The North American Securities Administrators Association ("NASAA"), through its Senior Issues / Diminished Capacity Committee working group, examined issues of diminished capacity and cognitive impairment that impact financial professionals.
In its report, the working group stated it was unable to determine the number of financial professionals operating with any level of diminished capacity or cognitive impairment, but the issues raised affect the spectrum of compliance, including standards of conduct, conflicts of interest, continuing education and training, client data, books, and records, cybersecurity, fraud, supervision, trading and client harm. The working group stated that more work needs to be done to raise awareness of the issues.
In addition, the working group recommended that firms consider:
- potential factors that may impede a firm's ability to identify diminished capacity or cognitive issues, particularly with smaller offices or remote branches;
- bolstering supervision and training, such that staff are aware of how, and to whom, to report concerns of potential diminished capacity, as well as developing policies and tools to detect such issues (e.g., error reports and electronic surveillance); and
- encouraging all financial professionals to establish a succession plan, regardless of age.
Commentary
This is an important study and perhaps the first to focus on securities industry professionals, rather than on customers.
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