek information from the internet or official sources trying to spread the word. Of course, the IRS would never, under any circumstances call someone and demand payment of a debt. Their official communications about taxes are by snail mail and that is not likely to change anytime soon.
If these evil scammers were not successful, they would stop doing this. But sadly, it works and they are relentless. My own neighbors, many elders, have reported that they have gotten these calls this week. Beware. Please take the time to alert your clients to this problem. And don’t think your ever so sharp client is too smart to fall for this. No one is immune from being shocked and intimidated by a sudden call. It can happen to anyone.
If you want to send a friendly letter to your clients about this scam and don’t have time to put it together, we make it easy for you. Just go to this link and download a free pre-made letter to send out.
Revise it with your name or firm name and you’ll look good by showing that you do care about their financial safety. You’ll never regret doing your part to thwart thieves and prevent financial elder abuse.
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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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Oct 12, 2017 | aging, aging investor, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, financial judgement, handling money for seniors, investor, NAPFA, senior citizen investor, senior investor, seniors finances
Watch a brief VIDEO about our presentation ⇓
Jun 20, 2017 | aging, aging investor, diminished cognition, elder investor, finances for elders, senior investor
Most financial advisors with aging clients often find themselves in the dilemma of just how involved they should get when it comes to their clients. You talk with them for portfolio reviews, but what if they show signs of diminished capacity in those conversations? Should you meet with them to talk about it or just wait until “something happens”? A critical point that every financial advisor needs to know: if your older client shows signs of mental decline, something is already happening. You don’t have the luxury of waiting. Research makes it clear that the ability to manage finances is the first thing to go downhill when a person begins to develop Alzheimer’s disease or other forms of dementia. There could be other reasons for cognitive decline too. Don’t make the mistake of ignoring it.
At AgingInvestor.com we recently heard a story that reinforces the importance of staying vigilant for your aging clients. Penny is 93 and until recently, the professionals in her life saw no particular reason to be concerned about her mental status. She was usually clear in conversation. Her accountant thought she was ok but failed to see mistakes and changes. But Penny was managing seven separate real estate investments and no one in her family, particularly her son, was helping her. Her son may have thought she was fully capable. She had been successful for decades. No one anticipated that she might become impaired late in life. But then her lawyer, living in a different city, wanted her to sign a document and have it notarized. She got confused and insisted that it be done incorrectly. The document came back a mess. Her lawyer did not heed these red flags that something was wrong and thought Penny was probably ok. He attributed the error to “normal” forgetfulness. Forgetfulness is a warning sign that closer monitoring of the older person needs to start right away.
Penny’s son eventually got her to a doctor who wrote a letter with the opinion that Penny was no longer able to manage her personal and financial affairs. Her son began taking over managing the property but was not prepared for what he found. Of the seven real estate holdings, five had IRS liens! One had become uninhabitable, the tenant had moved out and was billing Penny for the hotel stay, waiting for the home to be fixed. Penny had failed to pay the property taxes for several years.
Penny is a good example of a senior who is generally pretty clear but is definitely not able to handle complex finances any longer. The process of her cognitive decline did not happen overnight. It took several years. During that time she endangered her assets, lost track of her finances and could have lost most of her real estate to tax liens. Warning signs happened but no one paid attention to them.
Could this be prevented? Of course. Had her financial advisor kept a better eye on all of Penny’s assets, not just her stock account, he could have noticed the problem and contacted her son. The point is that wealthy clients may have assets you do not manage but also provide income. It is good practice to ask about all of your client’s holdings. Penny’s failure to pay property taxes and allowing the houses to fall into disrepair should have been seen by those close to her. Paying attention to those telltale signs of decline, which an alert advisor would have noticed, should have triggered reaching out to Penny’s trusted contact person. Working with your clients’ families is key to protecting their financial safety. Learn more about successful family meetings 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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May 1, 2017 | aging, diminished cognition, elderly, finances for elders, financial advisors, financial judgement, handling money for aging parents, handling money for seniors, long term care, medicare, seniors finances
How Much Should You Plan On For Retirees’ “Out of Pocket Medical Costs”?
For those outside the caregiving world, there is a lot of confusion about this cost. Calculations abound in retirement planning circles for helping your clients ensure that they have enough for the things they are likely to need medically. The usual calculations outline Medicare Part A premiums (deducted from Social Security payments), Medicare Part B supplemental health insurance premiums, also called “Medigap” and for medication expenses, as some are not covered my Medicare. In plain English, this means that your client’s Social Security is less to them when the Medicare payment comes out and they have to pay out of pocket for the other kind of insurance that covers outpatient care, clinic and doctor visits, as well as prescription meds.
OK what’s wrong with these calculators? Can’t you rely on them? I think for an unusually healthy person who is your client, one who needs little care and has no chronic illnesses, they would be fine. I’m not sure where the folks making up the calculations get their statistics but I think they grossly underestimate the real costs of out of pocket medical care in retirement.
From personal experience with thousands of elders I visited at home as a nurse over a career, I did not see much of the unusually healthy. What I did see was the average person then taking numerous medications, having multiple chronic conditions and being at risk for those getting worse with age. And now, decades later, we live longer, have more health risks as a result of greater longevity and we have to pay more for the problems that go along with living to be 100. We have better diagnostics and we can catch and treat conditions more. That means more out of pocket expenses for those exotic tests Medicare will not cover. That also means more and more drugs being prescribed to manage and control chronic illness. They work, but we pay. You would be amazed at what Medicare does not cover.
Here’s the message I want every retirement planning advisor to heed: you cannot predict how much out of pocket medical expense your client will have unless you really know a lot about both their genetic disposition and their health habits and condition. And then it’s only an educated guess. How educated are you?
We do know that the way we age is about 30% due to our genetics. The other 70% of the picture is directed by how we choose to live. That means what we eat, how much we move our bodies, how we manage stress, how we socialize and how we succeed or not in our relationships with others. All of these factors affect our health and longevity and consequently, how much it’s going to cost to keep living with conditions like heart disease, diabetes, cancer, hypertension, arthritis, etc.
We haven’t even touched on the subject of Alzheimer’s disease. If you are calculating out of pocket medical I’ll bet you never calculate what it costs to care for someone at home 24/7 with specialized skill for dealing with this devastating disease. It can last 20 years. Nursing home care and caring for a person with any serious illness at home is long term care. That is not in the calculations in those handy tables describing the out of pocket medical costs for an average couple retiring at the age of 65 and living to be 85.
Here’s an example. Mort is 95. He has multiple health issues and early dementia. He can’t do anything by himself. He has 4 caregivers in shifts every day in his home. He isn’t sure he wants to keep going but he doesn’t want to stop the numerous medications he takes to stay alive. It costs over $250,000 a year just for the caregivers, not for the other costs of housing, utilities, transportation via handicap van and such. And the out of pocket medical is still there. The dentist, the hearing aids, the medications that no insurance pays for, the stair lift, the ramp on the front of the house, the high-end wheelchair and more.
If you want to help your clients plan so they won’t run out of assets, you’ll need to be realistic. Lots of cash may need to be available at the later end of life. It is more likely than not. Forget reliance on a calculator or use one that has the highest number you can find. Then add on expenses like Mort’s and you’re on the right track.
Get a lot more detail on caregiving, costs of care and what is needed as we age in The Family Guide to Aging Parents: Answers to Your Legal, Healthcare and Financial Questions. Check it out here.
Carolyn Rosenblatt, RN, Elder law attorney & Dr. Mikol Davis, Gerontologist
AgingInvestor.com and AgingParents.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 24, 2017 | aging, aging investor, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, financial elder abuse, financial judgement, handling money for aging parents, handling money for seniors, investor, scammers, senior citizen investor, senior investor, seniors finances
What To Watch For: Aging Clients and The Sweetheart Scam
If it didn’t happen so often, there would be no need to warn your single, widowed clients about it. But every day, someone gets taken in by a “special someone” who appears to have only your client’s interests at heart. The special someone is a scam artist who knows just how to get an unsuspecting lonely man or woman into the web of deception. And then they finagle money out of your client and run.
Some of these scammers are skillful repeat offenders. Some just see an opportunity and proceed to milk it for all it’s worth. Take the case of Tommy, whose wife was ill with cancer. He used to take his clothes to the local dry cleaner every week and he got friendly with the woman who ran the business. She loved to chat and gossip and he was lonely with his caregiving, cooped up with the daily chores he had to do for his ailing wife. Norma, the dry cleaner heard all about it.
