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Financial Advisors’ Experiences with Clients and Diminished Capacity: Overview of Findings

As the population ages and the incidence of Alzheimer’s disease and other dementias grows, financial advisors, brokers, insurance agents, and others selling an array of financial products must be equipped to respond appropriately when a potential client signals that he or she may have diminished capacity to make financial decisions. For example, sellers need to know when to stop the sales transaction and if they should be dealing with a fiduciary rather than the principal. Similarly, compliance officers of these institutions must understand the experiences of their frontline agents and the needs they have when interacting with clients with potential diminished capacity.

In order to better understand the landscape from both the front-line agent and compliance officer perspectives, AARP commissioned a survey of 360 financial advisors and 166 compliance officers about their interactions with --and provision of services to-- clients who may have diminished decision-making capacity. The survey was conducted by telephone and online between August 19th and October 4th, 2010. Financial advisors included life insurance agents, advisors at registered investment advisor (RIA) firms, sellers working for wirehouse firms, regional broker-dealer advisors, independent advisors and bank representatives (all referred to as “advisors” in the observations below).