2 days ago
New securities system enables those with dementia to invest with family's help
The Japan Securities Dealers Association has introduced a new framework for "family support securities accounts" that allows individuals experiencing cognitive decline from dementia or other conditions to continue investing with assistance from family members.
Under the system, investors can designate trusted family members as their agents while they are still mentally capable. These designated agents can carry out securities transactions on the investors' behalf, in accordance with preestablished instructions, even after the onset of illness.
The JSDA aims to promote the system as a proactive option for investors seeking to plan ahead for potential future health challenges.
Typically, when investors lose their decision-making capacity due to dementia or other illnesses, their securities accounts are frozen. The new system is a response to growing demand from investors who wish to continue managing their assets despite such conditions. It also reflects the JSDA's broader aim to address key issues, such as inheritance planning and extending the longevity of retirement funds.
"We have developed a solid framework for wider adoption," JSDA Chairman Toshio Morita said. "We will work with member securities companies to ensure that the system is well understood and accepted by as many investors as possible."
Before a family support securities account can be opened, the original account holder, their designated agent and the hosting securities company must agree on an investment and management policy while the investor is still in good health. This process is followed by the conclusion of a notarized contract between the investor and the agent.
Under the system, investors can manage their own investments as usual until they are diagnosed with dementia or other conditions that impair judgment. After the onset of such conditions, designated family members can act as agents, enabling them to sell assets or purchase stocks and investment trusts on behalf of the investors, excluding high-risk financial products.
The current available options for managing assets when investors experience cognitive decline include family trusts under the trust law and statutory guardianship under the Civil Code.
Family trusts allow for the management of a broad range of assets, but once a trust contract comes into effect, even healthy investors are no longer allowed to manage investments on their own. Statutory guardianship is intended for use after the onset of symptoms and involves complex procedures, such as filing a petition with the court.
Yumiko Nagasawa, a senior official at Foster Forum, an organization that provides recommendations on financial products, praised the family support securities account system.
"Given the growing need for asset management that assumes longer lifespans, the family support securities account is a more user-oriented system," she said.
Imamura Securities, based in Kanazawa, Ishikawa Prefecture, plans to begin offering family support securities account services under the JSDA's framework as early as July.
As many of its customers have family members living nearby, the company believes it will not be difficult for them to meet the service's key requirement of designating a trusted family member as an agent.
Hisano Ohara, head of the brokerage house's internal controls department, said, "While robust safeguards must be in place to prevent the misuse of customer accounts, proper oversight will enable the effective use of customer assets."
Securities companies in Japan are exploring various measures to address the aging of their customer base.
In July last year, SMBC Nikko Securities established a cross-departmental "working group on supporting elderly customers and upgrading related services" to identify challenges faced at the operational level. The company has already introduced a family trust system and a "contingency agent system," which allows customers to appoint relatives in advance to act as agents for transactions. It now plans to expand its service lineup further.
Specifically, SMBC Nikko plans to create a dedicated webpage offering comprehensive information about its services for older customers and their families. The company is also considering implementing a training program for sales staff focused on dementia awareness.
Natsuki Kato, head of the customer-oriented business planning office, said, "We aim to provide not only investment advice, but also support tailored to our customers' individual circumstances."