Just after his wife passed, Tommy got a visit from Norma. She was so consoling and comforting. He felt like he had a real friend. She had heard about his wife’s illness for over a year and was ever so sympathetic. She also knew he had money. Within a month she had moved in with Tommy.
Over the next six months of giving Tommy her undivided attention, she managed to persuade him to give her “loans” of over $300K. She promised to stay with him forever. He loved the flattery and feeling special. No sooner had Norma gotten the last of what she could easily take, she promptly sold the dry cleaning business and disappeared. This is not such an unusual story.
Here’s what every financial professional needs to know about the Sweetheart Scam. Professional predators comb the obituaries for stories about the beloved widow or widower left behind. They look for those who have been with a deceased who was a business leader, a banker, a financially successful person. They choose the ones who may be likely targets, the survivors who have means. They scope out how to meet them and seize the opportunity to take advantage of loneliness. They will stop at nothing to get in the door. And sooner or later they always need “a temporary loan” or a little help to get out of an unfortunate jam. If it works, they up the ante. This can go on until they have bankrupted a widow or widower. It will at least drain available cash if no one is watching.
That’s where you come in, the financial professional with the ability to notice when unusual withdrawals are coming out of your client’s account. Once the scammer has gotten control over your client’s emotions, it may be too late to stop the scam. Your client is “in love” or at least addicted to the showered on attention. She won’t believe your warning then. The heads-up must come early, before an opportunist has a chance to cast a spell.
Here’s the takeaway: any recently widowed client in your book is a potential target. Do these things:
- Gently raise the subject of being careful of any stranger he/she meets soon after the loss of a spouse. Warn with empathy and facts.
- If your client claims he’s met a “special someone” do some digging. Google the person he names. Ask a few probing questions. See what your client may not be able to see. Share the data you glean with your client.
- Be sure you have contact information for a family member or trusted friend of your client whom you can call if you see something suspicious. Call them if you think your client is in danger, particularly if your client doesn’t want to hear your warning.
That protective posture you take on can save your client from disaster.
Financial elder abuse takes many forms besides the Sweetheart Scam. It is called “the crime of the century”, it is so prevalent. With the right know-how, you can stop it and keep your clients safer. Take a deeper dive into this subject in a book written just for you, Succeed With Senior Clients: A Financial Advisor’s Guide to Best Practices. Get a look at it here.
Carolyn Rosenblatt, RN, Elder Law Attorney & Dr. Mikol Davis, Gerontologist
AgingInvestor.com and AgingParents.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 11, 2017 | aging, aging investor, declining health, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, financial elder abuse, financial judgement, handling money for aging parents, handling money for seniors, senior citizen investor, senior investor, seniors finances
In a recent issue of Investment News, a study of financial advisors looked at this question. 591 advisors were asked about their experiences with elder financial abuse. One of the surprising findings focused on those advisors who knew or suspected abuse but did not report it.
A significant percentage of those who did not report abuse gave as a reason that they did not know who to contact. What is most troubling about this finding is that not knowing who to contact is such a simple problem to solve. Historically your regulators have never required that you have the name of a trusted contact for your client in order to open a file for that person. Here at AgingInvestor.com and AgingParents.com, where elder financial abuse comes up often, we think it is extremely short-sighted to be without a trusted contact or two in every client’s file. Isn’t it obvious that you need someone to call if a client gets into danger, whether it’s elder abuse or not? No one gets out of here alive and a client can live for quite a long time, developing cognitive impairment along the way. That puts a person at much higher risk for financial abuse.
New FINRA rules will require that you make “reasonable efforts” to get a trusted contact from your clients. We assure you, reasonable efforts are a lot easier to make when your client is signing up than they are when your client is 92 and forgetful or suspicious of everyone’s motives.
From us, two professionals who have worked with countless elders and their families over the last 10 years, we have three tips for every financial professional handling a client’s finances:
- You can’t ensure that your client will be competent for financial decisions forever. Be realistic! People are living longer and they may develop dementia or other cognitive impairment. Get at least two trusted contacts in every file for every client age 65 or older. Why two or more? One trusted contact might end up being the very person who is abusing your client–a family member.
- Get smart about the basics of recognizing red flags of diminished capacity. We offer a simple free checklist to help you. Click on the green button here to get yours now. These signs are warnings that your client is more vulnerable to manipulation by others.
- Know how to report financial elder abuse. You don’t have to be certain that abuse has occurred. You do need to know who may be doing it, when and how, in general (e.g., pushing your client into large, unexplained withdrawals). A reasonable suspicion is enough. It’s ok if you’re wrong. And you can do it anonymously. Call Adult Protective Services in the county where your client lives if you think someone is ripping off your vulnerable client.
Some advisors are worried that they’ll get sued for reporting suspected financial abuse. This is incorrect. Your regulators want you to report it. If you do what is reasonable, you are not a target. However, if you know that your impaired client is being financially abused and you do absolutely nothing, liability for failure to act is certainly possible.
by Carolyn Rosenblatt, RN, Elder Law Attorney, & Dr. Mikol Davis, Gerontologist, co-founders of 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 27, 2017 | aging, aging investor, diminished cognition, elder investor, elderly, financial advisors, investor, senior citizen investor, senior investor
How good are you at spotting the telltale signs of diminished capacity in an older client? Many older people have a bit of difficulty remembering. We often dismiss this when we see it, thinking it’s “just getting old”. It may be part of aging, as we do process things more slowly as we age and recall may take longer. But, there is a point when a problem recalling things should be a red flag for diminished capacity for you, the advisor. What are those red flags anyway? How do we label them? There are numerous signs of diminished capacity, more extensive than this article allows, but we’ll look at one category, which we call cognitive signs. Here’s a breakdown of what you should look for when your client has a lot of difficulty remembering things.
What to note and document about memory loss
This is one of the first things most advisors may notice in a client that causes concern. Perhaps she does not remember important meetings, decisions and discussions. Here are some examples of what you may see: Multiple telephone calls in one day that are repetitive and do not make sense. The client forgets that she has already talked with you and is calling about the same thing in another call to you. She repeats a question she already asked you and that you already answered. Client forgets why he has an appointment with you. This can be by telephone or in person. Perhaps the client himself asked for the meeting but then he forgets why. Or perhaps you wanted to discuss a proposed transaction with him and told him that, but when you call or he comes into your office, he has no idea why he is there. Trying to refresh his memory about it does not help. Complete forgetting of an event that just took place. You just spent a hour with your client telling her some important information about upcoming changes to her portfolio. She seemed to understand when you were talking but an hour later she asks you questions as if the meeting you just had never took place. She had totally forgotten about it. No shows. You have arranged meetings, appointments with others or events that require your client’s participation. He agrees on the pre-arranged date and time but then does not show up. When you call him, he has no recollection of the event, that others are involved nor that he had agreed to this.
If your client demonstrates any of these indicators you need to be paying close attention and make an effort to contact your client more often than you did before you noticed these problems. Any or all of them might be warnings of developing dementia. There could be other reasons for memory loss, but you won’t know unless you are keeping good records. The only way to determine if you have a serious problem here is to track these signs over time and document each instance you see. If the problem gets worse, it is time to take it to the next level. In your organization that might mean escalation, or having the documentation reviewed by a committee. Ideally, as we see it, the next step should include contacting the client’s appointed trusted third party who would step in when the client became impaired. To learn more about diminished capacity and just what you should do about it, click here. An hour of accredited learning on the course Best Practices for Clients With Diminished Capacity will make you a lot wiser in your approach.
By Carolyn Rosenblatt, RN, Elder Law Attorney, & Dr. Mikol Davis, Gerontologist co-founder of AgingInvestor.com
Mar 24, 2017 | aging investor, diminished cognition, elder investor
How Much Retirement Income Will Aging Clients Need? More Than You Think!
Financial professionals do their best to guesstimate how much income a person will need to maintain a client’s lifestyle in retirement. Figures vary, with averages being $50,000 a year and up. They are based on various median ranges of things like out of pocket medical expenses, cost of living and the like. But you can’t predict how long your aging client will live. All your calculations can be for naught if you totally miss how much it really costs to live to be in one’s 90s.
Let’s look at a real person who is in some ways atypical in that she is in pretty good health at 94 and can still get around on her own. A lot of those who are 90+ can’t. They need more help and help costs more than most retirement calculators accurately predict. Could you do the math on this one, in advance?
“Evelyn” was widowed 8 years ago. She lived in a big house in a lovely gated seniors’ community with all the amenities: golf courses, pools, recreation centers, clubhouses, restaurants and many activities. But after she lost her husband three pivotal things happened. First, she became more isolated. Some of her friends moved away to assisted living or to be closer to family. Next, she got more and more lonely. And third, her own health began to decline in that it was harder to walk and use her hands due to arthritis. She decided to move.
She sold her free and clear house and invested the cash. One would think that the proceeds of over $350,000 would be a nice cushion to pay for her move to a smaller seniors’ apartment where help was available, even though she was still able to do her own personal care unassisted. Moving from a 2800 square foot home to an 800 square foot apartment should be a savings, right? In the seniors’ complex, meals, linen changes, cleaning and transportation to appointments are provided, along with many social activities on site and in the community. The transportation service allowed her to give up driving, which it was time to do at her age. It also eliminated the struggle of having to shop, do housekeeping and cook all the time. She had a community now. But at what cost?
In the four years since she sold her house, she depleted all of the sales proceeds from the home. Why? She has expenses she didn’t really plan for. She was not able to predict these expenses accurately. Her out of pocket medical costs were for things not covered by either Medicare or supplemental health insurance. In a single year, that figure was over $2000. The medications she takes for her blood pressure, heart and other chronic health conditions are keeping her going but the part not covered by insurance cost her another $5000. A premium for her supplemental insurance (also called Medigap coverage) is almost $3000 a year.
The lowest level of “care” in the seniors’ apartment means that no help is needed with bathing, walking, dressing, eating, bathroom, and moving from bed to chair and back. The rent and services in a high-value real estate area where her apartment is located started at $5000 a month. Last year it cost $66,000 for the year and it increases every year. This year’s rent is $300 a month more than it was in 2016. And that is without assisted living, which would cost at least another thousand dollars each month.
Evelyn had a hospitalization last year due to her blood pressure. After she came home, she needed a helper, whom she hired independently for a few weeks. That cost was also not covered by any insurance. In the years since her husband passed, Evelyn also had to get a lot of dental work done. In the space of a few years, she spent over $50,000 on her teeth, with implants and several surgeries to get it right. And it was harder to hear. She spent $5000 on hearing aids with the ongoing expense of battery replacements. Dental and hearing aids are also not covered by Medicare or supplemental insurance.
What will it cost Evelyn to live an enjoyable but not extravagant life in a modest seniors’ apartment next year, assuming she is still able to do her personal care independently? The tab will be at least $97,000 without dental and hearing aid expenses. Do you and your clients plan for that?
The long-term health conditions Evelyn has will likely push up the out of pocket expenses she faces as she reaches 95. She says she wants to live to be 100. She is a fortunate person in that her investment income is about the same as her cost of living. But not every client you have is so blessed.
Sure some of Evelyn’s costs of living are cheaper where real estate costs less. Medical costs may be somewhat less too in other parts of the country and you plan according to where your client lives. But the reality is that there are likely to be huge out of pocket medical cost with aging. When you do retirement planning it’s not only about the calculator. It’s about the very real, somewhat unpredictable effects of living a long time and the toll it takes financially on your aging investors.
Here are the important takeaways:
- Widowhood changes the picture. Discuss with your clients what they would want if widowed. Where would they live? What would they need to be comfortable and safe?
- Expect everything about living to age 90 and above to cost more than anyone says it will.3. Be sure your older clients understand that Medicare does not cover dental, hearing aids, much medical equipment, home-helpers, transportation and certain medications. They must be ready to cover these expected costs that are part of aging for almost everyone.
- The cost of living in retirement does not go down, as people get older. The supports they are likely to need cost more over time, not less.
Learn more about the psychology of aging clients, how to communicate better with them and how to best deal with typical problems aging clients present in Succeed With Senior Clients: A Financial Advisor’s Guide to Best Practices. Click here to get your digital or hard copy today!
Carolyn Rosenblatt, R.N., Elder Law Attorney, & Dr. Mikol Davis, Gerontologist co-founder 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
Feb 13, 2017 | diminished cognition, elderly, financial capacity, financial elder abuse, finra, scammers, SEC
In all the proposed rules by FINRA and the SEC to address financial exploitation of seniors, advisors are urged to report suspected abuse to the local Adult Protective Services or to call the police. Unfortunately that is not always a solution. There seems to be a lack of clarity about how things work. Here’s a typical scenario that illustrates an issue.
Myra is 87 and her daughter, Lexie has been taking advantage of her for years. Myra feels sorry for her daughter because she can’t seem to hold a job. Never mind she has a drug habit. Myra has means and she often gives Lexie “loans” that are never repaid.
Lexie gets a power of attorney from Myra, goes with Myra to her financial advisor and tells the advisor that Myra needs $80,000 for a trip they are going to take. Myra is disabled and never travels. The advisor knows this. Advisor decides after seeing several of these demands for withdrawing Myra’s funds under suspicious circumstances that Lexie is abusing Myra. The total amount withdrawn at Myra’s request is over $150,000 in six months, which is highly unusual.
Advisor calls the police. They refer her to Adult Protective Services. APS takes a report over the phone, asks questions and then asks Advisor to fill out a report form. She fills it out and reports the recent questionable $80K demand and withdrawal and she lists the total taken of $150K. She puts Lexie’s name on it as the person suspected of financially abusing Myra.
APS sends a social worker out to investigate the complaint and to visit Myra at home. Myra finds the worker to be very nice and they chat. “Has your daughter ever pressured you to give her money?” the worker asks. “No”, says Myra. “Do you remember giving her gifts or loans totaling $150K this year?” the worker asks. “I don’t think I did that”Myra says. The worker asks if she is in the habit of giving money gifts to Lexie and Myra says yes, that Lexie is her daughter and she needs some help sometimes. The worker concludes that giving money to Lexie is what Myra wants and the case does not go any further. No one has tested Myra to see if she is competent to understand the consequences of giving her assets to Lexie, particularly since she has two other adult children.
In this case the facts are not clear enough to prove that a crime was committed. APS will not recommend that Lexie be prosecuted because even though giving away money is not in Myra’s best interests, she is assumed to be competent to do so. In this case APS is not solving any problem and takes no further action. If Myra did not want the funds to be given to Lexie it would be different and elder abuse could be proven perhaps. As is there is too much doubt about Myra agreeing to be taken advantage of by Lexie, no prosecutor could meet its burden of proof.
The Other Option
Lexie’s other two siblings were not initially aware of the abuse by Lexie. Their potential inheritance is directly affected by their sister’s actions and when they find out they call APS also. The case is closed and they get nowhere. They are furious.
They consider another option. If there is no crime here that can be proven, there may be a civil case. They contact an attorney who handles civil cases of elder financial abuse. The attorney does an investigation and finds out that Lexie has bought a condo with the money taken from Myra. The attorney successfully proves that Myra was duped by Lexie and the matter is settled by Lexie’s attorney agreeing to sell the condo and give the proceeds back to a fund set up for Myra in case she needs more cash as she ages. And the settlement agreement says that Lexie will inherit no part of the fund. Further, the power of attorney Lexie got is torn up and Myra appoints a more responsible agent, another daughter who now oversees all of Myra’s finances.
With a misunderstanding of how law enforcement works, there is a belief that all one must do is report to APS and somehow, financial abuse will be stopped. But when APS finds insufficient proof, or a wiling victim like Myra, they do not intervene. They are essentially reporters to law enforcement but APS does not prosecute anything. A civil case is outside their sphere and a civil attorney must be consulted to explore whether one can pursue that possible way of recovering an elder’s assets that have been wrongfully taken.
The Takeaway
The important thing to know here is that APS is limited in what it can do. A criminal case of any kind has to be proven “beyond a reasonable doubt.” Any advisor who wants to keep senior clients safer needs to understand that a willing victim will pretty well destroy a criminal case of abuse. A civil case is a possibility as long as there is an asset (in Lexie’s case, a condo) to get and someone who is not a willing victim (in Lexie’s case, her siblings). One should know a competent elder abuse attorney to consult and find out if your client has that choice in taking legal action or if her heirs do. Making a few calls is the least you can do to protect your client.
By Carolyn Rosenblatt, RN, Elder law attorney, AgingInvestor.com
Feb 6, 2017 | aging, diminished cognition, elderly, finances for elders, financial advisors, long term care, medicare, seniors finances
Probably I’m not the only one who has seen the deluge of ads on TV for Medicare supplement insurance. One that really bothers me though is the bit with the actress saying she’s only in her 60s and “I’ve got a nice long life ahead.” She’s so smug and so sure she’s just fine and will stay that way.
The ad taps into the belief most people cherish, which is that impairments happen to other people and that they will just keep being fine, at any age. People say they want to live to be 100. Their imagination is that they will be perfectly capable in all ways and will not need any help at 100. That is belief, not truth.
What makes a “nice long life” anyway? No one ever wants to think about infirmity and cognitive decline. And yet, by the time we reach that nice old age of 85 at least one in three of us, and maybe even one in two will have Alzheimer’s disease. Not so nice. And oh, by the way, that supplement insurance the actress is promoting doesn’t pay for care if you need it at home long term. Neither does Medicare.
Every financial planner who has a client over age 65 needs to be considering that the “nice long life” that is part of our cultural fantasy is indeed dreaming for most people. It’s not about longevity. That we’ve probably got. It’s about good health in old age. That, we have definitely not totally figured out. As 10,000 people a day are now turning 70, it’s time to get past fantasy and consider how to make that long life a lot safer financially.
Are your client’s assets enough to pay for the care they are likely to need? If not, you, the client and her family must engage in the essential discussion about who will care for the client as she ages and how much it will likely cost. One must do the math. The cost of caring for someone with dementia at home is staggering. And the advisor needs to calculate it. This is not considering the usual figures thrown around about “the average couple at age 65 will spend “x” dollars on out of pocket medical expenses for their lifetimes”. None of those commonly used figures consider what it may cost to pay for a person with Alzheimer’s disease who lives for 7-20 years with the disease. Help from someone will be absolutely necessary for anyone with dementia.
Your portfolio review with a client at retirement is a good time to talk it over and bring up the actual, not fantasy prospects for the future. And here’s hoping you will not be influenced by stupid TV commercials about what the future may look like. Longevity can be wonderful, yes, and you can help make it financially safer for your older clients. A nice long life is certainly possible. And a long life with accessible assets to cover long term home care near the last phase of life is ideal.
Carolyn Rosenblatt, RN, elder law attorney, AgingInvestor.com
Jan 30, 2017 | aging, diminished cognition, elder investor, elderly, financial elder abuse, scammers
Imagine this: your aging client is 86 years old, slightly grumpy, and he thinks he knows better than just about everyone else on nearly everything. He’s quite willing to follow your advice, though and that’s what makes a good relationship with him.
Lately, he’s got you worried. He is obsessed with the internet. He spends many hours a day on it and he tells you about this man he met online who has an amazing investment he wants to get into. When he starts telling you about it, it sounds like a scam of the worst kind. You warn him not to do it and he says you don’t understand.
He asks you to liquidate one of his investments you manage. You do it. He tells you how happy he is that he’s got this great thing going now. A month later he calls you and wants to liquidate a lot of his funds to raise some significant cash for his “friend” who has the scammer-sounding “investment”. You say, “don’t do this!” He won’t follow your advice. This is new, and puzzling. What should you do?
Rules tell you that you must follow your client’s instruction and that you are not supposed to reveal his financial information to anyone. Should you call Adult Protective Services? Can you? You are not sure what to do.
Here’s the answer: you are permitted to report financial elder abuse. According to the regulators’ Interagency Guidance on Privacy Laws and Reporting Financial Abuse of Older Persons, which discusses the issue in detail, you are also permitted to disclose this information to protect against or prevent actual or potential fraud.
But what if your client think his internet “friend” is fine even if you are seeing telltale signs of fraud in your client’s interactions with the scammer? You can report the apparent crime in an online form to the FBI as long as you know enough detail from your client. I think anyone who suspects internet fraud should do this, even if it turns out to be some legitimate thing in the end. It probably isn’t. And your client’s money could all be gone if you do nothing. Would that be okay with you?
Financial professionals need to be clear about your role in preventing and stopping elder abuse. Law enforcement can’t always stop the criminals but sometimes they do. No one can stop what is never reported to them. Do not be misled by the misconception that protecting your client’s private information is supposed to stop you from reporting apparent fraud and abuse.
You could be the difference between your client’s safety and your client being wiped out financially. Take a deeper dive and get very smart in an accredited one hour online course about stopping financial abuse. Click here now.
Carolyn Rosenblatt, R.N., Elder Law Attorney & Dr. Mikol Davis
co-founders of AgingInvestor.com and AgingParents.com
Jan 27, 2017 | aging, aging investor, declining health, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, financial elder abuse, financial judgement, handling money for aging parents, handling money for seniors, long term care, long term care insurance, medicare, senior investor, seniors finances
Do you have older clients who seem to be doing really well physically? Some of our aging folks are remarkably sharp and we can all be lulled into a false sense of security with them. This is a heads up warning about a real situation that you can perhaps help clients avoid by a simple step. Bear in mind that your older clients may be alert but still have trouble keeping track of the occasional bill. That can lead to a true financial disaster. Here’s what happened to one person we met at AgingInvestor.com who could well be your client.
Ruth is 88, still quite independent, taking care of herself at home. She does her own shopping and cooking, drives and pays her own bills. Great at her age, right? But when it comes to memory, that’s a problem from time to time. And forgetfulness plus an unforeseen glitch caused a financial nightmare for her. Here is what happened.
Ruth has Medicare and supplemental insurance. That extra 20% the supplement pays doesn’t sound like a lot, unless you have a crisis and have to go to the hospital.
Ruth paid her bills by check each month. But sometimes her mail carrier made mistakes and put envelopes in the wrong box. That’s just what happened with Ruth’s supplemental insurance bill. She didn’t pay the bill one month because she never got it. That was the glitch. Unfortunately that is exactly the month that she had a major health crisis and had to be hospitalized. She never knew that her supplemental insurer had missed a premium payment from her until they denied payment to the hospital for the amount due after Medicare paid the hospital in full. She was very upset and called them but they brushed her off when she told them what happened. She had never paid late nor had she ever missed a payment. They didn’t care. Her bill for the amount Medicare didn’t cover was over $80,000. They flatly refused to pay it.
She tried to call again and again but got nowhere. She sent a letter but received no response. Ruth’s case is not the first time we’ve seen a situation when an older person fails to pay an insurance premium notice either because of illness, dementia, not receiving the bill or other valid reason. Some companies will allow reinstatement of coverage when the amount owed is paid in full. But Ruth’s former insurer has been horrible; clearly to get out of the large bill they would have had to pay. They’re probably happy about it but of course Ruth is distraught.
Now imagine that Ruth is your client. Most write checks by hand for paying bills, as they have done all their adult lives. Lots of people in their 80s don’t use a computer or are only able to do so with many limitations. They don’t use auto debit for paying bills automatically.
There is one thing you, the advisor, can do to prevent a disaster like Ruth’s. Work with your aging client and their family to get them set up so that payments for ongoing, recurring expenses are auto debited from a bank account. This applies most especially to insurance premiums. As long as you are overseeing the finances for these older clients, think about this simple preventive strategy you can urge them to use to protect their financial safety. Sometimes no one thinks of it. Sometimes the family is also lulled into a false sense of security because the elder is so independent in other ways. Bill paying is a vulnerability and you can think of measures to make it less so.
That medical bill coming to a client because of a simple error, forgetfulness, or glitch can be a source of extreme stress. Take the time now to talk with your client about the prospect of auto pay for all of their recurring bills. Even if they are unsure of how to set it up, a family member, a friend or money manager can offer to do this for them. It’s a small, basic measure but hugely helpful to prevent financial loss
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
Jan 5, 2017 | aging, aging investor, diminished cognition, elder investor, finances for elders, power of attorney, senior investor, seniors finances
Have you ever had a stubborn older client who told you he’d never talk about his assets with anyone but you? He doesn’t think he’ll ever need help in his life and he wants to be in charge. When you suggest a family meeting to let someone else know what to do in case he ever became ill and unable to communicate, he shuts you down. This is all too common.
A consistent obstacle to communication we see in our work is the resistance of the older person to discuss finances with anyone, including their adult children or other heirs. The Great Depression led to secrecy about finances for many, as fortunes were lost sometimes overnight and once proud people became impoverished. Talking openly about money was just not done for those who grew up in this time of widespread devastating and sometimes life-ending financial losses. To this segment of our population, openly discussing money was considered rude, unseemly. Some of these Depression-era survivors remain reluctant to tell anyone in their families where their accounts are, what their assets are and what they want done with their assets in the event of incapacity.
