CFPB and SEC Jointly Issue a Consumer Advisory and Investor Bulletin on Diminished Capacity

The Consumer Financial Protection Bureau’s Office for Older Americans and the Securities and Exchange Commission’s Office of Investor Education recently issued a bulletin to help investors and consumers understand the potential impact of diminished capacity on their ability to make financial decisions and to encourage investors and consumers to plan for possible diminished financial capacity well before it happens.

The advisory bulletin makes the following recommendations to help avoid or minimize problems: (1) organize your important documents (this includes bank and brokerage statements and account information, mortgage and credit information, insurance policies, pension and other retirement benefit summaries, Social Security payment information and contact information for financial and medical professionals); (2) provide your financial professionals with trusted emergency contacts; (3) consider creating a durable financial power of attorney; (4) think about involving a trusted relative, friend, or professional; (5) keep things up to date; and (6) speak up if something goes wrong (i.e. if you ever think someone is taking advantage of you, or that you’ve been the victim of a fraud)

With regard to helping others who may have diminished capacity, the CFPB and SEC make the following recommendations: (1) have an open conversation about investments and other financial matters sooner rather than later; (2) help your relative or friend with managing finances; (3) if your family member or friend has named you to manage money or property, understand your responsibilities and how you can protect your loved one from financial exploitation. 

Finally, if you are someone who has been asked by a loved one or friend to help out with his or her finances, the CFBP and SEC notes you can do the following to help: (1) help with ongoing financial responsibilities (you may need to take on immediate tasks, such as helping to pay bills, arranging for benefit claims, preparing tax returns, or helping with investment decisions); (2) review their investment portfolio; (3) assess the riskiness of their investment portfolio; (4) contact their investment professional.