What is a Trusted Contact Person and why you should name one
At some point in life, adults may experience a decline in financial awareness and health due either to a crisis or the natural aging process. In these situations, they become reliant on the help of family members or caregivers to assist them in making financial decisions, making them prime targets for financial fraud and exploitation. The risk is even higher for those who have cognitive impairment caused by disease or other factors, such as Alzheimer’s, missed medications or short-term medical issues.
To help protect potentially vulnerable clients from financial abuse and exploitation, Canadian securities regulators recently introduced The Trusted Contact Person. The Trusted Contact Person initiative provides your financial advisor with a tool to help protect you should they suspect you are experiencing financial exploitation or diminished mental capacity.
What is a Trusted Contact Person (TCP)?
As of December 31, 2021, your financial advisor is required to take reasonable steps to see if you would like to name a Trusted Contact Person (TCP) when opening an account and when updating your client information. A TCP is someone you authorize your financial advisor to contact in limited circumstances. It allows your financial advisor to know who you trust and who they have permission to contact when they are concerned about your wellbeing under specific situations. This could include:
- If your financial advisor needs to get in touch with you but can’t.
- If your financial advisor has a concern you are vulnerable and being financially exploited.
- If you are having a health issue and your financial advisor needs to confirm your wellbeing.
- If your advisor needs confirmation of your legal representative(s).
For example, your advisor may contact your TCP when they simply can’t reach you because you have taken an extended vacation and forgot to inform them. Or, in a more complex situation, they may contact your TCP to ensure the validity of a request that is out of character if they believe you are vulnerable and being financially exploited.
What can my Trusted Contact Person do?
A TCP can help safeguard your financial assets, but they:
- cannot authorize transactions on your behalf
- cannot make decisions on your behalf
- will not be given access to your detailed account information
You appoint a TCP to act solely as an additional resource to help your financial advisor make decisions about protecting your account. You can specifically outline in your client agreement when your TCP should be involved.
Who should be a Trusted Contact Person?
A TCP should be someone you trust and someone who is mature and can handle difficult conversations about your personal situation. Consider choosing someone who:
- will protect your interests
- will be comfortable talking to your financial advisor
- knows you well enough to notice changes in your personal situation
- is familiar with your support network
- agrees to take on the role
- is typically not involved in decisions about your finances, and preferably, is not your power of attorney
Should I tell my Trusted Contact Person that my advisor may contact them?
It’s important to let your TCP know that you have appointed them as your Trusted Contact Person. This may help your TCP feel comfortable talking with your financial advisor if they are contacted. It’s also an opportunity to discuss your financial wishes and what is expected from them if they are contacted. Download You’re my Trusted Contact Person, a resource that could help your TCP know what is expected of them should they be contacted.
If your situation changes, you can contact your financial advisor at any time to add or update your Trusted Contact Person.
Why is it important to name a Trusted Contact Person?
It’s important for all New Brunswickers to consider this important tool. A health crisis may strike at any time, rendering a person vulnerable to financial exploitation or issues that might affect capacity to make financial decisions.
While naming a TCP on your account is optional and is not a legal process, it can provide you peace of mind knowing your financial advisor has someone you trust to help them make decisions about protecting your account. Having a plan and trusted people in place now can help protect you and your financial wishes in the future.
Speak to your financial advisor to learn more about naming a TCP.