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When a client request raises red flags Thumbnail

When a client request raises red flags

Advisor's Edge –  By Michelle Shriver

The quandary

Your client Ken is an elderly widower you suspect has dementia because he sometimes repeats himself. On the other hand, he has no family nearby and you know he’s lonely and enjoys prolonged conversation. A long-time caregiver whom Ken trusts visits him a few times a week and is his trusted contact person (TCP). Ken phones you to say he’s short on funds this month, and you know that shouldn’t be the case. How do you proceed?

The Experts

Ngoc Day

I’d ask Ken what the money is for. Typically, clients’ financial decisions percolate for a while, so they’re no surprise when they occur. If Ken’s request surprised me, I’d contact the TCP.

When speaking with Ken’s TCP, I wouldn’t mention finances and would instead ask if they’d noticed any changes with Ken or if he’d had any visitors. The conversation may reveal that Ken’s dementia has worsened or that he’s experiencing external influence. Scams targeting seniors, such as fraudulent email requests for money, are another possibility.

A face-to-face meeting with Ken would help me assess the situation. Knowing a client well has helped me identify external influence in the past. It’s a matter of regular contact and getting to know the client beyond money — discussing their family relationships, health, worries, upcoming plans. Regular contact also makes progressive dementia more apparent.

If I still had concerns after speaking with both Ken and the TCP, I’d escalate the situation by notifying my compliance department.

Ideally, Ken would have a power of attorney in place who I would have already met, and I could contact them as well. If Ken’s dementia is worsening, it may be time to make the power of attorney effective.