Aging and Incapacity

We don’t know when or how incapacity will strike. People should be prepared and ensure their affairs are in order while they are fully mentally capable. Addressing diminished capacity and potential for financial exploitation helps protect Clients, yourself, and your business.

Use Helping you plan to age with dignity checklist to help Clients prepare for future health-care needs.

Step 1: Recognize the red flags of cognitive decline and financial exploitation

Having capacity means that a person can both understand the necessary information for making decisions and appreciate the consequences of those decisions.¹ As Clients age, the threat of financial exploitation and/or cognitive decline grows exponentially. It’s imperative to be aware of the warning signs related to diminished capacity. Warning signs include:

• Pronounced memory loss
• Difficulty performing familiar tasks
• Changes or inconsistent mood and behaviour
• Decreased understanding of financial concepts
• Impaired financial judgment

Watch these videos to recognize the red flags of cognitive decline

• Caring for a parent with Dementia
• How can advisors talk to Clients about incapacity?

Read Recognize the red flags of cognitive decline and financial exploitation

Step 2: Prepare early on using important documentation

A key part of planning is ensuring that Clients have completed important documents. All Clients should consider:

• A power of attorney (general and enduring or continuing)
• A will
• A living will or medical directive
• Trust documents, if required for their estate plan.

If Clients don’t have one or more of these documents, you may want to start that conversation. Make a note of what hasn’t been completed yet. Circle back with Clients in a few months to see if they need help with any missing documents.

Consider a TCP

Another key planning step that advisors are using is having Clients designate a trusted contact person (TCP) on their account. Clients can provide consent for you to contact their TCP in defined situations, such as suspicion of incapacity or financial exploitation. In designating a TCP, Clients allow you to speak to a person they’ve authorized without the concern of breaching privacy.

There are currently no regulatory requirements for Clients to have a TCP. However, regulators are encouraging this as a best practice when a Client account is opened or when collecting know-your-Client (KYC) information. Making it a part of your practice is a good way to be proactive with Clients, your firm, and industry standards.

• Watch Preparing for Client incapacity best practices video
• Read Planning for cognitive decline – We can’t predict but we can better prepare
• Share What you need to know about Power of Attorney and Trusted Contact Person with Clients

Step 3: Protect Clients, yourself, and your business

What do you do when you discover that a Client has diminished mental capacity? Or someone is taking advantage of them financially? Knowing where to look for help is key when it comes to protecting Clients and yourself from the associated risks.

If you suspect a situation of mental incapacity or financial exploitation, follow the established procedures set out by your firm. These include:

• Carefully documenting your interactions with Clients;
• Contacting the Client’s TCP or power of attorney if proper authorization has been collected and recorded;
• Notifying the firm’s compliance department or legal counsel of your concerns; and
• Alerting police if elder abuse is suspected.
• Watch How can advisors protect senior Clients from financial exploitation?
• Read Protecting Clients from the risks of cognitive decline and financial exploitation.
• Share Protecting seniors from the risks of cognitive decline and financial exploitation.

We can’t predict – but we can better prepare

Addressing diminished capacity and financial exploitation properly helps protect Clients, yourself and your business.

3 experts reveal their best practices – through their personal stories.

Planning for Client incapacity is worth your time. Watch these 5 short stories to hear industry experts share their best practices for serving an aging Client segment.

• A Certified Financial Planner talks about assessing capacity and what they did when they suspected a family friend was showing signs of Dementia.
• An industry expert tells a personal story of caring for a parent with Dementia and what signs he saw.
• A Certified Financial Planner talks about how advisors can protect senior Clients from financial exploitation.
• A Certified Financial Planner and an Insurance specialist share their best practices to prepare for Client incapacity and how to build a senior-friendly business.