The value of asking clients for a trusted contact
by Meiz Majdoub
In our December article, we will be concentrating on Wills & Power of Attorney. This article it to focus on a Trusted Contact and the need.
Financial advising is a relationship business. We spend time building relationships with our clients and strive to help them reach their financial goals. We are in for the long haul and are around to watch our clients go through different life stages and changes.
If we begin to notice signs of diminished capacity in our client or possible financial exploitation, what can we do? With family dynamics, our duty of client confidentiality and other legal obligations, how can we protect our client?
The Investment Funds Institute of Canada (IFIC) has advocated to help protect both clients and financial advisors if a situation arises when we are concerned about a clients capacity or financial exploitation.
What is a Trusted Contact?
The trusted contact person is an individual designated by a client whom advisors can call upon if they suspect something a miss with the client, however, the individual cannot be cited as the attorney in a power of attorney (POA) document.
The simplest way to explain is that it is very much similar to an emergency contact that you give your kids’ school: someone who can be contacted by an advisor in special and unique circumstances, such as when there may be issues with diminished capacity and who could help prevent a future case of financial exploitation.
Asking a client to name a trusted contact before any issues arise, provides the consent that an advisor requires under privacy laws to discuss a client’s circumstances with someone the client trusts. A trusted contact should be someone with sufficient knowledge and standing in the client’s life to know what is happening on a personal level.
Although clients are not obligated to provide the name of a trusted contact, it would be beneficial in the event that an Advisor has concerns that may affect the client’s judgment and decision-making capacity.
Here is a comparison chart showing the difference between a Trusted Contact Person (TCP) and a Power of Attorney (POA).
|Trusted Contact Person (TCP)||Power of Attorney (POA)|
|Informational document: Client identifies and consents to the release of information to a trusted contact person whom the financial advisor can contact if there are concerns about client’s behaviour or transactions in client’s account- without violating client privacy.TCP has NO authority to make financial decisions for the clientA TCP is helpful if a Financial advisor can’t find client or is concerned about loss of mental capacity, fraud or financial abuse.TCP is a complement to and NOT a substitute for a POA||Legal document: Enduring or Continuing Power of Attorney for Property or HealthClient grants one or more persons authority to make decisions regarding client’s property or healthPOA remains valid when client loses mental capacity to manage property or healthMaking a POA does not always mean the client has relinquished control over financial affairs; it depends on circumstances, the law and POA wording.|
The Majdoub Group is very experienced in this area and welcome questions, inquiries and comments.
About the writer
Meiz Majdoub, B.Comm, is a financial professional with over 30 years of experience and is accredited with a CLU, CH.F.C. He is also a member of the Conference for Advance Underwriters (CALU). and the Estate Planning Council Of Ottawa. He has helped individuals, organizations and corporations attain their goals in the areas of Financial & Estate Planning, Insurance, Living Benefits and Employee/ Group Benefits. He can be reached at: 613-749-4007, or firstname.lastname@example.org