Frank Moore, the chief investment officer at Vintage Financial Services in Ann Arbor, Mich., remembers a longtime client, a man in his eighties, who announced that he had won the Canadian national lottery. He wanted to wire funds to a Canadian brokerage firm in order to collect his prize.

"I tried to preserve his dignity by saying congratulations, that sounds great, but let me check into this for you," Moore says.

The lottery, of course, was a scam. "The client wanted us to send the money anyway, and I told him flat out that I wouldn't do it," Moore says, and the client backed down.

Just six months later, Moore noticed that he had been withdrawing a lot of money. "This time, he'd won the Australian lottery," Moore says drily. "We stopped him just before he sent a sizable sum."

Moore's client was in the early stages of Alzheimer's, a disease that often first shows up when people fail to understand financial concepts. Financial planners, who work closely with clients, often for many years, may be among the first to notice worrisome developments. In many case, no spouse is at hand. Clients with dementia are typically single or widowed; many are women whose husbands handled family investments during their married lives.

In the best circumstances, families tell planners when an older person is no longer able to make independent financial decisions. In less clear-cut situations, where perhaps no one else has noticed cognitive changes, planners are faced with the need to balance between respecting an adult's financial decisions and delicately, diplomatically intervening.

A client's financial security may be at stake; the planner may also be risking a lawsuit if a client is making financial decisions without fully comprehending them.

EARLY SIGNS

To help professionals deal with clients who have trouble reasoning and recalling, FINRA met recently with financial service companies and with the Alzheimer’s Association to create guidelines. A sensitive planner will take steps to protect everyone involved as soon as the initial symptoms appear.

Some dementia victims might show dramatic personality changes, going from sensible to gullible, as Moore's client did, or from trusting to paranoid. Others might show smaller changes.

"One of the first things I see is when a client who would typically be able to make quick decisions about portfolio changes is not so willing to make those decisions anymore," says Lea Ann Knight, a principal at Garrison Knight Financial Planning in Bedford, Mass. "They say that they're still thinking about it, but they can't articulate what it is that they're thinking over."

Some of those clients may move slowly because they're unable to understand changes. Knight recalls a widowed client whose financial life changed substantially after her husband's death. "She kept parroting the details of his plan, even though it no longer really applied," Knight recalls.

Others lack the short-term memory necessary to recall new information. "I had a client who asked me a question, wrote down the answer, then looked up and asked me exactly the same question. We did this five or six times. It was clear that his short-term memory was gone," says Mimi Hackley, director of financial planning for Sharkey, Howes & Javer, Inc. in Denver.

Still other early-stage dementia patients continue the interests and activities they've always enjoyed, but take them to a new, more intense degree. "People often go off the rails in the same direction they were already headed," says Kathleen Kuehl, a financial principal at wealth management company Lowry Hill in Minneapolis.

Kuehl recalls an elderly client who had always listened to right-wing radio and talk shows. "Up to and after the last presidential election, it got to the point where she was sending out vitriolic emails and videos," recalls Kuehl, who received three CDs. "For me, that was a tipping point. She'd always had the idiosyncrasy, but now we were going over into paranoia."

MAKE IT ROUTINE

When clients fail, it's crucial to bring another person-perhaps the client's grown child, attorney, accountant, sibling, or close friend-into financial decisions. Although planners aren't bound by the same confidentiality expectations as an attorney or a physician, it's still best to get permission to talk to others.

Some planners now ask clients for permission to consult others as part of the routine sign-up process. "We created a piece of paper that we give to every client," Hackley says. "It says, 'If we notice any decline in your functioning or anything strange going on in your account, who should we call?'"