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The value of a trusted contact person Thumbnail

The value of a trusted contact person

Encourage your dealer to establish a trusted contact person procedure and form.

As clients age, they can become more vulnerable to both cognitive impairment and fraud, and advisors are often in the best position to see changes in financial behaviour that may indicate a problem. But what can you do if you have concerns about a client’s diminished mental capacity or possible financial exploitation?

New recommendations from the Canadian Securities Administrators (CSA) aim to empower advisors by encouraging them to ask clients for the name of a “trusted contact person” (TCP). When you have a TCP on file, you have someone your client has specifically chosen whom you can alert if you suspect something is amiss. It’s a powerful extra level of protection for your clients and for you.

If your dealer does not already have a procedure and form regarding the TCP, you should encourage them to establish one. You should not undertake a TCP process without dealer oversight and policy.

What a TCP is and isn't

A TCP is a close friend, family member or caregiver your client trusts with his or her personal information. A TCP is not the same as a power of attorney, who has authority to make financial decisions on your client’s behalf under certain circumstances, such as if your client becomes incapacitated. In fact, the TCP should have no interest or involvement in making financial decisions for your client. After all, you may need to reach out to the TCP if you feel the client’s power of attorney isn’t acting appropriately.

It’s also important to note that naming a TCP is not authority for you, the advisor, to share information with the TCP about your client’s financial accounts, assets or holdings, unless the client has given specific permission for this. When you speak with a TCP, you should limit your conversation to the bounds of your client’s consent and only disclose details the TCP needs to understand the situation and get the appropriate help for the client.

When to contact a TCP

The CSA has put together a list of red flags that may indicate a need to contact a client’s TCP.1

Early warning signs of diminished mental capacity may include:

  • Forgetting instructions or asking questions more than once
  • Finding it harder to complete forms
  • Getting confused about basic financial concepts
  • Struggling with simple math or with language
  • Exhibiting personality and mood changes
  • Looking uncharacteristically dishevelled

  • Early warning signs of financial exploitation may include:

  • A sudden shift towards a higher risk profile
  • Sudden hesitation to talk about financial matters
  • Sudden, unexplained withdrawals and account closures
  • A sudden request to change asset ownership, beneficiaries, powers of attorney or wills
  • Barriers to talking directly with the client without others present
  • Anxiety, failure to respond to communication attempts and increasing isolation
  • It is best practice to contact your dealer’s compliance branch manager or legal counsel to notify them of any early warning signs you identify.

    What to say to a TCP

    When you call a TCP, start the conversation by explaining the role (see the sidebar on the next page). Ideally, the client has already done this, but it is important to reiterate the level of trust the client has placed in the TCP and confirm that they accept the role. Then keep your discussion narrowly focused on your concerns, without sharing unnecessary additional information about the client’s financial situation.

    It is good practice to keep a summary of your conversation with the TCP in your client’s file and to inform your dealer’s compliance branch manager. Include details about what information you shared, what information you received from the TCP and any next steps you discussed.

    A new tool to help protect your clients

    Encouraging clients to name a TCP is another way advisors can support clients who are aging and becoming more vulnerable. Remember to check in regularly to ensure the TCP information remains up to date – it’s important to have accurate contact details at hand if and when you ever need to use them.

    For more information, advisors are encouraged to consult their dealer compliance contacts.

    1See the complete list here: www.osc.gov.on.ca/documents/en/Securities-Category3/csa_20190621_31-354_suggested-practices-for-engaging-with-older-orvulnerable- clients.pdf.