Tom Murphy never intended his Dallas-based wealth management company to specialize in serving clients with cognitive disabilities. A West Point graduate and former military intelligence officer, he co-founded Murphy & Sylvest Wealth Management in 1987 to help clients prepare for retirement by distributing investments across bonds, stocks and cash. Spent over 10 years in business.
But after Murphy's mother died of Alzheimer's disease in 2001, something changed. “Her experience finding a way to care for her mother was my introduction to Alzheimer's disease,” Murphy says. “That led to her understanding of so-called ‘cognitive impairments.’”
Those disorders can include declines in mental function associated with Alzheimer's disease, dementia, stroke, and even what is simply called “senility.” Many financial planners shy away from clients with these conditions, preferring to simply transfer control of the account to a guardian.
But after his mother's illness, Murphy went down a different path. He said he wanted to help people with cognitive disabilities maintain as much control over their finances as possible. Over his 20 years, Murphy's firm has developed unique procedures for detecting cognitive impairment in clients and continuing to work with them.
“This was not something I actively pursued as a specialty,” Murphy says. “Because, frankly, there isn't really a specialty called 'cognitive disorders.'”
Maybe it's supposed to be there. As America's population continues to age, financial planners will increasingly have clients with cognitive disabilities. Already, the Alzheimer's Association estimates that 6.7 million Americans over the age of 65 (about 14 percent of the total population) have Alzheimer's disease. The Alzheimer's Association predicts that by 2050, as the population ages, there will be more than 13 million people living with Alzheimer's disease. In Texas alone, the association projects that the number of Alzheimer's patients in 2025 will be 22.5% higher than in 2020.
It's not because older people are sicker than previous generations. That's because the number of older Americans is increasing. The U.S. Census Bureau predicts that by 2035, there will be more Americans over 65, the group most affected by dementia and other cognitive impairments, than children under 18. I am. As such demographic changes arrive, it's worth thinking about. What you can do to spot potential signs of cognitive impairment in yourself, your spouse, or other family members. What to do financially when cognitive problems arise. And what to expect from a financial advisor.
1. Look for warning signs and beware of rejections.
Early signs of cognitive problems are sometimes so subtle that family members may not realize that something is wrong. Murphy has seen it happen in his personal life as well. His mother-in-law also had Alzheimer's disease, as did her mother. But the condition went unnoticed for some time, even after the former mathematician and accomplished home cook mistakenly substituted sugar and salt in some recipes.
However, while such signs can be overlooked, financial processing problems are often more noticeable, at least to financial professionals. Some of the warning signs of the disease that the Alzheimer's Association warns about, particularly those related to household finances, include not being able to pay bills properly and falling far short of a long-established financial plan. This may include a sudden desire to deviate.
“We don't want to say we're diagnosing dementia in our clients,” Murphy says. “But we were one of the first to notice that they were behaving differently. The pattern we see is that people who have never bounced checks are bouncing checks. Or they may make unlikely financial demands, such as asking you to move a large portion of your investments into gold.These requests are often a sure sign that something has changed.
Still, clients don't always respond well to Murphy's concerns. Some people simply deny that there may be a problem. “When you know someone has a problem, they often deny it and won't let anyone do anything about it,” Murphy says.
Approximately 1 in 20 adults over the age of 60 will be affected by financial abuse, most at the hands of their own family members.
If someone denies having a cognitive problem or simply fails to recognize it, the problem can quickly escalate. Murphy said one customer was checking out at a grocery store when he noticed his credit card was frozen. The client's husband was in charge of the household finances and had stopped paying her bills. She was then diagnosed with dementia.
“That's the thing,” Murphy says. “The first signs of cognitive impairment often appear when the disorder is already causing a terrible scourge of problems.”
Such disasters could be avoided with basic cognitive tests, such as the 11-question St. Louis University Mental Status Examination, which can detect early signs of dementia and help people prepare for a difficult future. Be able to prepare household finances.
There is no cure for dementia and Alzheimer's disease. The situation worsens over time. The typical life expectancy for Alzheimer's patients is only four to eight years after diagnosis. And the Alzheimer's Association says the disease kills more seniors than breast and prostate cancers combined. This dire consequence means that financial planners often have to rely on so-called “trusted individuals”, usually family members who have been given financial power of attorney, to take over financial planning. do.
Murphy's firm requires clients to designate a trusted person with financial representation and authorize the firm to contact that person in the event of unusual circumstances. “If you come to us and say, 'I'm going to sell my house and move to Botswana,' we'll already have your written permission, contact someone you trust, and get your instructions.” ,” Murphy says. From that person if we feel it is necessary. ”
Some wealth management companies believe that the best way to avoid the responsibility that comes with managing the finances of someone with a cognitive disability is to hand over control to a trusted contact. Instead of continuing to work with a client after a client has been diagnosed with an illness such as dementia, asset management companies should immediately freeze the account and ask a person with financial power of attorney or guardian to take over the account. It may be requested. Murphy and Sylvest take different approaches.
“If you're in the early stages of dementia, you're probably OK for at least five days a week,” Murphy says. “So the worst thing we can do is force someone to disappear and put them in a conservatorship. It's different from a power of attorney. If you give someone power of attorney, they can make all the decisions themselves until they can no longer do it. ”
3. Expect your financial planner to change policies and apply new laws to protect you from fraud.
According to a study on financial planning and cognitive impairment published in American Medical Association Network Journal In 2022, financial planners will need to adjust the types of investments their clients make if they are diagnosed with a disease such as dementia. The research suggests moving customers to easier-to-manage, lower-risk investments such as pensions.
MIT AgeLab researchers also found that financial planners need to change the way they communicate with clients with cognitive disabilities. The MIT researchers recommended that planners keep detailed records of all communications and share the results with clients who are at risk of forgetting or getting confused about what was discussed.
That's Murphy and Sylvest's approach. At any given time, the company sends out multiple advisors to meet with clients who have or may have cognitive disabilities and, as Murphy says, “documents everything thoroughly.”
Advanced documentation also helps prevent financial abuse of vulnerable seniors. In addition to financial exploitation from family members, older Americans are at increased risk of becoming victims of online fraud, which Murphy calls “a type of Nigerian prince.” According to a study by Weill Cornell Medical College, approximately 1 in 20 adults over the age of 60 has been affected by financial abuse, most often at the hands of their own family members.
To combat these risks, lawmakers are moving to help financial planners better spot and stop fraud opportunities. In 2017, the Financial Industry Regulatory Authority (FINRA), the government-chartered nonprofit agency that oversees financial planners and other investment professionals, required advisors to receive training on how to spot cognitive impairment in their clients. adopted regulations mandating. And in 2018, Congress passed the Senior Safe Act. This bill would give financial planners and others broad leeway to report suspected senior financial fraud. And in 2022, FINRA expanded its rules to allow planners to freeze customer accounts that may have been compromised.
Preventing fraud is one of the main reasons Murphy prefers to continue working with cognitively impaired clients as long as they are able to make good decisions. “Sometimes kids might just try to steal money,” Murphy says. “But sometimes they have good intentions. Sometimes a child says, 'I'm going to put all of Mom's money into a brokerage account and put that account in my name, so Mom can qualify for Medicaid. You may think, “Well, I don't have to spend as much money on taking care of my mom.” This will protect our children's heritage. ” But then they leave no money in the brokerage account. they use it. ”
This article originally appeared in the November issue of D Magazine with the following headline:heart than money” Write destination [email protected].
