What to Do if a Client Shows Mental Dips

The subject of losing cognitive abilities is a difficult conversation to initiate. It may not be something an adviser can come right out and talk about, says Stephen Williams, vice president, U.S. financial planning strategy at BMO Private Bank. When there is a previous relationship with an existing client, the adviser can look for changes in appearance, mismatched clothes, forgetfulness, or significant weight loss.

“The Four Keys to Longevity,” from BMO Wealth Institute, examines Americans’ views on various aspects of aging. The report outlines the different physical and financial considerations that Americans must contemplate as they live longer lives.

In 1970, the average life expectancy at birth in the U.S. was 71 years, the report noted. In 2014, it is 79 years and by 2050, the U.S. Census Bureau projects that average life expectancy will be 84 years. Today, according to the National Institute on Aging, there are more than 40 million people in the United States aged 65 or older, accounting for about 13% of the total population. By 2050, it is estimated that there will be more than one million centenarians living in the U.S.

These figures raise a number of  questions for advisers with aging clients, who may want to proactively take some steps to protect their finances.

Knowing the client is important, Williams tells PLANADVISER. Who is their primary caregiver or support? Whether it’s a spouse or an adult child, the adviser should be able to have a conversation with that person if he senses a problem.

Rosanne Roge knew something was not right with one of her clients, whom she describes as intelligent and very sharp. Roge is managing director of R.W. Roge & Company, and a certified senior adviser and financial planner who specializes in geriatrics. 

Estate Planning

“We knew the estate planning was going to be an issue,” Roge tells PLANADVISER. The firm put her in touch with an estate planning attorney, which helped to get the client’s children involved. “If we don’t have the authority to speak to the children,” she says, “that could be a problem.”

Roge had the client sign and notarize a letter, which was given to the estate planning attorney, detailing permission for the adviser to speak with the children in case the client is not fully cognizant. The attorney can be a liaison. “It’s really key to establish the relationship with the children,” she says.

Talking about past changes to an account can be a quick way to assess someone’s abilities, Williams says. If the adviser is conducting a financial review, he can say, “Remember when we moved some money away from large-cap U.S. to international a few years ago?” A blank stare could be a red flag.

Looking for the red flags that can signal cognitive decline can be tough, Williams says. One sign of mental slippage, such as a dip in risk tolerance, is very common for people in retirement. “People want to hold onto things instead of risking the market,” he says. Signs of frivolous spending could be something to pay attention to: “If someone has always driven a Toyota, and they show up in a BMW, could be an indication they’re losing some ground.”

Williams says that his position in a bank makes him especially aware of problems that can show up through checkbook activity if someone habitually forgets to pay bills or make deposits.

Financial behaviors are sometimes a tip-off, Roge agrees. “They start writing checks to every charity that sends them an envelope,” she says. They spend money on purchases that are unusual for them. Someone who does not like fancy clothes suddenly spends $5,000 on a coat. 

Warning Signs

“If we don’t see it, we hear from one of the kids that they noticed something,” Roge says. Housekeeping and bill paying are two areas that can be unmistakable signs. People with cognitive declines may begin hoarding and stop managing everyday paperwork, causing papers to pile up.

If clients do not realize when dementia starts, Roge says, people sometimes throw things out. Her firm is actively trying to get clients to have conversations about the location of wills and other essential documents so they can be scanned into the system.

Williams mentions that people can visit a neurologist at age 60 for a baseline exam. The visit can generate a reading that can be a good way to reassess mental and physical capabilities in subsequent years. “It can track any slippage in the mind,” he says. “If there is a family history, it’s a good route to go.”

Advisers could begin the conversation by discussing the client’s wishes for their own elder care as they age, says Cyndi Hutchins, director of financial gerontology for Bank of America Merrill Lynch.

Advisers might ask their clients to consider a contingency plan for unexpected health care expenses and issues, Hutchins tells PLANADVISER. “This is a conversation that could easily lead to a discussion around the client's wishes for several issues,” she says. First, their own elder care choices and documentation of those choices. Naming a designated family member who will help with decisions in the event of the onset of cognitive decline is another subject. Next, talk about putting in a place a plan to deal with the issue and inform family members of these plans.

“We think four things are most important to keeping the brain sharp,” Williams says, starting with cognitive training such as Lumosity or other online tools, reading and keeping the mind active. Continuing to work in some capacity can be helpful; the report mentions the Chianti region of Italy, where family-owned vineyards are passed from generation to generation, and older family members continue to work at less-taxing but still vital jobs.

Financial security, good health and intact social networks are also detailed as key factors in maintaining a healthy long life.  “The Four Keys to Longevity” can be downloaded here.