Skip to Content

Diminishing Capacity for Financial Decision-Making
November 2017

Nov 30, 2017 | Families | Retirees

We treasure the relationships we have with our clients. Over the years and decades of serving as a trusted advisor we learn a tremendous amount about who they are and what is most important in their lives. As a result of this close relationship, the initial evidence that aging may be taking a toll on one’s capacity to make financial decisions may be visible to us, perhaps before anyone else.

For example, we have encountered clients asking for the same transfer of funds several times in one day, indicating a memory lapse. Other clients have had difficulty grasping financial concepts they previously had easily understood. Diminished cognitive function can show up differently in each person, but there are signs we have learned to identify that can raise red flags.

Confidentiality agreements with our clients prevent us from doing anything beyond mentioning these red flags to our clients. While we are committed to confidentiality and our clients’ best interest, sometimes these commitments conflict with one another. If our clients are making financial decisions that appear to be out of character and not in support of their firmly-established goals, it may be in the client’s best interest for us to contact a trusted third-party to express our concerns and provide support for seeking additional assistance. Yet our privacy policy prevents us from doing so.

Seniors are particularly vulnerable to financial fraud. Financial planners can be a first line of defense against such fraud. Financial regulators see the unique role that financial planners play in their clients’ lives and are expected to mandate something we have already been developing: a policy that gives us the right to contact a third party in the event we have concerns about our clients’ cognitive capacity to make decisions in their own best interest.

We will be asking each client to complete a document to provide us the names and contact information of the trusted individuals they would like us to contact if competency concerns arise. The document can specify the conditions under which we are to reach out to the trusted individuals.

We are grateful for the trust our clients place in us. In the years to come, we will continue to be by their side, especially if the natural process of aging takes a toll on their ability to make decisions in their own best interest.

 

IMPORTANT DISCLOSURE INFORMATION
Please remember that past performance may not be indicative of future results.  Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Pathway Financial Advisors, LLC-“Pathway”), or any non-investment related content, made reference to directly or indirectly in this blog will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful.  Due to various factors, including changing market conditions and/or applicable laws, the content may no longer be reflective of current opinions or positions.  Moreover, you should not assume that any discussion or information contained in this blog serves as the receipt of, or as a substitute for, personalized investment advice from Pathway.  Please remember that if you are a Pathway client, it remains your responsibility to advise Pathway, in writing, if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services, or if you would like to impose, add, or to modify any reasonable restrictions to our investment advisory services. To the extent that a reader has any questions regarding the applicability of any specific issue discussed above to his/her individual situation, he/she is encouraged to consult with the professional advisor of his/her choosing. Pathway is neither a law firm nor a certified public accounting firm and no portion of the blog content should be construed as legal or accounting advice. A copy of the Pathway’s current written disclosure Brochure discussing our advisory services and fees is available for review upon request. Please Note: Pathway does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to Pathway’s web site or blog or incorporated herein, and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly.