When a Client Faces Cognitive Decline, Speak Up

The first step in protecting clients that show signs of cognitive decline is straightforward, argues Barbara Archer, managing director and partner of Hightower Wealth Advisors in St. Louis.

“If we see something, we need to say something,” she says in an interview with ThinkAdvisor.

Specifically, this means speaking with the client and then to a trusted contact if the client has one.

When advisors spot a red flag, they also need to protect themselves. This entails taking the above steps plus contacting their firm’s compliance department and the state in which they’re based to determine appropriate rules, says Archer.

Should a client with diminishing cognitive capacity or other mental health issues start to handle assets differently from an established manner, “the client’s family or their counsel may question the advisor. If there’s an issue, there is liability,” Archer points out.

Some behavioral changes do not necessarily signal cognitive decline, she notes. They may be temporary changes resulting from a new medication or an infection.

Archer, who heads a practice with two partners and five other advisors, supported by six associates — with assets under management of more than $1 billion — founded Archer Wealth Management in 1983 and joined Hightower in 2016, merging her practice with Carol Rogers, a longtime advisor and friend who retired in 2022.

Archer focuses on owners of closely held businesses, top corporate executives and professionals, like physicians and attorneys.

In the recent interview with Archer, who was speaking from Memphis, Tennessee, where she was holding a client meeting, discusses her process for serving clients with decreasing mental capacity and details how to protect clients — elderly or young — from scammers.

“There’s no age restriction on being phished,” Archer says. “It can happen to anyone.”

Here are highlights of our interview: 

THINKADVISOR: What should financial advisors do if they note cognitive decline in a client?  

BARBARA ARCHER: If we see something, we need to say something. 

If we know how the client typically acts and all of a sudden something starts changing, we have to step in as an objective observer.

It’s a difficult conversation to have. But it’s imperative for advisors who care for their clients to address the issue thoroughly.

If the client has children, we may notice something before they do. Or sometimes the family is in denial. We tell them, “Here’s what we noticed.”

Then we’ll suggest that the children visit Mom or Dad to see if they observe anything different. 

How can advisors protect themselves and clients should a client become confused or mentally incapacitated?

First, during our regular planning meetings, we always review the client’s legal documents that have to be in place: power of attorney, designated individual who might make financial decisions when the client no longer can, a medical directive, living will that states their medical preferences if they can’t communicate.

Also, we make sure the client has their will and trusts in place, especially for distributing assets when they die, and that the correct beneficiary designations are on their retirement plans and life insurance.

Do you do anything else to protect clients?

We offer the option to give us the name of a trusted contact. That’s almost always going to be the spouse and, then, it’s the children. If they don’t have children, it will be one of their very best friends. 

We can suggest to the trusted contact to reach out to legal and medical counsel. 

By connecting with the trusted contact, we’ve satisfied our obligation as the financial fiduciary.

Is the trusted contact option intended just for older clients?

No. The client can be 30 years old. They could fall and bump their head and get confused and forget things. There are lots of ways people can have issues.

What has to occur for you to communicate with the trusted contact?

We call to let them know we noticed something that isn’t right in the client’s world.

If we have a relationship with two or three of the generations in a family, there’s more of a comfort system to support the client that may be teetering on that mental [cliff] compared to what we typically see.

We also offer family meetings, where we bring in the children or grandchildren. The client can share the strategy of how their assets will move in the future.

Some are very comfortable sharing the numbers, too.

How do advisors protect themselves when a client shows signs of cognitive decline?

Notify the trusted contact of any red flags. Have regular meetings and stay aware of any changes during them. 

Maintaining detailed notes on all interactions can help protect against potential disputes.

Contact compliance. Reach out to the state the advisor is in or look for contacts at the North American Securities Administrators Association for their state contact in order to understand requirements.