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5 Tips for Working with Clients with Dementia

5 Tips for Working with Clients with Dementia 5 Tips for Working with Clients with Dementia

As baby boomers retire, advisors can expect to see more clients who are beginning to lose their cognitive acuity or are suffering from dementia-related diseases, such as Alzheimer’s. The legal challenges such clients raise for advisors can be significant. Clients suffering from cognitive decline may request transactions that are out of character, or worse, not in their best interests.

In BIC's latest issue, Margarida Correia writes about these challenges and shares tips from advisors and legal experts. Here are their top tips.

1. Involve a family member 1. Involve a family member

If you suspect that a client has diminished mental capacity, you should always try to involve a family member. By getting permission to bring in another family member, “you lower the risk that anybody could accuse you of taking advantage of the other person because someone else was present,” says Bernard Krooks, a founding partner of Littman Krooks.

2. Ask for an emergency contact when opening new account 2. Ask for an emergency contact when opening new account

There’s always the possibility that a client may refuse to allow an advisor to involve a family member. To avoid that legal quagmire, advisors should, as a matter of practice, ask for an emergency contact at the beginning of the relationship when setting up the account. If all other efforts fail to get permission from the client to contact someone else, the financial professional can reach out to the person named as the emergency contact.

3. Do not engage in transactions that you believe are inappropriate for the client 3. Do not engage in transactions that you believe are inappropriate for the client

Even though a client has the right to refuse to give an advisor permission to contact family members about transactions requested by the client, advisors still cannot engage in transactions that are not prudent or appropriate. “If some 88-year-old client calls you and says they want to sell all their bonds and invest in a mining company in South Africa, you can’t be a robot,” says Krooks.

4. Document all conversations with the client 4. Document all conversations with the client

Document all calls and office visits with your clients. It’s important to not only communicate well but also to confirm what you discussed in writing, says Krooks. This helps minimize your potential legal liability should a client or their family members file a claim or lawsuit against you.

5. Terminate client relationship, if necessary 5. Terminate client relationship, if necessary

If a client denies an advisor permission to contact a family member, and the advisor believes that the client is cognitively impaired, the advisor may want to terminate the relationship. “Declining to represent a client with diminished capacity who refuses to involve a family member is a very sound business practice for a financial advisor,” says Krooks.

Read more about dealing with clients with dementia here

The legal challenges raised by clients who are beginning to lose their cognitive acuity or are suffering from dementia-related diseases, such as Alzheimer’s, can be significant for advisors. Here are some of the top tips for advisors working with clients with dementia.

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