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Don’t ignore legal responsibilities around clients with dementia, Julius Baer’s UK CEO warns wealth management sector

(as published by Tristan Blythe, Group Editor, Thewealthnet)


Cognitive decline, such as Alzheimer’s or other forms of dementia, remains a somewhat taboo subject. It is, understandably, an area many find difficult to discuss.

However, the UK’s wealth management sector cannot afford to ignore it and the impact it has on a firm’s interaction with clients, according to David Durlacher, chief executive of Julius Baer in the UK and Ireland.

“People are living longer and this brings about issues about how we deal with this financially and socially,” Mr Durlacher said. “The wealth management sector has put a lot of thought into the financial aspects, i.e. how do we make sure our clients have an income throughout their old age, but it has put little or no thought into the human element. That is to say, how do we deal with clients that are exhibiting signs of cognitive decline? How do you communicate with them and ensure they are able to take on board information, retain information and use that information to make informed decisions?”

Not only does he feel that the sector has a moral duty to address this, but the FCA has recognised the potential problems it can cause. A 2015 consultation paper from the regulator stated: “Vulnerability can affect people’s interaction with any consumer market, but it is particularly challenging in the context of financial services due in part to the long-term nature of commitments, and the complexity of products and information.”

In addition, the Mental Capacity Act puts a legal obligation for a firm selling any kind of service or product to ensure that the client understands what they are purchasing and are mentally able to make an informed decision. This includes the provision of wealth management services and investment products.

To this end Mr Durlacher launched a pilot scheme at Julius Baer with a group of client facing staff undergoing specific training on cognitive decline.

This was successful and has now been rolled out to all client facing staff as well as a group within management being trained to a more advanced level. It has been the most popular training scheme amongst staff for some time, Mr Durlacher added.

The training focuses on ensuring client facing staff can identify issues, can handle the situation with “greater sensitivity” and provides the skills to communicate better with these clients.

The training was provided by Dr James Warner. Dr Warner is medical director of Red & Yellow Care, a consultant old age psychiatrist at CNWL Foundation Trust and Honorary Reader in Psychiatry at Imperial College London.

Mr Durlacher said that he contacted Dr Warner after he was recommended due to his training programmes with a number of law firms.

Law firms have been ahead of private wealth management firms in responding to this issue and recognising their obligations under the Mental Capacity Act, he added.

Dr Warner agreed, saying: “Three to four years ago when I started law firms were not very aware of the issue. This has now changed and they recognise the need for training. In financial services this is not the case. Some of the main high street banks have put staff on ‘dementia friends’ schemes but in private banking and wealth management there doesn’t seem to be an awareness.”

Indeed, anecdotal evidence suggests that some firms are turning away clients purely based on their age as they are too high risk, Mr Durlacher said. Others are only dealing with these clients if they have a lasting power of attorney in place, a solution that while right for some clients is not necessarily right for all, he added.

“Although predominately affecting the elderly, cognitive decline does not respect age or wealth,” Dr Warner said.

The Julius Baer scheme is currently available in the UK, but while the legislation surrounding this area will vary from country to country, the problems facing individual clients and their families are the same the world over, Mr Durlacher said.

As well as developing the scheme within Julius Baer, he is keen to encourage the rest of the UK’s wealth management sector to embrace the idea and to take similar steps.

“I would not want anybody to be discriminated by financial service providers for this reason,” he explained. “It is not how I would want a member of my family to be treated and therefore is not how I would want to treat a client. Cognitive decline can be a long term or short term issue. It can affect both young and old. We should be aware of it and the warning signs when dealing with all our clients.”

The next step for the firm within the UK is to further embed the training, and its outcomes, within the business. Mr Durlacher said it is part of formal governance and will become “a core part of governing the business.”

“It is important we look at how this learning can be used strategically to change the business model,” added Dr Warner. “This is about changing the way organisations think about dementia.”


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