Consumer Financial

Protection Bureau

CONSUMER ADVISORY AND INVESTOR BULLETIN | JUNE 2015

Planning for diminished 

capacity and illness 

“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. We 

often think about our financial capabilities, like 

our ability to drive, as an important measure of our 

independence. But planning ahead may help you 

stay in control of your finances, even if diminished 

financial capacity becomes a serious problem. 

Taking the steps listed below now may help avoid or 

minimize problems for you and your family. 

Organize your important documents 

Organize and store important documents in a safe, 

easily accessible location. That way, they are readily 

available in an emergency. Give copies to trusted 

loved ones or let them know where to find the 

documents. Typically, the following documents will 

be most relevant to your finances:

§ Bank and brokerage statements and account 

information. Make a list of your accounts with 

account numbers. Keep a separate list of online 

bank and brokerage passwords and PINs and 

keep the lists in a safe place. In addition, make 

a list of the locations of your safe-deposit boxes, 

including where the keys to the safe-deposit 

boxes are located. Also, keep your recent bank 

and brokerage statements available, as well as 

information about how to get those statements 

online if you access them electronically.

§ Mortgage and credit information. Make a list of 

your debts and regular payments, with account 

numbers and names of the financial institutions 

that issued the loans or credit cards.

The SEC’s Office of Investor Education and Advocacy and the CFPB’s Office for Older Americans 

are issuing this 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.
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§ Insurance policies

§ Pension and other retirement benefit 

summaries

§ Social Security payment information

§ Contact information for financial and medical 

professionals, such as doctors, lawyers, 

accountants, and securities professionals.

Provide your financial professionals with 

trusted emergency contacts. 

If you have a financial professional, such as a 

broker or investment adviser, provide that person 

with emergency or alternate contact information 

in case he or she cannot contact you or suspects 

something is wrong. You may wish to discuss with 

your financial professional what you would consider 

to be an “emergency,” and specify when he or she 

may contact someone on your behalf. 

Discuss what information can be shared with 

your emergency contact. For example, you might 

provide your financial professional with a simple 

written instruction, such as: “Please call my son 

Mark at (222) 555-5555 if: (i) you are unable to 

reach me and there appears to be unusual activity 

regarding my account; (ii) you are unable to reach 

me for two weeks irrespective of any unusual 

account activity; or (iii) if you think I am confused or 

acting strangely.” Providing an emergency contact 

generally will not enable the person to make 

investment decisions on your behalf—so be sure 

to take other steps if you want someone else to 

manage your accounts if you cannot.

Consider creating a durable financial 

power of attorney. 

A financial power of attorney gives someone the 

legal authority to make financial decisions for you 

if you cannot. That person is called your agent. The 

document is called “durable” because it remains 

in effect even if you become incapacitated. You 

retain the ability to change it or cancel it as long 

as you are still able to make decisions. A financial 

power of attorney differs from a health care power 

of attorney, which only covers health care decisions. 

You may want to consult with a lawyer to determine 

whether a durable financial power of attorney is 

right for you. 

After signing a durable financial power of attorney, 

you can still manage your money and property as 

long as you have the ability to make decisions. Also, 

it is important to remember that you always have 

the option to change who you choose to act as 

your appointed representative and the individuals 

you allow to access your financial information. As 

you are essentially giving financial decision-making 

authority to your agent, it is critical that he or she be 

someone you can trust. 

Think about involving a trusted 

relative, friend, or professional.

Besides listing them as emergency contacts, you 

may wish to give a trusted relative, friend, or 

professional an overview of your finances (even 

if you don’t want to share all the details). For 

example, you might ask your broker or bank to 

send duplicate statements to your daughter or 

accountant. You might also consider asking a 

trusted friend or relative to join you on periodic 

visits to your financial professional. This would 

give someone you trust a sense of your financial 

situation and with whom you’ve been doing 

business. If you choose to involve a relative or friend, 

it is very important it is someone you are sure you 

can trust. Consider discussing the selection of the 

person with a number of other trusted friends or 

relatives.
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Keep things up to date.

Be sure that if something changes (for example, you 

open a new account) you keep your information as 

current as possible. Also, your trusted contact may 

change over time. Keep your financial professionals 

informed of changes regarding who has authority 

to review your account or whom they should 

contact in case of an emergency.

Speak up if something goes wrong.

If you ever think someone is taking advantage of 

you, or that you’ve been the victim of a fraud, speak 

up. Sadly, sometimes even financial professionals 

and people we know commit financial crimes. 

There’s no shame in being a victim, and the sooner 

you let someone know about it, the better chance 

there is of putting an end to it. Contact information 

for reporting abuse appears at the end of this 

document.

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.

Even if it feels awkward, it is important to have an 

honest conversation about finances. Ask your loved 

one to consider taking the steps outlined above. 

