By John Heinzl  |  The Globe and Mail  |  April 26, 2012

I am an 82-year-old woman and currently work with a broker on a commission basis. If I develop dementia, should I transfer to a portfolio manager who would have discretion over my account? What other advice do you have for someone in my position?

Jason Heath, certified financial planner with Objective Financial Partners in Toronto

The reader’s question is a tough one. There are pros and cons to commission-based versus discretionary fee-based investing period, but I think the focus in this case shouldn’t be so much on how the broker is engaged to manage the account, but on the reader’s estate plan. She has taken a non-discretionary approach for a reason, and just because she can’t work with her broker any more personally if she develops dementia, that doesn’t mean someone else can’t do so.

A Power of Attorney for property is a legal document used to appoint someone to make financial decisions on your behalf in the event you become sick, injured or disabled. So I’d be having this discussion with the person appointed in my Power of Attorney document to determine if that person could work with the broker in the same way, which they probably could. And if she doesn’t have a Power of Attorney or hasn’t reviewed the appointment recently, that would be the first step.

If the reader has modest assets, they should probably be invested reasonably conservatively anyway, just based on her age. But in particular, if she’s worried about dementia and being provided for during this period, I wouldn’t want a lot of trading within my account. Life expectancy for someone diagnosed with dementia may only be four to five years in most cases, particularly in one’s 80s, but the cost of care could be fairly large.

If the reader has significant assets, it may or may not change the approach. Again, it’s a personal decision based on beneficiaries and the overall estate plan. It could be that the money is being managed only partially for the reader and partially for the next generation, in which case one might consider whether some of the assets might be passed along in advance of either dementia or death. This decision should be made with caution, as I often see too much money being passed along too early to the next generation and for the wrong reasons. read full article