Cognitive decline: be prepared and know your role

With people living longer it’s time for advisers to address the long-time challenge of what to do when clients experience cognitive decline

October 2019

Rhonda Latreille

MBA, CPCA, Founder and CEO, Age-Friendly Business®



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Risk Disclaimer

The information, opinions, estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time.

Key takeaways:

  • The benefits of taking a proactive approach to addressing cognitive decline with clients ‘ahead’ of time
  • How to integrate client wishes and documentation as an initial and ongoing part of the advice review process
  • Deal with the signs of decline with empathy and clarity

With people living longer, and as the regulatory landscape evolves, it’s time for advisers to address the long-time challenge of what to do when clients experience cognitive decline. Rhonda Latreille, Founder and CEO of Age-Friendly Business®, and a Certified Professional Consultant on Aging (CPCA), shares her unique insights on the maturing client base to help you broach the notoriously sensitive topic – with ease.

Finding that middle ground: addressing cognitive decline

As a certified professional consultant on the ageing marketplace, I’ve seen many advisers struggle with the same issue of how to address a client’s cognitive decline. Either they’re too frightened to even broach the topic – and therefore already at risk of liability – or they’re eager to dive into the deep end, leaving themselves, and their firm, potentially vulnerable.

But there is a happier – and less murky – middle ground. While as a financial adviser you need to be aware of the legislation and privacy considerations at stake, there is still a favourable approach that allows you to operate within guidelines and make the conversation a little easier for ALL involved.

The reality is that we are all living longer and are heading into retirement with more financial assets than any previous generation. With the baby boomer market playing an increasingly dominant role in advisery practices the topic has become an ever-important point of discussion in today’s landscape.¹ Yet it’s still fairly taboo: in fact, a recent study found that only 17-19% of investors have actually discussed cognitive decline and/or dementia with their own advisers.²

So how do you proceed on the issue?

As a best practice, it’s ideal to prepare for the situation AHEAD of time – both during the initial intake interview, and annual reviews, when your client is still healthy and of sound mind.

Always resort back to the foundation of your commitment, and reinforce the message that as your clients’ trusted adviser, you have a continuous obligation to act in their best interest. Manage expectations, and define what that will look like, in good times, and bad:

  • Start the estate transfer process during onboarding, and ask for an individual, or powers of attorney (POA), who can be contacted in case of diminished capacity (e.g. “If you’re having a difficult time, who would you like to me to contact to come in, and help us work together to discuss your financial strategies?”)
  • Always document the information, and have clients sign off on it (don’t ever assume the POA or representative will be a family member, as there is sometimes greater potential for abuse and exploitation)
  • Review the record annually, and update as necessary to ensure contact information is current, and representatives are still able and willing to act
  • Set up family meetings early on, where appropriate, to help solidify relationships and engender trust
  • Do your homework on your firm’s compliance policies to avoid scrambling at the last minute, and be crystal clear on your responsibilities
  • Keep communication transparent and above board (never contact a family member or friend without your client’s knowledge)
The conversation: clarity and empathy are KEY

Once you begin to suspect a client’s cognitive decline, it’s important to remind him or her of your core responsibility as an adviser and then clearly describe the behaviour you’ve observed – without judgment or interpretation. Be respectful and honour their circumstances. For instance, “Mary, I’ve noticed you called us four times today to confirm our appointment, so I’m not assuming anything – I just want to ensure that everything is in order with your health, and that you’re feeling okay.”

At this point, gently, but firmly, alert clients to the preparative document they have already signed (if you have it) to ensure they have the support they need, and where possible, follow up with any obligatory company policy, especially if resistance is encountered: “Our firm requires that if I have any concern about your health, I am not able to move forward until we’ve confirmed you’re okay, and we have all the proper protections in place” – whether that means an official doctor or mental capacity assessment, or bringing in some additional support.

Ultimately, it’s critical to understand your role, and that you’re not a social worker, or any kind of authority on mental capacity. But as their financial adviser, you’re among the most-trusted professionals in your clients’ lives, so it falls upon you to safeguard their assets and ensure a process that’s as smooth and seamless as possible.

