As the nation's 76 million baby boomers continue to retire and live longer, advisors can expect to encounter more clients with memory and cognitive problems. Given the legal issues that could arise from working with cognitively impaired clients, it's important that advisors are aware of the early signs of dementia-related diseases.

Here are some of the red flags that may indicate that an investor may have diminished capacity or a reduced ability to handle financial decisions. The list was compiled from a joint report by the SEC's Office of Compliance Inspections and Examinations, the North American Securities Administrators Association and FINRA, and draws upon information on the Alzheimer's Association website.

Read related story: Dementia: The New Retirement Risk

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Memory loss

One of the most common signs of dementia, especially in the early stages, is forgetting recently learned information. Others include forgetting important dates or events; asking for the same information over and over; and relying on memory aides or family members for things they used to handle on their own.  

Decreased or poor judgment

Investors with dementia may experience changes in judgment or decision-making. They may use especially poor judgment when dealing with money, giving large amounts to telemarketers, for example, or closing large accounts or terminating large investments without regard to loss or penalty. They may make decisions that are inconsistent with their current long-term goals and commitments or refuse to follow appropriate investment advice. 

Difficulty understanding simple concepts

Some people may experience changes in their ability to develop and follow a plan or work with numbers. They may have trouble keeping track of monthly bills, managing a budget, or understanding recently completed financial transactions.

Mood swings

The mood and personalities of investors with dementia can change. They can become confused, suspicious, depressed, fearful or anxious. They can, for example, become concerned or confused about missing funds in their accounts, where reviews indicate there were no unauthorized money movements or no money movements at all.

Trouble communicating

People suffering from dementia-related illnesses may have trouble following or joining a conversation. They may stop in the middle of a conversation and have no idea how to continue or they may repeat themselves. They may struggle with vocabulary, have problems finding the right word or call things by the wrong name.

Confusion with time and place

People with dementia may appear to be disoriented with their surroundings or social setting. They can lose track of dates, seasons and the passage of time. They may have trouble understanding something if it is not happening immediately. Sometimes they may forget where they are or how they got there.

Difficulty with familiar tasks

Dementia sufferers often find it hard to complete daily tasks. Sometimes, they may have trouble driving to a familiar location or remembering the rules of a favorite game. They may pay less attention to grooming or keeping themselves clean.

Trouble understanding visual images and spatial relationships

For some people, having vision problems is a sign of dementia. The may have difficulty reading, judging distance and determining color or contrast. In terms of perception, they may pass a mirror and think someone else in the room. They may not recognize their own reflection.

Withdrawal from work or social activities

Investors afflicted with dementia may become withdrawn and secretive, removing themselves from hobbies, social activities, work projects or sports. They may have trouble keeping up with a favorite sports team or remembering how to complete a favorite hobby. They may also avoid being social because of the changes they have experienced.

Misplacing things and losing the ability to retrace steps

A person with a dementia-related disease may put things in unusual places. They may lose things and be unable to go back over their steps to find them again. Sometimes, they may accuse others of stealing. This may occur more frequently over time.