SEC and CFPB issue Bulletin on Diminished Financial Capacity

The Securities and Exchange Commission’s Office of Investor Education and Advocacy and the Consumer Financial Protection Bureau’s Office for Older Americans issued an investor bulletin, Planning for Diminished Capacity and Illness.

The bulletin (available on Investor.gov) is 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.

What is diminished financial capacity? “Diminished financial capacity” is a term used to describe a decline in a person’s ability to manage money and financial assets to serve his or her best interests, including the inability to understand the consequences of investment decisions. While the inability to manage one’s money is clearly a problem in itself, when people of any age lose the capability to manage their finances, they may also become more vulnerable to investment fraud and other forms of financial abuse. 

Preparing for Your Own Financial Future: Hope for the Best, But Plan for the Worst. Losing the ability to manage your finances may be something you’d rather not think about. Taking the steps listed below now may help avoid or minimize problems for you and your family. 

• Organize your important documents
• Provide your financial professionals with trusted emergency contacts
• Consider creating a durable financial power of attorney
• Think about involving a trusted relative, friend, or professional
• Keep things up to date
• Speak up if something goes wrong

Helping Others Who May Have Diminished Financial Capacity. You may have a parent or other loved one with diminished financial capacity, or who you worry may face that issue in the future.  If so, consider the following steps to help. 

• Have an open conversation about investments and other financial matters sooner rather than later
• Help your relative or friend with managing finances 
• 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

Read additional suggestions from the Investor Bulletin, at: Planning for Diminished Capacity and Illness.

 

• Prev
• Next