While you’re fully in control of your financial decisions now, there may come a time when changes in your physical or mental health mean you need help. If you’re married, existing tools such as powers of attorney and joint ownership may be sufficient. For others, regulators have recently created a new tool: the Trusted Contact Person (TCP).
“Your TCP can be any adult — ideally someone familiar with your financial and overall personal circumstances, who you trust to keep your best interests in mind,” says Dave Lee, a Senior Wealth Advisor with Scotia Wealth Management in White Rock. “When one of my clients names a TCP, they’re authorizing me to contact that person if I have concerns about my client’s wellbeing or ability to make sound financial decisions.”
Should I have a Trusted Contact Person?
Naming a TCP is optional, and your financial advisor can help you decide whether it’s in your best interest. Though a TCP may be useful at any age, seniors are most likely to rely on a TCP as they’re typically more vulnerable to financial abuse and are more likely to experience health issues, including dementia.
“If I notice a change in a client’s cognitive ability or decision making, I can reach out to their TCP. We may start the conversation about whether it would be prudent for their Power of Attorney to get involved, or the TCP may explain that a temporary health setback has affected my client, but they’re expected to be back to normal soon,” Dave says.
When a client has named a TCP (often a sibling, adult child or close friend), Dave is authorized to have that conversation without breaching privacy laws.
“I may also alert a TCP if I suspect that someone is financially abusing my client, and suggest that the TCP take a closer look. They may have more insight into whether someone is taking advantage of their vulnerability.”
How is a Trusted Contact Person different from a Power of Attorney?
Someone with Power of Attorney is legally authorized to learn about your financial affairs and make decisions on your behalf.
“A Power of Attorney has a fiduciary responsibility to act in your best interests, but sometimes clients aren’t ready to hand over so much control,” Dave says.
A TCP has significantly less power — they can’t make investment decisions for you, can’t take money out of your accounts, and can’t demand to see your account details. A TCP also has less power than a person given trading authority on investment accounts.
“A TCP is an additional level of care and protection for clients, without requiring lawyers, doctor assessments or other documentation. It’s another tool in the toolbox to help ensure your best interests.”
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Dave Lee CIM, CFP, FCSI is a Senior Wealth Advisor with Scotia Wealth Management in White Rock. He can be reached at dave.lee@scotiawealth.com or 604.535.4743
ScotiaMcLeod, a division of Scotia Capital Inc.