Presumably when you have a long-term relationship with your client, she trusts you and trusts your judgment. That gives you leverage. You may know more about her finances than her family, her friends or anyone in her life. You are charged with the task of long range planning and you look ahead. In doing so, it is up to you to urge your client, gently, repeatedly and with ongoing persistence that she find someone she can trust to appoint to protect her if she has an accident, falls ill, or can’t speak for herself.
Sometimes persistence pays. The power of your relationship is a tool to persuade your client to come around. This is not a situation to ignore just because your client resists. The older she is, the more there is at risk. Anything can happen to her health at any time.
If your client resists, we encourage you to repeat your requesting a week or a month. Do it in a tactful way and paint a verbal picture for her of what would happen if she were no longer able to speak for herself. Tell her how frustrating it would be to have to refer her account to your legal department for a decision about getting a court involved if she could no longer communicate. Tell her how upset that would make you feel. Express your own concerns and make it your problem.
We hope that every single person in your book of business has an appointed trusted other for you to contact. You may well need that and it can be up to you to urge your client to take care of that most important piece of legal business, the Durable Power of Attorney, if she has not done this. Diminished capacity can sneak up on your client and you’ll need help.
It’s a new role you have with the oldest clients. They are living longer than they thought they would and with longevity come the risks of impairment in all ways.
If you’d like to take a little deeper dive into managing clients with diminished capacity, you can get a lot of expertise in a one hour online course by clicking here.
By Carolyn Rosenblatt, RN, Elder Law Attorney
AgingParents.com and AgingInvestor.com
Oct 21, 2016 | aging, aging investor, diminished cognition, elder investor, finances for elders, financial advisors, financial capacity, financial elder abuse, finra, handling money for aging parents, handling money for seniors, NASAA, nasdaq, SEC, senior citizen investor, senior investor, seniors finances
Oct 7, 2016 | aging, aging investor, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial elder abuse, handling money for seniors, investor, NASAA, senior investor, seniors finances
Two Things Professionals Can Do About Elder Financial Abuse
It’s vicious and pervasive. It’s growing. It has been called “the crime of the century”. Elder financial abuse, according to a study by True Link Financial, costs seniors in the U.S. over $36B a year. But can financial professionals do anything about it? We say definitely yes.
Most of us have encountered this kind of opportunistic crime at some point, among family, neighbors or friends. When we at AgingInvestor.com present to groups of professionals we ask how many have had witnessed this kind of abuse with anyone known to them. Almost every hand goes up. The question is, what can you do about it?
Many professionals are either hesitant to get involved because they think privacy concerns should stop them, or they want to take action but are unsure about what to do. Let’s clear away those concerns now.
First, remember that when your client gets ripped off and cash is drained out of the account you manage, you are losing fees for those AUM. If that isn’t incentive enough to be involved note that NASAA has already developed model rules which will require that you report abuse to authorities. Those are likely to become mandates soon enough.
Let’s look at two basic steps any professional can take now to improve your response and protect your clients from financial abuse.
Get third party contacts on file
One, you need to get from your retirement-age clients the names of several trusted others whom you can call in the event that you see red flags that abuse could be going on. Remember that family members are the most frequent abusers of aging folks. Perhaps that favorite one, Sonny Boy is taking advantage of a vulnerable parent or other relative. Be sure one of the contacts you get from your clients is not a family member, but a trusted friend, colleague or professional. Age makes all of us more vulnerable to financial manipulation for many reasons. Next time you review an older client’s portfolio, get this necessary information about whom to call if you get concerned and keep it on record.
Get permission from your client to call the third parties under certain circumstances
Two, you need not consider privacy rules a barrier if you have your client’s permission to contact the designated third parties he has identified. A legally sufficient privacy document will help you. This is an area where both legal and compliance departments should assist you to get the right paperwork in order. At AgingInvestor.com, we developed just such a model document, a product we offer to overcome the confidentiality barrier to taking action. It’s part of a senior-specific policy. And you can do it in-house on your own too with legal input. Get one done for every aging client. It resolves the question of giving private information to the designated third party. You will have the ok to act when you need to.
Caution: we do not recommend that you use an informal letter to for your client to give up the right to privacy. Consider that in our society, we use things like a durable power of attorney to give up the right to solely manage one’s finances, and an advance healthcare directive to give up the right to make end of life or care decisions alone. We don’t use mere letters for these things. You need papers that are standardized, formal and that will stand up to scrutiny should anyone question them.
Surely you do not want predators to take advantage of your clients, particularly when they suffer from any cognitive decline. That increases their vulnerability. And the integrity of their portfolios is enhanced by your own vigilance over them as they get older.
Take a deeper dive into the elder abuse subject in our book Succeed With Senior Clients: A Financial Advisor’s Guide to Best Practices. We offer you a handy checklist with the 7 warning signs of financial elder abuse, more practical tips and some true stories of how a financial professional did or didn’t get involved at the right time.
The most forward thinking financial advisors will be early adopters of these means to keep clients financially safer. Be one of those leaders!
by Carolyn Rosenblatt, RN, Elder law attorney, AgingInvestor.com
Oct 4, 2016 | aging, diminished cognition, elderly, finances for elders, financial elder abuse, handling money for seniors, scammers, seniors finances
The Emotional Impact of Financial Elder Abuse
When older persons are deceived financially by hose they trust the most, the emotional effects can be devastating. The problem of financial elder abuse costs our older population over $36 billion per year in the U.S. alone. The reasons for this rampant problem some call “the crime of the century” are complex. Many victims cognitively impaired in some way, and are therefore subject to the undue influence of greedy relatives, caregivers, professionals, or criminal predators who strategically seek out older victims. However, not all seniors who fall victim to financial abuse are affected by cognitive decline. Some competent people are seduced by unscrupulous sales pitches promising big rewards. Some are cheated by the Bernie Madoffs of the world and their cohorts who take advantage of seniors who are worried about having enough money. These victims see the pitch or offer as a way to alleviate their money insecurity and they give up their cash to those who want nothing more than to take it and run. Sometimes, the senior may want to get something for nothing or get a “great deal’ with very little perceived risk.
Abusers are not always shady characters or unscrupulous family members. Sometimes they are legitimate organizations that simply find an opportunity to take advantage of someone with whom they already have a relationship. Using a relationship of trust to manipulate an older adult is called undue influence. The laws protecting them from being victimized by undue influence vary considerably from state to state, with some defining it so vaguely that enforcement is difficult. However, whether the law is used to convict abusers of this crime or not, the effect on an aging person is devastating. It is hard enough to realize that one has been duped by a stranger. When one understands that the manipulator is a trusted relative, friend, an organization in which a person truly believes or contributes to, the pain is even worse.
Wanda’s Case
Wanda was eighty-nine years old at the time her daughter, Janis, contacted an attorney. Janis reported that Wanda had been a member of her large church all her life and had been an active participant in the congregation. She had always made modest contributions to the church and trusted all of the other members. But over time, Wanda’s memory began to decline and she got confused easily.The church began a fundraising campaign for new construction. Wanda was asked for a donation, which she gave. Then another request came and Wanda once again complied. Wanda gave larger and larger donations to the church over the next year, with the checks totaling over $100, 000. Janis grew increasingly alarmed, because her mother clearly was in need of help. Wanda was found lost and wandering near the church after one day. The church itself had recorded the incident and a church worker had taken Wanda home. Janis was concerned that Wanda would run out of?money. She was physically ok, but her mental condition was becoming a serious enough problem that Janis believed she should no longer live alone. And Wanda trusted the church, to the point that she did not believe that anyone there would do anything wrong. This was a case of the church using its position of influence over an impaired member to elicit larger and larger financial contributions from her. They took advantage of an older adult who had become lost and confused after church, and they knew it. Wanda could not perceive that she needed care, which was going to be expensive, and that she could all her reserves by these overly generous donations. She was not able to act in her own best interests. She ?believed that she could not possibly run out of money. When her daughter, Janis, tried to explain that she had to stop giving to the building fund, Wanda was incredulous. She simply could not process the reality that she was going to lose all her savings if she kept up the contributions.? She became angry with her daughter for even suggesting that her actions were not right and that the church was out of line doing what it did.
