Financial advisors are becoming increasingly concerned about aging clients whose memory loss may hurt their ability to make sound financial decisions, making them vulnerable to abuse.

Three-quarters of advisors are working with clients with diminished capacity, and one in five advisors has encountered financial abuse of their aging clients, according to research from Fidelity Investments.

Indeed, seniors are losing an estimated $36 billion each year to elder financial abuse, and things may  not get better anytime soon: By 2050, the number of people age 65 and older with Alzheimer’s disease may nearly triple, from 5.1 million to a projected 13.8 million, according to the Alzheimer’s Association.

"We're hearing about this situation from advisors," says David Canter, executive vice president, practice management and consulting for Fidelity Clearing & Custody, "and we wanted to respond."


As a result, Fidelity is rolling out a new program to help firms work better with aging clients. Advisors who clear or custody with Fidelity will receive, and can pass along to their clients, a 20% discount on services offered by EverSafe, a technology firm that provides a daily monitoring service that scans financial accounts and credit reports for suspicious activity and identity theft. In addition, advisors will also receive access to the firm's research and educational material on aging issues.

“Our goal is to help advisors implement policies and procedures to identify changes in their client’s behavior, monitor their financial accounts and mitigate the potential for financial abuse,” Canter says.

For example, Fidelity is urging advisors to:

  • Discuss the subject of dementia with older clients. Advisors shouldhave these conversations even if clients currently show no signs of diminished capacity. This will help to establish the procedures you intend to follow, and can include a review of beneficiary designations and power of attorney documents.
  • Reach out frequently to older clients. Make a point of speaking with them regularly by phone, and occasionally in person, to monitor their state of mind, maintain a strong relationship and keep track of their health, financial and family situations. Follow up on phone conversations with letters that recap the discussion and outline any action items. 
  • Develop stronger relationships with your client’s family. The National Adult Protective Services Association estimates that family members are the culprits in 90 percent of financial abuse cases. An advisor’s role is to identify trusted family members and involve them as much as possible so that a client’s future wishes are honored, money management risks are minimized and any misunderstandings over money are eliminated.
  • Document and regularly review an Investment Policy Statement (IPS). This can be a central tool in managing every client relationship. If applicable, it should be reviewed and reaffirmed annually. With older clients, make sure to provide signed copies of the IPS for their records and remind them frequently of its existence and goals.
  • Help older clients stay financially organized. Whether it’s creating a set of folders or leveraging an online tool, consider including: full account information; key contacts for tax, legal and health-related providers; trust and estate documents; latest tax returns; and all financial and income plans.
  • Be on the lookout for irregular spending patterns. Sadly, many seniors fall victim to being sold inappropriate products and services. Those can include recurring credit card charges and services that may not apply to their circumstances; for example, automobile insurance for those who do not drive. 

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