Conditions that cause cognitive decline, such as dementia, are on the rise in Australia. According to Australian Institute of Health and Welfare, an estimated 446,500 are living with dementia, 63 per cent of those being women.
With Australia’s ‘Silver Tsunami’ of retirees hitting the market and looking for advice, chances are the rate the average adviser will experience and work with cognitively declining clients is likely to increase.
Advice is already a highly personal profession within the world of finance, with things such as balancing family dynamics, death and illness elevating the duty of care and depth of relationship professionals have with their clients, and this is no different for those who begin to show signs of cognitive decline.
“We do have an obligation under the Code of Ethics to make sure clients can provide informed consent, and we also need to ensure they are able to understand and comprehend the advice we give them,” Fradley Advice founder Nathan Fradley told ifa on the issue.
“When it comes to declining capacity, there is a pretty strong requirement that if we’re working with someone who does not have capacity, we can’t provide them advice because they don’t understand that advice.”
According to Fradley, balance is important in addressing this issue. While the temptation might be to approach a client’s family member with one’s observations, adviser’s still have a responsibility to privacy and to keep client information confidential. If you want to reach out to family, it has to be with the client’s blessing.
“Where advisers start to see signs of degenerative diseases or dementia, they need to work with the client to understand what’s going on and whether there are other people in their life who can help them through the process.
“It may be appropriate to encourage the involvement of a family member or trusted support person who can help them understand the advice and remind them of discussions if things slip their mind. There’s definitely an element of that that needs to be handled sensitively and empathetically.”
Being aware of coercion is also crucial in these circumstances, especially when family and future beneficiaries become involved.
“It’s important to meet family members and establish those points of contact, but at the same time, advisers need to be alert to the risks of coercion or indirect control,” Fradley said.
“That means speaking with clients on their own while they still have capacity, as well as engaging with family members, and making sure that every decision being made is genuinely in the client’s best interests rather than the interests of somebody else.”
If the effort has been put into to cultivate a good relationship with the client (as any good adviser would), then getting in ahead of any potential cognitive decline will become easier.
“The most important aspect of this is having a strong relationship with the client because trust is everything, particularly if you’ve worked with them for a long time.
“That should be paired with appropriate powers of attorney documentation so that, at a point where they’re no longer able to act for themselves, there is a clear framework in place for decision-making.”
Like all issues where the personal lives of client’s seep into advice, balancing the needs of clients and their best interests with ethical and compliance requirements is key, especially in situations when a client’s ability to make decisions is being affected.
