What do you do when your elderly client begins to make bizarre withdrawals?  Is there something wrong when your elderly client starts transferring funds to finance a Nigerian soccer teams?  What if a long lost relative comes on the scene and starts influencing the investments and cash withdrawals of an elderly client? 

Unfortunately, many financial advisors are faced with these problems because a growing number of their clients currently have or will have dementia.  The best course is preventative medicine before your client has dementia; i.e., a protocol for dementia-stricken clients.  The challenge becomes what to do when you client is suffering from dementia. 

There are a number of courses your firm can consider, all of which have an upside, downside and associated expense and risk.  Firms may consider any of the following: money.jpg

  1. Terminate the client relationship.
  2. Freeze the account until you can obtain some sort of resolution.
  3. Suggest that your client seek medical attention; the dementia may have been caused by something that can be fixed.
  4. Seek the input of a co-account holder or family members in accordance with privacy laws.

Each of these options has certain legal implications that may vary depending upon where the client and the firm reside so you should consider any of these steps carefully with someone abreast on the law.  Ideally, your firm would have developed strategies to anticipate these types of situations, and plan accordingly for clients who suffer from dementia.  Otherwise, you may be stuck in a very difficult situation to remedy, and exposed to potential liability from aggrieved clients and their families.

* photo from freedigitalphotos.net