Mental health issues may have a negative influence on the financial decision-making of your clients and it is up to advisors to do their best to see their clients through an issue, says Carol Lynde, president and CEO of Bridgehouse Asset Managers.
Lynde told a webinar put on by the Independent Financial Brokers of Canada (IFB) on June 17 that the main issue financial advisors see with their clients is anxiety – anything from diminished financial capacity to depression, dementia or substance abuse.
A Bridgehouse poll has indicated that advisors feel a real tension with clients who have mental health concerns.
“That tension came from wanting to do the right thing for their clients, to work in their best interests but also to not be intrusive,” said Lynde.
More than anything, advisors want to be sure about their boundaries as a financial advisor, particularly their role with regard to risk mitigation and overall responsibilities with clients who have mental health concerns.
Advisors may ask the client for the name of a Trusted Contact Person, someone the advisor can contact if they think the investor is being financially exploited, or if the advisor is concerned about the whereabouts or happenings of a client.
“It gives you peace of mind and it gives your client peace of mind,” said Lynde, adding this is not the same as the client’s power of attorney.
It is also not the same as “safe harbour” protection, which allows an advisor to put into place protective measures when they suspect investors have become vulnerable or are the target of those trying to financially exploit them.
“Safe harbour really protects you, the advisor,” said Lynde. “If you feel that you want to freeze an account or process a transaction and you know you have … an execution obligation to process an execution in a timely manner – and if you’re concerned and think there is some kind of fraud that’s happening or it just doesn’t seem right, then safe harbour will protect you if you decide to freeze that account.”
Like the Trusted Person Contact, safe harbour has not yet become law in Canada, but Lynde expects both to be given the necessary approvals later this year.
“Given where we are, the mental health concerns in Canada, the need for your counselling and good financial advice is not going to go away,” said Lynde. “From our industry’s perspective we are in a very good position to help clients through the different situations they may encounter and hopefully they will have the financial resources they need.”
Bridgehouse has conducted a second survey regarding mental health and clients, indicating a higher incidence of financial abuse.