Retirement Advisor | July 2016 | LifeHealthPro.com 10
the news 07.16
With the aging of america, financial advisors
are facing increasing numbers of clients showing symptoms of alzheimer’s and other age-related dementias.
although the temptation is to not get involved due to
privacy concerns, it’s important for advisors to take action to protect their clients, as well as to prevent e&o
exposure. national compliance Services, an ria consulting firm in Delray Beach, florida, suggests advisors adopt
the following escalation process once they witness a client
exhibiting memory or other cognitive symptoms.
Raise the issue with an immediate supervisor
and/or chief compliance officer.
Check the client file for presence of an executed
trading authorization form, durable power of
attorney, or a guardianship appointment form.
if none of these is available, consider notifying the
client’s agent, attorney or other representative to
express your concerns.
Make sure anyone claiming authority to act on
the client’s behalf actually has that authority.
Encourage the client to bring a spouse, close
family member or trusted friend to the next
meeting. failing that, seek the advice of the
client’s attorney or doctor.
If doubts remain, determine jointly with
compliance whether it’s advisable to secure a
legal opinion about the wisdom of continuing
to advise the client under the current arrangement.
a big part of that analysis will involve determining the
applicability and legitimacy of existing authorization,
powers of attorney or guardianship-appointment forms.
If the client declines to bring a third party
to the next meeting and the authorization
documents are missing or questionable, get legal
advice to see what further escalation may be needed.
now, in cases where advisors suspect senior financial
abuse, it will be crucial to document concerns, log
supporting facts and report the matter to compliance. in
certain jurisdictions, notifying state protective
services may also be warranted.
for further information, the national ethics associa-
tion encourages advisors to read ncS’s full discussion of
this issue, as well as to contact their own firm’s compli-
ance department or legal counsel. Prompt action should
serve to minimize complaints from family members,
lawsuits and future e&o insurance claims.
A call to action: What to do when incapacity strikes
reD fLag reminDer