Wanda’s emotional response to the abuse was to be in denial about it. She likely not able to fully process what had happened and felt that Janis was being disloyal to the church. The matter did get resolved. When the church was contacted to meet and discuss the pattern of solicitations they had sent to Wanda and their record of her being lost after church services, they immediately contacted an attorney who put a stop to their actions. Janis was able to watch over Wanda after that and she did obtain help for her. Wanda’s anger at Janis was an unfortunate effect of stopping the abuse. Wanda would likely have been angry at the church had she been able to perceive that she was being manipulated. However, she was cognitively impaired and did not see?the full picture.
The Emotional Impact of Abuse
Undue influence is not the only means of taking advantage of seniors. Any kind of elder abuse can be devastating. Denial is common after older victims discover financial abuse. When a scam is underway, they tend to keep up hope and continue engaging with the scammer. Despite warnings from family, friends, and advice from knowledgeable others, they continue to believe that the big payoff is coming. Or they are unable to embrace that they have made a mistake and trusted an untrustworthy person. Sometimes, even after the evidence of fraud mounts, the victim continues to give money to the predator. They have put their trust in someone whom they very much want to believe was trustworthy. When the payoff does not come, or nothing that was promised materializes, they eventually realize they were duped. The effect is sometimes intense shame and embarrassment. Living with this shame often leads to depression.
Suicides resulting from financial abuse have been reported. Some never recover emotionally from the feeling of horror that they were “so dumb” as to fall for a scam that in retrospect looks a lot more obvious. It damages a person’s sense of self, and sense of being able to trust one’s own judgment. It can go to the core of a person’s self-esteem, leaving the victim with a belief that he can no longer trust himself with anything financial. When a senior loses most or all of her assets and is left impoverished, it becomes a constant reminder of the shame of being duped by someone else. Losing a home can force the person to live somewhere he does not choose to be. That can be with relatives if available, but it can also land him in a Medicaid bed in a nursing home where few would ever want to live out their last years.
Prevention Strategies
No one is totally immune from fraud and financial abuse. Anyone can be victimized. Many a sad tale is told by an adult child of a victimized aging parent that “I trusted my father and didn’t want to question him.” Or, “I thought since my mom was a CPA, she would never fall for that.” Part of the problem is the perception adult children and even some professionals have that certain folks are never going to be abused financially because they are smart, or experienced with money matters. It is simply not true that education or experience protects everyone. Working with older adults puts professionals in a position to be vigilant, to educate about the risks of abuse out there, and mainly to pay attention.
Using Resources to Help Victimized Clients
While the criminal justice system prosecutes the relatively small number of abusers who are reported to authorities, it does not do much to help the victims of abuse. Money stolen from older people is often long gone by the time a predator is brought to justice. When a criminal is prosecuted successfully, the court will order that he make restitution of stolen monies to the victim, but enforcement of restitution orders can be problematic.
What is almost entirely lacking is any resource to help a victim of financial abuse manage the emotional effects of the crime. We simply do not fund this in our justice system. If victimized seniors wish to get emotional support or mental health help to recover from the impact of financial abuse, they would have to do so on their own. The cost is clearly a barrier, though Medicare does provide for psychological services. However, the benefit has limitations. A diagnosis is required for the provider to get payment. And many people attach a stigma to getting mental health help, which is an unfortunate perception that stops some from obtaining the needed psychological support for recovering. If there is a civil case of elder abuse with a successful outcome, and financial damages are actually awarded to the victim as a result, the award may include expenses for psychological treatment for the victim. Therapy is one means a victimized person can learn to cope with the emotional distress, shame, and? humiliation of being taken advantage of by any financial abuser. There is little doubt that those who receive supportive services after victimization cope better and have a better chance of healing from the trauma.
Professionals’ Roles with Abuse Victims
Professionals who work with aging adults in any capacity will likely encounter someone who has been victimized or is in the process of being taken advantage of by another. It is important to know their own community resources to provide information to anyone who may need help. Understand how difficult it must be for the person who has been victimized, and offer a respectful referral to a local resource. Local mental health providers can be found through the American Psychological Association, Psychologist Locator, community service agencies such as Jewish Family Service Agency (serving people of all faiths), the Alzheimer’s Association, or senior centers throughout the U.S. Most offer information and referral to local providers in the senior’s county.
Warning Signs
When suspecting financial elder abuse, those working with them should be aware of these warning signs:
1. The presence of a new “friend” in a client’s life who has an inordinate interest in the older person’s accounts or assets, and who gains access to any of them.
2. Sudden change in a Durable Power of Attorney document.
3. Isolation of the older adult from friends, family, and others close to them.
4. Large gifts to strangers or people they don’t know well.
5. Complaints about having reached maximums on credit cards when this has never happened before.
6. Frequent email or telephone contact with any stranger who establishes a relationship with the senior that seems addictive.
With the effort of those in the community surrounding older adults, we can all take steps to intervene and prevent or stop abuse. If something seems odd to you, speak up, ask questions, step in where you can. You just might be the key to keeping a senior financially safe. And if you learn of abuse in the course of doing business with a senior client, a kindly approach in offering emotional health resources lifts both you and the victim.
BY CAROLYN ROSENBLATT, RN, ELDER LAW ATTORNEY
Carolyn Rosenblatt has over forty-five years of experience in her combined professions of nursing and legal practice. She is co-founder of AgingParents.com, a resource for families, and Aginglnvestor.com, offering educational training and products. She can be contacted at (415) 459-0413, carolyn@aginginvestor.com.
REFERENCES
Journal of Accountancy. 2015. “Emotional harm of elder financial abuse outweighs its financial damage.” www.journalofaccountancy.com/news/2015/jun/elderfinancial-abuse-201512535.html. Accessed January 2016.
MetLife Study on Elder Abuse, www.metlife.com/assets/cao/mmi/publications/studies/2011/mmi-elder-financial-abuse.pdf. Accessed January 2016.
Rosenblatt, Carolyn. 2015. “Protecting Our Aging Parents from Abuse.” In The Family Guide to Aging Parents: Answers to Your Legal, Financial and Healthcare Questions. Sanger, CA: Familius, 284-296., 2015.
“Common Elder Specific Issues.” In Working With Aging Clients: A Guide for Legal, Business and Financial Professionals. Chicago: American Bar Association, 71-76.
This article was originally published in the CSA JOURNAL 66 / VOL. 2, 2016 / SOCIETY OF CERTIFIED SENIOR ADVISORS / WWW.CSA.US
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
Sep 20, 2016 | aging, aging investor, diminished cognition, elder investor, elderly, finances for elders, financial advisors, financial capacity, handling money for aging parents, handling money for seniors, investor, log term care, long term care insurance, senior citizen investor, senior investor, seniors finances
Three Tips For Talking To Your Older Clients About Long Term Care
When you look at an older client’s portfolio, the biggest concern is probably about whether they have enough to last to the end. You calculate the drawdown, the earnings, and you spend time on those figures. But what about long term care?
This is the conversation the client doesn’t want to have. No one wants to think about being disabled or losing independence.
Of course, this is not realistic. You, the planner may not want to bring up the subject because of your own discomfort, or because you aren’t sure what to say, or perhaps because your client dismisses it if you do bring it up. But a competent planner and advisor must do so.
Consider this realistic typical scenario:
A health crisis happens to your client. It can be a fall, a stroke or heart attack, anything that is unexpected. First, there is a hospitalization. OK, Medicare covers that, together with supplemental insurance. A rehab facility is next with therapy and nursing care. Medicare covers that but only to a point. When the elder is ready for discharge, the client and family are told, sometimes a day or two beforehand, that they will have to get help for the aging loved one at home. ”Doesn’t Medicare cover that?” they ask. Unfortunately, no, they are told.
The Cost
So the family members and the client start scrambling to provide help at home. In some parts of the country the cost is about $30 per hour. According to the Genworth 2015 Cost of Care study, the national median price for someone to provide help with bathing, dressing and walking or other hands-on home help is $20/hour.
When you do the math, you realize that even if your client needs just twenty hours a week at the average cost, it will add up to nearly $20,000 a year. That is on top of other, non-covered medical expenses, such as physical therapy when Medicare stops paying, hearing aids, and many medications. And that is just the beginning. Limited hours of home care often stretch into full time care as people who have disabling conditions age.
Some people figure they can spend their assets and give things away so they can qualify for Medicaid. I would not recommend Medicaid as the best way to get quality care. First, one must be really destitute to qualify for it. And the state looks back at all financial transactions for a five year period in most states prior to the application to see what was going on, what transfers were made and if they were honestly done. Second, the care one receives under Medicaid is the most basic, may be of the lowest quality and typically is not what anyone really wants.
