Do You Have a Trusted Contact Person?

What is a Trusted Contact Person?

The concept of a Trusted Contact Person (TCP)  was mandated by Canadian securities regulators in 2021. The purpose of asking clients to name a TCP is to provide an additional layer of protection for the vulnerable, particularly seniors, who are at greater risk of financial abuse and exploitation.

 

You may think that this is an unnecessary redundancy, especially if you have granted a trusted person Power of Attorney (POA). The view of the regulators, including recently, the FP Canada Standards Council™, the body that sets standards for holders of the CFP® and QAFP® designations, is that this is a helpful addition.

 

What Purpose Does a TCP Serve?

A TCP is there for a financial planner to reach out to about any of the following regarding a client:

 

• Concerns about possible financial exploitation of the client;
• Concerns about the client’s mental capacity as it relates to the ability of the client to make decisions involving financial matters;
• The name and contact information of a legal representative of the client (e.g., POA), if any; and
• If the client cannot be reached, the client’s current contact information.

 

In short, the TCP is named so that the financial planner has someone to contact if there are concerns about the client’s well-being or to protect the client’s financial interests.

 

A TCP has not been granted power of attorney, however. For that reason, if a financial planner speaks to the TCP, this will not allow the TCP to have the authority to place trades in the client’s accounts, make other financial decisions on the client’s behalf, or gain access to detailed account information.

 

 Who Should Not Be a TCP?

I start here first because people will tend to think of the Trusted Contact Person as virtually identical to the person who has been granted Power of Attorney. However, the POA has the authority to manage a person’s (the grantor’s) financial matters. Despite the legal responsibility the POA bears, it can be the case that the POA will exploit the grantor of the POA for their own advantage.

 

A client may feel that this will not be the case, and that only a trustworthy person will be granted Power of Attorney. However, Ellen Bessner, a lawyer with many years of experience litigating in the financial services world, illustrates how this can go wrong in a recent article. In essence, while many do act responsibly, as they should, there are stories of attorneys (those granted power of attorney) acting in their own interests. In that case, when a financial planner notices out-of-character behaviour from their client, and the only person they have to contact is the attorney, they will have nowhere to turn to protect their client’s interests.

 

Who Would Be a Good Candidate for a TCP?

A good TCP can be a trusted family member or friend who is not a beneficiary of the client’s estate. In other words, they have no financial interest in the client’s assets. However, they must know the client and the details of the client’s life sufficiently well to be able to assist a financial planner in contacting the client.

 

New Practice at Money Architect Financial Planning

Given these new expectations, my new clients will be requested, as part of the Discovery process, to designate a Trusted Contact Person (TCP) and provide contact information for that person. Existing and ongoing clients will also be asked to provide this information. Designating a TCP is not mandatory, and it can be updated or revoked, but financial planners are also required to periodically remind clients of the benefit of a TCP.

 

 

This is the 256th blog post for Russ Writes, first published on 2024-07-29

 

Note: I will not be posting to my blog during the week of 2024-08-05.

 

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Disclaimer: This blog post is intended for general information and discussion purposes only. It should not be relied upon for investment, insurance, tax, or legal decisions.