Even if he or she does not want to take these steps, 

ask your relative or friend to consider how he or she 

wants to maintain control of his or her finances in 

the future. Explain that advance planning is a way to 

make sure that a trusted person makes decisions if 

he or she no longer can.

Help your relative or friend with 

managing finances.

You may also offer to take a more active role in 

helping your loved one manage his or her financial 

accounts. Be alert both to mistakes that your loved 

one may make in managing finances and to any 

signs of elder financial abuse. 

It can be hard to tell whether actions are the 

result of confusion or of financial exploitation. For 

example, if you find that a loved one has paid the 

same bill twice by mistake, you should help him 

or her fix the error. But beware that multiple or 

unusual payments could also be a sign of financial 

exploitation, so don’t rule out that possibility 

without looking into it. Be on guard for any sudden 

changes in investments that seem out of keeping 

with the loved one’s longstanding goals, values and 

investment style. These changes may have come 

about because of confusion or may be a sign of 

financial exploitation.

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. For example, your loved one may have 

named you as an agent under a power of attorney 

or a trustee under a revocable living trust. Read the 

Consumer Financial Protection Bureau’s Managing 

Someone Else’s Money guides (consumerfinance.

gov/blog/managing-someone-elses-money). They 

walk you through your duties, tell you how to watch 

out for financial exploitation and scams, and tell you 

where you can go for help. 
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If you’ve been asked by a loved one or friend to 

help out with his or her finances, here are some 

things you can do to help:

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. 

Review their investment portfolio. 

This might be a good time to help reevaluate the 

person’s portfolio in light of his or her financial and 

medical situation. Does the person expect a big 

increase in health care, personal care or other costs 

as a result of his or her illness or disability? If so, 

will he or she have enough cash or liquid assets on 

hand to cover those costs? (Liquid investments are 

assets that the owner can sell readily and without 

paying a hefty fee to get money when it is needed.) 

These can be complex questions and you may 

wish to discuss them with a financial professional. 

Keep in mind that buying and selling investments 

on behalf of a loved one requires legal authority, 

through a power of attorney, a trust or similar 

arrangement.

Assess the riskiness of their investment 

portfolio. 

All investments involve some level of risk. But do 

the investments present the right level of risk at 

this stage of the person’s life? If not, you may wish 

to consider contacting a registered investment 

adviser representative or registered broker-dealer 

representative for help. 

Contact their investment professional. 

If your loved one has a financial professional 

and has authorized that person to speak with 

you, make the professional aware of your loved 

one’s condition. This is critical so that the financial 

professional can make recommendations 

appropriate to the client’s financial needs and 

can watch for signs of declining financial skills or 

potential abuse. 

Your financial professional, or that of your loved one, 

may raise topics discussed in this bulletin. Financial 

services firms are paying increasing attention to 

improving communications on this subject. If a 

financial professional does not raise these topics, 

however, you should feel free to raise them yourself. 
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Additional Resources

Financial Protection for Older Americans webpage 

of the Consumer Financial Protection Bureau (CFPB), 

available at consumerfinance.gov/older-americans

The U.S. Department of Justice’s Elder Justice 

Initiative website at justice.gov/elderjustice/ 

(including the page on victim and family support)

The SEC Investor.gov web page for Seniors, 

available at investor.gov/seniors

To Report Suspected Elder Abuse

To report suspected elder abuse in general, locate 

the appropriate adult protective services agency by 

calling the Eldercare Locator at (800) 677-1116, or 

eldercare.gov.

Elder financial abuse often violates one or more 

criminal laws. To report it, contact your local police 

or sheriff.

To report suspected elder financial abuse involving 

brokers or investment advisers, contact: 

§ The SEC at (800) 732-0330 or sec.gov/complaint/

select.shtml

§ The Financial Industry Regulatory Authority 

(FINRA) Securities Helpline for Seniors at 

(844) 574-3577 or www.finra.org/investors/

investor-complaint-center, or 

§ Your state securities regulator. For a contact list 

of state securities regulators, visit nasaa.org/

about-us/contact-us/contact-your-regulator.

To Submit a Complaint 

with the CFPB

If you have an issue with a consumer financial 

product (such as a mortgage or credit card), you 

can submit a complaint to CFPB. CFPB will forward 

your complaint to the company and work to get a 

response from them. Visit consumerfinance.gov/

complaint or call (855) 411- 2372.

The SEC’s Office of Investor Education and 

Advocacy and the CFPB’s Office of Older Americans 

have provided this information as a service to 

investors and consumers. It is neither a legal 

interpretation nor a statement of SEC or CFPB policy. 

If you have questions concerning the meaning or 

application of a particular law or rule, please consult 

with an attorney who specializes in securities or 

consumer finance law.