If an advisor is having difficulty reaching a client and their power of attorney, the TCP is the next point of contact, and can provide the advisor with a check-in of the client’s whereabouts and wellbeing.kitzcorner/AFP/Getty Images
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Since the Canadian Securities Administrators mandated financial advisors to recommend clients fill out a trusted contact person (TCP) document for all financial accounts a few years ago, uptake has been positive, advisors say.
Unlike a power of attorney, a TCP is not somebody who makes financial decisions on the client’s behalf in case of mental incapacity, says David Christianson, senior wealth advisor and portfolio manager with Christianson Wealth Advisors at National Bank Financial Wealth Management in Winnipeg.
But if the advisor is having difficulty reaching a client and their power of attorney, the TCP is the next point of contact, and can provide the advisor with a check-in of the client’s whereabouts and well-being, Mr. Christianson says.
Ideally, the TCP is not someone who has a vested interest in the client’s financial affairs but is a family member, friend or neighbour who would be aware if the client was travelling, in hospital or, in dire cases, be able to go check on the client in person.
“It’s someone the client trusts but it’s not a legal relationship in which the person is a substitute decision maker who gives us instructions,” Mr. Christianson says.
He notes about 85 per cent of his client base has a completed TCP document. He believes the holdouts are still figuring out who would fill that role as it should not be the same person who was appointed power of attorney.
TCPs can play a huge role in helping advisors understand, say, an elderly client’s mental capacity and if any financial abuse may be taking place with family members. Perhaps the client starts withdrawing lump sums of money on a regular basis with vague reasonings, for example. A call to a TCP may find the client has in fact been pressured by a family member to pay off loans or provide more cash to them, Mr. Christianson says.
Confirm with clients every year
Karlee Vukets, certified financial planner and founder at Karlee Vukets & Co. in Toronto, says a TCP is paramount for retired clients, especially if the advisor has been working with those clients for years.
“Advisors often see their clients through a lot of circumstances and may notice some early signs of cognitive change, or suspect their client is a victim of a financial scam,” she says. “It would be nice to touch base with a TCP to make sure the client is safe.”
Ms. Vukets has primarily younger clients, and while most have filled out the document, she hasn’t had to call any TCPs at this time.
Ensuring the client file has an updated TCP listed is key. Ms. Vukets confirms the information with clients every year.
Brenda Hiscock, a fee-only certified financial planner at Objective Financial Partners Inc. in Cobourg, Ont., doesn’t have clients complete the TCP form because she isn’t licensed to sell any financial products and has no jurisdiction over their financial accounts.
“I check if they have their beneficiary designations properly structured, and whether they have a TCP in place at each financial institution,” she says. “And if they don’t know what a TCP is, I talk to them about how it works.”
Some clients simply want to name their power of attorney, so Ms. Hiscock has a conversation with them about why that may not be the best decision.
“This is someone to contact if you suspect something might be going on and who doesn’t have an interest in the financial management related to the client,” she says.
Getting permission and sharing contact information
Once the client picks someone, it’s also crucial that they let the person know they have done so and get their permission. Ms. Hiscock says there’s nothing worse than the person selected finding out when the advisor calls.
“Give the person a heads up that they might be called at some point,” she adds. “You can also name different people for different accounts if you choose.”
If clients choose not to appoint a TCP, that’s their right, she adds. What’s mandated by compliance is that advisors ask and inform clients of the possibility. Ms. Hiscock suggests making detailed notes in their account about why they didn’t provide a TCP and continuing to ask about it at future client meetings.
Finally, ensure the client provides the TCP with the advisor’s contact information, too. Even if the appointed person knows an advisor may call them at some point to do a check-in, they may want some proof of reference as to who is calling, Ms. Vukets adds.
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