By Jeff Motske
The key to financially protecting a client in the age of dementia lies in teamwork.
Financial planning around dementia is a complex matter. The disease’s development can be gradual and subtle, or it can progress drastically and abruptly. The diagnosis and its symptoms can leave the afflicted and their loved ones feeling confused and hopeless, grappling with sudden changes that ripple through an individual’s life. In the flurry of physical and mental changes, more mundane issues can be put on the back burner until things snowball into an unfortunate mess. All of this can sound scary and overwhelming, but there are steps to take to increase financial protection when dementia does occur.
A client’s team should be comprised of personal and professional individuals who have the client’s best interest at heart, including:
The financial professionals on the client’s team include their financial planner, tax professional and estate planning attorney. As the financial planner, I see my role as my client’s financial quarterback, overseeing all components of their financial independence.
With their permission, I will typically reach out to the other members of their team. While we all continue to focus on our own particular role and duties, maintaining a professional relationship does give us the opportunity to check in with one another to see if anyone has noticed any concerning behavior or received conflicting information concerning our client. In the beginning stages of dementia, when symptoms can be subtle and easily dismissed, it’s helpful to receive concerning information from multiple sources. Likewise, relying on multiple professionals to spot issues promptly ensures that you can address them with the least amount of disruption.
Designated Decision Makers
In addition to these professionals, critical to a client’s financial protection are the key decision makers they appoint. When a client is afflicted with or concerned about a dementia diagnosis, there are certain actions that can safeguard an individual from themselves or those who may want to take advantage of them.
I often recommend my clients to draw up a durable power of attorney, which legally allows an individual to designate someone to make financial and medical decisions on their behalf should they become mentally incapable to do so. The client may also want to establish a joint checking account with the delegate that has enough funds to cover two to three months of expenses. The DPA will eventually allow the delegate oversight over financial accounts, but it may be delayed while the client is being tested to determine if they are mentally incapable of acting on their own behalf. This delay can cause bills to go unpaid and other financial complications to mount. Having these safeguards in place can save on time and hassle should matters deteriorate and allow your delegate to focus on more pressing matters.
This role requires someone extremely trustworthy and who has the client’s best interest at heart. Additionally, the delegate needs to be strong enough to resist undue influence or pressure from probable heirs to maintain the client’s confidentiality. The selection of such a decision maker can be stressful and emotionally charged. Therefore, having unbiased input from one or many of the financial professionals on your team can be valuable in the selection process. This input can range from discussing the nature of the relationship and character of the person to the full scope of what the role entails to ensure that the client fully understands what is required and what they are entrusting to their decision maker. If possible, I like to formally meet these individuals as well. It’s important to make sure the delegate is familiar with me and feels comfortable approaching me with any questions or concerns that may inevitably arise.
Another key player on this team is a client’s physician. It would be nice if the different parts of our lives stayed contained within their defined boxes. However, we all know that everything is interrelated, and oftentimes our physical and mental health can have immediate and drastic impacts on our financial well-being. While financial advisors are obligated to report troubling behavior concerning their clients, it is possible that we may miss or downplay important signs or symptoms. That is why a medical professional plays a key part on this team. In fact, there are some financial professionals that require clients who are 75 or older to undergo a cognitive assessment conducted by their physician prior to annual review meetings. Financial planning professionals should always be striving to do what is in the best interest of the client. To do so, we need to make sure that we have the most accurate and current information, and we need to make sure that our clients can provide that.
This need for teamwork does not stop with the individual afflicted by dementia. It also applies to their caregiver. Administering to someone with dementia can be physically, mentally and emotionally draining. Caregivers often juggle numerous duties and serious responsibilities. The strain of it all can create a dangerous environment where mistakes are made, things slip through the cracks or the caregiver suffers from burn-out. With the proper team in place, the caregiver should have the resources to properly execute their responsibilities and a support system to step in to provide them assistance, aid or even a much-needed break.
Dementia can be an overwhelming and isolating diagnosis. When so many of us pride our independence and self-reliance, such a prognosis can be downright scary. I understand this well, and I do my best to set my clients up for financial independence so they can create the life they want to live. When circumstances step in and disrupt their lives, though, it’s vital for them to know that they have people to rely on and safeguards to protect them. We may not know how the game ends, but they’ll go into each day with more confidence with the proper team by their side.
Jeff Motske is president and CEO of Trilogy Financial, a privately held financial planning firm headquartered in Huntington Beach, Calif.