STOCK MARKET WATCH - Friday, 17 February 2012

[Demeter]

35. Preparing for Alzheimer's (IN YOUR CLIENTÈLE)

http://www.reuters.com/article/2012/02/16/advisers-alzheimers-idUSL2E8D8H9720120216

Alzheimer's disease, an incurable, progressive form of dementia... presents a legal and moral morass for registered investment advisers. Once a client's mental capacity is diminished, advisers may find it impossible to fulfill their legal obligations. Hollie Mason, associate counsel at TD Ameritrade, warned that advisers can be held liable for trading losses if a client was incapacitated at the time the investments were made, even if disclosure agreements were signed. What's more, part of being a fiduciary means providing full and fair disclosure of all material facts . But if a client requests the same financial statement three times in the same month because she cannot remember receiving earlier copies, it might not even be possible to provide full and fair disclosure to that client, Mason said.

Such risks can be reduced -- but not completely avoided -- with some forethought. Durable power of attorney can be set up during the estate planning process, for starters. Advisers can also ask clients to sign disclosure documents that allow them to contact someone on the clients behalf in case of an emergency. That can cut the risk of running afoul of confidentiality and privacy policies for an adviser seeking help for a client whose mental capacity has diminished.

Around 5.4 million Americans have Alzheimer's and that number could balloon to 16 million by 2050, as the population ages and lifespans increase, according to the Alzheimer's Association. The group said one in eight people over the age of 65 and nearly half of those over 85 are currently affected.

The financial costs of Alzheimer's are significant.

Fidelity Investments estimated in 2009 that a couple retiring at age 65 needed about $240,000 to cover medical expenses in retirement. But that figure would more than double to about $495,000 if one spouse developed Alzheimer's...