If you can prevent that choice, you will. Your client could spend her last days in a three bed room in a dingy nursing home if she or anyone in her life thinks Medicaid is a fine way to pay for care.
The cost for quality care at home can be staggering. In my own prosperous county, with a very high elder population, the cost of 24/7 care at home from non-nursing providers (home care workers) exceeds $200,000 per year. That is on top of the ordinary costs of living a senior has, regardless of care. And she will still be paying her out of pocket costs for other things Medicare does not cover: many medications, other non-covered services, Medicare premiums, etc.
Taking On The Long Term Care Discussion: Three things you should do
- You need to create a plan for how to pay for long term care in the future as part of your job of financial planning and retirement planning. Your client is not likely to ask you about it. Do not wait to have these discussions. Cash for the unexpected need for care could be a major expense. Your client needs to know the facts and figures. Most people grossly underestimate the costs. We have even seen financial industry publications naively state “Medicare pays for most things”. It doesn’t pay for what most people need to stay at home after any disabling condition arises.
- Educate your client about the likelihood of this need for future care.About 70% of people will need long term care in some form in their futures. Failure to plan for it can bankrupt a person or leave them in serious debt toward the end of life. Or some investments could make cash inaccessible when needed.
- Use resources to help yourself understand the real costs of home care, assisted living, and nursing home care. In order to educate your client, you need to educate yourself first. The Genworth Cost of Care study is a good resource. Here at AgingInvestor.com, we also offer tools[1] to help you. Be sure you have something to hand to and to discuss with your client. The need is now for any retiree.
by Carolyn Rosenblatt, RN, Elder Law Attorney & Dr. Mikol Davis, Geriatric Psychologist
AgingInvestor.com
[1] The Family Guide to Aging Parents: Answers to Your Legal, Healthcare and Financial Questions, and Succeed With Senior Clients: A Financial Advisor’s Guide To Best Practices and Working With Aging Clients, A Guide for Legal, Business and Financial Professionals. All 3 books are available at AgingInvestor.com and Amazon.com
Sep 13, 2016 | aging, aging investor, diminished cognition, elder investor, finances for elders, financial advisors, financial capacity, handling money for aging parents, handling money for seniors, senior citizen investor, senior investor, seniors finances
Do you consider yourself to be pretty good at managing your older clients?
Most of us may be overestimating what we know and underestimating what we need to know. By the year 2020 nearly one in six Americans will be sixty years old or older. And 10,000 people a day are turning seventy.
If you’re thinking “so what?” consider this: the risk of dementia and Alzheimer’s disease rises with age and the risk doubles about every five years once a person hits sixty-five. So you the advisor, the financial professional with responsibility about another’s finances will have to deal with the risk. Some of your clients are impaired now whether you recognize it or not, and many of you have several clients with some cognitive impairment.
Do you know what to look for with your older investors? Do you know the red flags? And if you spot those red flags, do you know what to do about them? There can be a long list of signs showing that a person is beginning a downhill slide with her thinking and understanding. Let’s just start with one sign most of us can recognize: short term memory loss.
The First Red Flag
Researchers who study these issues tell us that this is one of the very first signs other people see when the older client (or anyone) is starting to lose the capacity to make safe financial decisions. The client may entirely forget a conversation he had with you last week or even the same day. The client may forget her appointment with you or that she had a question she needed answered. By the time you get back to her with the answer, she doesn’t recall asking it. There are innumerable examples of this in our lives, as grandparents, other older relatives and friends start becoming forgetful. When it happens with clients, it is a red flag that warns you something is happening that needs your attention. Why?
The signs of forgetfulness can indicate that you need to track your client more closely than before. That means increasing the frequency of contact, especially in person if possible. Memory loss may lead to dementia, though this is not true in every case. However, memory loss is listed by the Alzheimer’s Association as an early warning sign of Alzheimer’s disease. Clients who have this disease should not be making financial decisions without the assistance of a trusted other. It is far too dangerous for them, as their judgment is impaired.
Documentation
No one will know what you see in your client unless you keep good records of your client contact and your observations. You need to label the changes you see in a uniform way, as should everyone else in your office. Call things by the same terms so everyone understands what is going on. “Short term memory loss” is a good example. This is a term that is in widespread use and typically understood by just about anyone. If you document that, and then see a client six months later, noting that the problem is worse than at the prior contact, you and those who may advise you about what to do will have something solid to work with in making decisions about that client. When you document, give specific examples, such as “client called repeatedly the same day asking the same questions”. And comment that he appeared to forget the previous conversations about that subject.
Then What?
After you have spotted such red flags as memory loss, you need a plan for escalation of the matter to someone who knows more about elder issues than you do. That needs to be a firm-wide or office policy. The decision-makers on the subject of what to do to keep an impaired client safer need to have a solid working knowledge of what steps they can take with you to help your client and protect your organization from costly mistakes.
Red flags of diminishing capacity are things every financial professional must learn and understand. We don’t cover the topic deeply in this article of course, but we do take a deeper dive in the book, Succeed With Senior Clients: A Financial Advisor’s Guide to Best Practices. You’ll find all you need to know in the chapter entitled “Know the Client Red Flags”. It comes with a checklist you can use as a guide on what to look for and the right terminology to document your observations correctly. If you want a “cheat sheet” with the red flags on it, just go to AgingInvestor.com and download your free checklist any time. You can get the book by clicking here.
By Carolyn Rosenblatt, RN, Attorney, & Dr. Mikol Davis, AgingInvestor.com
Aug 3, 2016 | aging, aging investor, diminished cognition, elder investor, elderly, finances for elders, financial capacity, handling money for aging parents, handling money for seniors, senior citizen investor, senior investor, seniors finances
The National Institute on Aging reports that scientists are using magnetic resonance imaging (MRI) of the brain to explore the parts associated with money managing abilities. Can we actually see a picture of this?
The report cites neuropsychologist and lawyer, Dr. Marson. “It’s the $18.1 trillion problem,” said Daniel Marson, J.D., Ph.D., professor of neurology at the University of Alabama at Birmingham, citing an estimate of household wealth held by U.S. adults age 65 and older. “That money is at risk in part because of the cognitive disorders of aging.”
We don’t have a way to pinpoint an exact spot in the brain that would tell us that a person is or is not competent with finances, but the report describes novel efforts using MRIs to find out more than ever about the brain and financial capacity. Changes in certain parts of the brain are linked to loss of financial capacity.
New techniques are providing intriguing data on why older adults—even those who were previously quite savvy about finances—may lose their money-managing abilities,” said Nina Silverberg, Ph.D., program director of the Alzheimer’s Disease Centers at NIA’s Division of Neuroscience.
What does this mean for you and your aging client? It may be one more objective way to verify what you already suspect: that an older client is not savvy anymore when it comes to handling finances. The trick would be persuading a client to get this brain image if you and the family suspect that the client is in cognitive decline. We don’t have the MRI techniques nailed down to verify loss of money making decisions, but that seems to be on the horizon.
Meanwhile, every advisor needs to be aware of the subtle signs of impairment in your client. An aging client who is in the earliest stages of Alzheimer’s for example, is already moderately impaired for making safe money decisions. That means that you, a responsible advisor have in place a clear path to bringing in a surrogate decision maker to help that client. Part of that $1.8 trillion Dr. Marson mentions as being at risk is what is paying your fees. Take prudent steps to protect it.
Learn fast about spotting diminished capacity with our downloadable free checklist at AgingInvestor.com.
Jun 18, 2016 | aging, aging investor, diminished cognition, elder investor, elderly, financial capacity, senior investor
Most of us probably think we know what to look for in an aging client who has diminished capacity. But have you every studied the subtle signs that should serve as red flags for you? Now is the time to learn more. Too many older clients are among us to ignore the probability that some of them will be too impaired to do business safely.
Indicators of diminished capacity will not always be so obvious to you, particularly if you are interacting with a an aging client and you as a professional are doing most of the talking. You are probably directing the conversation with that client If you have specific questions about a transaction, whether it involves a real estate matter, a legal transaction or case or accounting matter. You could miss the signs that your client is beginning to develop cognitive problems. If you are asking your client, “Do you understand?” and he says “yes” that is not a way to test whether he really did understand or not. You will need to do more if any warning sign pops up when you interact with your client.
