The Trusted Contact Person initiative has been adopted across Canada.
It is part of new regulatory measures to support advisors in their efforts to help investors, particularly older investors and vulnerable, protect themselves and their financial interests.
Canadian seniors are increasingly called upon to make complex financial decisions, with higher stakes, later in life than ever before. For many, health, mobility, or cognitive changes that can occur with age, may affect their ability to make these decisions. This can make seniors more susceptible to financial exploitation and fraud. In fact, about half of the victims of investment fraud are over age 55.
Who is a Trusted Contact Person?
Your advisor is required to ask you about adding a Trusted Contact Person to your account. A Trusted Contact Person essentially serves as your emergency contact. It’s a bit like when you may have provided an emergency contact for other things like a passport. The Canadian passport application form includes a section for an emergency contact in case the applicant requires emergency assistance while outside of Canada.
What information do I need to provide to name a Trusted Contact Person?
You’ll be asked to provide details for how your advisor can reach your Trusted Contact Person. You will also be asked to provide written consent for the advisor to reach out to the Trusted Contact Person in specified circumstances.
Given the client relationship, many financial advisors are well positioned to notice warning signs of diminished mental capacity and suspected cases of financial exploitation. With the right tools, they can play an important role in protecting their clients against financial harm.
When would your advisor call your Trusted Contact Person?
Your advisor can only contact your Trusted Contact Person based on the written consent you give to the advisor. Generally speaking, the consent you will be asked to provide will include the following circumstances:
- where the advisor suspects that you are being financially exploited.
- where the advisor has concerns about your mental capacity as it relates to your ability to make financial decisions.
- to confirm your contact information if the advisor is unable to contact you after repeated attempts and where failure to contact you would be unusual.
- to confirm the name and contact information of a legal guardian, executor, trustee, an attorney under a power of attorney (POA) or any other legal representative.
Who should I name as my Trusted Contact Person?
The decision to name a Trusted Contact Person is yours. You don’t have to name one, but we strongly recommend you consider choosing someone in your life who:
- you trust.
- you communicate with on a regular basis.
- who will be comfortable speaking with your advisor about your personal situation.
- who is not involved in your financial decision-making process.
Basically, you want to pick someone who knows you well and who would be comfortable speaking to your advisor if your advisor had concerns about you.
Your Trusted Contact Person should not be your financial advisor.
How is this different than a power of attorney?
With a power of attorney, you can authorize another person to act on your behalf to carry out specific actions, such as paying your expenses, or to manage your finances generally. On the other hand, a Trusted Contact Person is not permitted to direct trades or otherwise make financial decisions on your behalf.
While you can choose to appoint your power of attorney as your Trusted Contact Person, we recommend that you choose someone who is not involved in your financial decision-making process, to add that second layer of protection for your account.
What will my advisor discuss with my Trusted Contact Person?
Depending on your written authorization and circumstances, an advisor may contact your Trusted Contact Person to discuss:
- concerns about your mental capacity to make financial decisions,
- facts suggesting that you might, if you do not get help, act in a manner that would jeopardize your assets,
- signs of financial mistreatment observed in dealings with you or with your power of attorney.
- concerns that you are being scammed.
How is my Trusted Contact Person expected to help?
Depending on the circumstances, the Trusted Contact Person could, at their discretion, provide information to the advisor, intervene with you, or get you the needed help.
Should I notify my Trusted Contact Person that I’ve named them?
We encourage you to tell your Trusted Contact Person that you’ve named them. This may help your Trusted Contact Person feel comfortable talking with your financial advisor if they’re contacted. You could also use the opportunity to share your wishes and expectations of the Trusted Contact Person, should issues arise and they are asked to help.
Read this brochure to learn more about appointing a Trusted Contact Person.