A long-term partnership makes ALL the difference

Even by taking all the right steps, it’s important to acknowledge that addressing the issue of cognitive decline will never be easy. However, many of the financial advisers I’ve encountered through my Age-Friendly Business® have cultivated meaningful relationships with their clients over time, and are able to leverage this to achieve a level of comfort and trust that would otherwise be unattainable in a difficult situation:

“[Mary,] I’ve known you for a long time, and I’m committed to helping you achieve your goals. I can appreciate what this must feel like for you, but we’ve been through many challenging times together, and this is no different. I always have your best interest in mind, and I’m obligated to voice my concerns. Let’s work together on this, and then we can move forward.”

Even if you have clients’ permission to contact the POA, or trading authority, remember to copy them on any future conversations, and document the entire process to avoid any legal trouble. It will go a long way to nurturing your existing relationship, and demonstrating that you’re a dedicated, reliable, and proactive partner.

Cognitive decline? How to spot the signs

It’s also a good idea to identify some general behavioural triggers upfront that would cause you to suspect cognitive decline (included in that same document that outlines your client’s chosen representative). This would not only allow you to refer back to those specific markers when approaching the conversation, but it also creates an opportunity to discuss the importance of understanding the nature and consequence of decisions.

Recognise that mental capacity is not necessarily binary and can change on a day-to-day basis depending on a number of contributing factors – from vitamin deficiency, UTIs, side effects from new medication, or even just a particularly poor night’s sleep. It may be permanent, but it may also be temporary confusion that’s reversible. And of course, cognition is not about a client being able to repeat the complex theory behind every investment and shouldn’t be a go-to diagnosis after a bad decision. Simply put, from a financial perspective, clients must be able to comprehend the outcome of their decisions. Identifying symptoms that would render them incapable of doing so ahead of time lets clients know what they can expect and reassures them that you’ll be there for them – at all stages of life.

4 Telltale Signs:
  1. A significant or sudden change in financial objectives (e.g. if a client had a fairly conservative portfolio and decided to withdraw all money to embark on a world cruise with a new friend). It’s important to note that this could also be an indication of potential abuse or exploitation and not necessarily a change in mental capacity
  2. Memory loss or confusion (e.g. repeated missed appointments, calling frequently to ask the same questions, forgetting instructions, etc.)
  3. Incoherent speech, or having to repeat simple concepts time and again
  4. Lack of interest in financial decisions, and an unusual gap in communication
An Age-Friendly® practice: a smooth transition to the next stage

While the issue of cognitive decline is an important focus for the 50-plus market, it’s just one facet of the many concerns and considerations that impact this major life stage. In my Age-Friendly Business® enterprise, we specialise in training professionals how to differentiate themselves in this marketplace, and create an elevated experience for baby boomers and senior citizens.

As such, it’s essential for advisers to understand their needs, fears and goals to ensure they can provide the best financial solutions for what they require now – AND into the future. To accomplish this, you should first seriously challenge yourself on your own stereotypes and beliefs about ageing: “What am I bringing to the table? What are the myths? What are the realities? And how does that all influence the quality of my engagement with the client?”

Then, it’s often about putting in the necessary effort and comprehending potential problems or risks that may arise: dealing with ageing parents; paying for children’s university tuition; assisted living and the long-term care system; retirement lifestyle; ; living through chronic illness; end-of-life care; estate and succession planning. Just being aware of these issues – and what’s keeping your clients awake in the early hours of the morning – is a big step toward guiding meaningful conversations and enriching your practice. More often than not, clients will not have even thought of a particular issue and are grateful to the adviser for simply initiating the discussion.

Ultimately, to manage an Age-Friendly® business, it’s about being able to demonstrate the appreciation and sensitivity you have for the unique concerns of the older demographic – and assuring clients that while you may not always have all the answers, you certainly have the right questions, and the knowledge to direct them. Having a history of these important conversations ensures that when difficult times arise, you can deliver that bottom-line message to your client with honesty and integrity, fostering a more positive resolution for all involved.

¹ PriceMetrix. The State of Retail Wealth Management, as of December 31, 2016. Based on insights drawn from PriceMetrix’s proprietary database, representing 24 wealth management firms, with over $5 trillion in assets under management, more than 60,000 financial advisors, 10 million retail investors and 500 million transactions.

² “The Impact of Aging on Financial Decisions,” State Street Global Advisors SPDR, 2016.

Risk Disclaimer

The information, opinions, estimates or forecasts contained in this document were obtained from sources reasonably believed to be reliable and are subject to change at any time.

It has been produced for information only. Views and opinions should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned. No action must be taken or refrained from being taken based on this content alone.

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