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Jun 17, 2016 | aging, aging investor, diminished cognition, elder investor, elderly, financial capacity, financial elder abuse, senior investor
Your elderly clients are exactly what professional thieves are looking for. They know, from the massive success they’ve had in stealing from elders, that age is the biggest risk elders have that can affect their money judgment.
But as a professional, is it really your business to keep them safe from outside predators? It’s one thing if the person taking advantage is in your own organization or office. That puts an obvious burden on you to act. But it’s the subtle things that you learn from your client about losing money to someone that should get your attention too.
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Jun 17, 2016 | aging, diminished cognition, elderly, financial capacity
Have you ever found yourself in a situation with an older client who can’t seem to remember anything anymore. 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? He’s pleasant and just loves you. But you are worried.
You are pretty sure your client is experiencing a slow, but steady cognitive decline. He has a daughter in another state but maybe she isn’t paying attention to what is going on. He has a son she’s not close to, though he lives in the same area she does. You asked him once if he had someone to be his agent, his power of attorney. He 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. He says he doesn’t want to talk about it and you just back off and never mention it again. You suspect he may have Alzheimer’s disease, from your experience with your own family member.
Here is what can happen to your client.
He steadily loses judgment about what is a good thing to spend money on or invest in; therefore, bad decisions happen. We have observed 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. 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. 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 an 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 smarter about conducting successful family meetings in our new book, Succeed With Senior Clients: A Financial Advisor’s Guide to Best Practices. There’s a great chapter entitled “Your Client’s Family: An Open Book or Pandora’s Box?“ Click HERE for your copy today!
Jun 17, 2016 | aging, aging investor, diminished cognition, elder investor, elderly, finances for elders, financial capacity, investor, senior investor, seniors finances
Have you ever had an older client who didn’t want anyone, not even family, to know what his assets were? Did you find this secrecy about money to be a problem with a few of these older folks? It’s not so rare.
Everyone is entitled to privacy, of course, and the rules mandate that you not share a person’s private financial information. But what if your client begins to decline in his health? What if he starts to appear as if he’s “losing it”? Then are you supposed to just let him make mistakes and feel constrained that you can’t call a family member or anyone about his health? It does seem that most advisors do nothing until things reach a crisis point.
As aging experts, we think things should be handled differently. When you open every client file, you are not required to get the name of someone to call in case of emergency or in case of need. That is precisely what needs to change. Let’s consider common sense. If people are living longer than ever, their chances of developing cognitive impairment are consequently greater. With impairment, people lose their financial judgment. If you have a client’s trusted contact in the file, you may need it. And you can’t wait until your client is really, obviously impaired. If you do, she probably won’t want to give you anything. That puts you in a bad position. Your client is vulnerable to big mistakes and even to financial abuse. You don’t know what to do. You can’t call anyone and you wouldn’t know who to call even if you could.
Here’s the sensible solution: get the names and contact information of two trusted others for your client when you open any file. And with existing clients, ask them for the contact for two trusted people in their lives at the next portfolio review. Do it across the board for every single client. That way, when any one of them goes on to develop cognitive impairment, or dementia or has a stroke or anything disabling, you are not caught flat. And how do you ask that secretive client for the names and for permission to call when, in your judgment, the need arises? You start by making it your problem. You let the client know that it is now office policy. You politely insist and you get it done.
Not every single client will immediately cooperate. Some will need your patient persuasion and tact to coax them to do this. That is one of those “soft skills‘ you absolutely need with your older clients. A few may refuse your request and you can’t force it on them. But for most clients, the encouragement from you to look to the future may be considered part of your job.
Senior clients can pose a number of communication issues with you besides being secretive about finances. Hearing loss, vision limitations and mobility issues can all make conversation more difficult. What you need to know to hone your skills and keep on top of these challenges is all spelled out for you in our book, Succeed With Senior Clients, A Financial Advisor’s Guide to Best Practices. Check out the chapter, “Tough Talk: Communication Challenges With Aging Clients”. You’ll get those soft skills down in no time! Get your copy today by clicking HERE.
Jun 17, 2016 | aging, diminished cognition, elderly, scammers, senior investor, seniors finances
Howard, 92, loves women. He has dementia and is legally blind. He likes to give women checks when they tell him their sob stories about needing money. He has one daughter, Missy, who is aghast at his conduct.
After her mother died, Missy felt obligated to try to keep Dad from throwing away all his money. He would use up everything in the checking account and then use credit cards to the max. He got into debt. Missy warned him and warned him, but he just didn’t get it. She had no legal authority to stop him from his stupid decisions about money.
He got a housekeeper, Flossie, recommended by the manager of his building. Flossie didn’t have much money, and needed to get her car fixed. She hit up Howard and wrote herself a large check from his account, which she had him sign.
When Missy confronted him about giving Flossie money, he lashed out and tried to hit her. He had a history of violence and Missy was fearful as well as very angry. Dad had given away cash to five other women before Flossie!
Finally, Missy was able to get the checkbook away from dad and no one else could write checks for this blind man to sign. He was now out of money. She had not taken legal steps to do this before he was broke. Not smart.
Flossie decided she was “in love” with Howard. She assured his daughter that she just wanted to be with him but they weren’t going to get married. Then Howard took a fall, was hospitalized and soon after, went to a nursing home. Flossie kept hanging around. One day, she went down to City Hall and got a marriage license. She never told Missy. She found an officiant for marrying them and had the ceremony right there in the nursing home.
Missy was beyond furious. She had reported Flossie to Adult Protective Services. The worker told her that Howard was “entitled to his folly”. She thought that was just plain stupid. She was advised that she could go to court and get a guardianship over her Dad. But, he had no money left and it seemed pointless by then. It was going to cost thousands of dollars too.
She sought advice at AgingParents.com. Mediation of the dispute with Flossie was suggested. Missy and Flossie both agreed to talk over the problem.
Missy wanted to have the marriage annulled. She wanted Flossie to be able to visit Howard, as he did seem to like her company and he was lonely. Missy and her husband had a suspicious and mistrusting relationship with Flossie, but in a way she was actually helping them by keeping Howard company while they were at work. Flossie didn’t want an annulment. She liked the idea of being married. Apparently, she didn’t consider Howard’s credit card debt. She just wanted to get something from Howard, like his Social Security survivor’s benefits.
The dispute was mediated without involving lawyers or the court. Missy proposed that she would allow Flossie to continue to visit Howard as she wanted. But, she was to refrain from discussing money and would report to Missy. When Missy asked Flossie if she was going to pay her Dad’s credit card bills, Flossie blanched. Suddenly, she seemed a lot more interested in the annulment.
She agreed to Missy’s conditions. A deal was worked out between them with the mediator’s help. Flossie agreed not to tell Howard about the annulment. He had been declared incompetent long before, and would forget what it meant anyway. Flossie agreed to the legal annulment. In exchange, Missy and her husband agreed to attend a “marriage” ceremony between Flossie and Howard at Missy’s home, without any paperwork, without it being legally recognized, and Howard would be none the wiser. Flossie could play married, without any legal consequences good or bad. Howard would still have Flossie’s companionship and Missy was okay with that.
The resolution gave everyone at least some of what they wanted. Before it got as far as it did, however, Missy might have tried other options.
By the second or third time a woman had ripped Howard off, she might have worked on persuading him to give her a Durable Power of Attorney for finances. She could have moved funds out of his checking account and stopped the ripoffs by his “girlfriends”. He eventually did sign one, but it was too late to keep his funds in the bank when he did.
She also could have gone to court for that guardianship. His doctors were cooperative in declaring him incompetent to handle money. Guardianship was a last resort, but it would have protected him. He ended up on Medicaid, in a 3 bed room in a mediocre nursing home. He will likely stay there for the rest of his days. Guess that’s how it works when one is “entitled to his folly”.
I’m hoping that anyone with an aging parent who is like Howard will look ahead. Sometimes, your aging parent makes a string of stupid decisions and you can’t stop them. But sometimes you can stop the folly before it’s too late. If you don’t know what to do, seek some outside advice.
Until next time,
Carolyn Rosenblatt
AgingParents.com
Jun 17, 2016 | aging, aging investor, diminished cognition, senior investor
And yet, these elders seem so oblivious. If you point out logically that they’ve forgotten the earlier phone call, there will either be an embarrassed excuse or a denial. Even if you read her your notes of the earlier phone call you both had and that the question was answered, she will not going to accept that and she might get very angry with you for suggesting that she isn’t fine. Why is this? Why can’t a person who is forgetful just say it and admit it? Are they being purposely difficult?
