RIAs can be tipped off to possible abuse by observing relationships between elderly clients and their caretakers - whether individuals employed by the client or family members. Trouble may be afoot if the caregiver does not allow the client to speak freely, or is reluctant to allow the client to meet with you one-on-one - or if the client reveals any hint of fear of the caregiver. Also be leery of caregivers who are not responsible for the client’s financial affairs but show a keen interest in them.

RIAs are more likely to face a situation in which a client no longer appears fit to manage his or her financial affairs, but does not realize it. Perhaps the most fundamental indication that a client may need some support is “their inability to process information,” says Kevin Painter, managing partner of LeConte Wealth Management in Maryville, Tenn.

The bulleted list below contains indicators that advisors may need to act decisively to prevent client harm.

Consider restructuring your relationship if your client:

  • Appears unable to process simple concepts; seems to have memory loss, difficulty speaking, seeing or communicating; and seems unable to appreciate the consequences of his or her decisions.
  • Makes decisions that are inconsistent with his or her current long-term goals or commitments.
  • Is subject to significant mood swings or otherwise erratic behavior.
  • Refuses to follow appropriate investment advice. (This may be of particular concern when the advice is consistent with previously stated investment objectives.)
  • Appears to be concerned or confused about missing funds in his or her account, where reviews indicate there were no unauthorized money movements or no money movements at all.
  • Is not aware of or does not understand recently completed financial transactions.
  • Appears disoriented with surroundings or social setting, and uncharacteristically unkempt or forgetful. 

Rita G. Dew is founder and president of National Compliance Services in Delray Beach, Fla.

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