Training on How to Identify Diminished Capacity.   This includes the ability to observe changes in investors’ behavior.  Signs include, but are not limited to, the following: 

• The investor appears unable to process simple concepts.
• The investor appears to have memory loss.
• The investor appears to have difficulty speaking or communicating.
• The investor appears unable to appreciate the consequences of decisions.
• The investor makes decisions that are inconsistent with his or her current long-term goals or commitments.
• The investor’s behavior is erratic.
• The investor refuses to follow appropriate investment advice; this may be of particular concern when the advice is consistent with previously-stated investment objectives.
• The investor appears to be concerned or confused about missing funds in his or her account, where reviews indicate there were no unauthorized money movements or no money movements at all.
• The investor is not aware of, or does not understand, recently completed financial transactions.
• The investor appears to be disoriented with surroundings or social setting.
• The investor appears uncharacteristically unkempt or forgetful.

Once detected, professionals and firms are in a unique and challenging position.  What steps to take?  Firm responsibilities in these instances?  Potential liability in instances where the securities professional does not address the issue?  Obviously, professionals cannot take advantage of investors in a manner that would violate an adviser’s fiduciary duty to the investor or a securities broker’s responsibility to follow just and equitable principles of trade.  Firms may want to direct professionals to seek advice from supervisors about contacting a trusted family member or the person designated in the investor’s power of attorney. 

    Training on How to Identify Elder Financial Abuse.   Elder abuse comes in a variety of forms - physical or emotional, it can result from neglect, abandonment, or financial exploitation.  Elder financial abuse generally is referred to as the misuse of a person’s money or belongings by a family member or a person in a position of trust.  Similar to detecting diminished capacity, firms indicated that securities professionals are on the front lines of seeing indications of possible financial abuse and, as a result, have included segments in their educational programs to help securities professionals identify signs -- or “red flags” -- that may indicate that an investor may be subject to elder abuse.  Signs include, but are not limited to, the following: 

• The investor appears unable to process simple concepts.
• The investor appears to have memory loss.
• The investor appears to have difficulty speaking or communicating.
• The investor appears unable to appreciate the consequences of decisions.
• The investor makes decisions that are inconsistent with his or her current long-term goals or commitments.
• The investor’s behavior is erratic.
• The investor refuses to follow appropriate investment advice; this may be of particular concern when the advice is consistent with previously-stated investment objectives.
• The investor appears to be concerned or confused about missing funds in his or her account, where reviews indicate there were no unauthorized money movements or no money movements at all.
• The investor is not aware of, or does not understand, recently completed financial transactions.
• The investor appears to be disoriented with surroundings or social setting.
• The investor appears uncharacteristically unkempt or forgetful.

For further details, click onto:  [ SEC PR 10-147, 8/13 ];  and, [ The 2010 Addendum ];  and  [ The 2008 Report ] 

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FYI:  Course Outline.  Up Next:  #4 - Escalating Issues and Taking Next Steps...

1. Getting started: how firms are thinking of ways to remodel their supervisory and compliance structures to meet the changing needs of senior investors.
2. Communicating effectively with senior investors.
3. Training and educating firm employees on senior-specific issues (such as how to identify signs of diminished     capacity and elder abuse).
   
4.     Establishing an internal process for escalating issues and taking next steps.
5. Encouraging investors of all ages to prepare for the future.
6. Advertising and marketing to senior investors.
7. Obtaining information at account opening.
8. Ensuring the appropriateness of investments;  and,
9. Conducting senior-focused supervision, surveillance and compliance reviews.