By By iA Private Wealth, August 22, 2022
When it comes to finances, most people can make their own decisions. They may seek support and guidance from an Investment Advisor, of course, but they’re able to take the advice they’re given and make sound decisions for themselves.
But what happens if you lose mental capacity? Wouldn’t it be reassuring to know that someone will step in and protect your financial interests? That’s where a trusted contact comes into play.
Designating a trusted contact
Canada’s securities regulators understand the risks of incapacity, so they’ve introduced the Trusted Contact Person (TCP) standard. A TCP is someone you authorize your advisor to contact if they believe you may be experiencing physical or mental incapacity, or if they suspect you’re a victim of fraud or another form of financial exploitation, including undue financial pressure exerted by a loved one.
Your designated TCP should have good knowledge of your overall personal and financial circumstances. A family member, close friend or caregiver are common choices for a TCP, but you could turn to a trusted lawyer or accountant to uphold your best interests in the event of your incapacity. Whomever you choose, be sure to notify them and confirm that they know what the responsibility involves and that they’re willing to accept this important role.
What does a TCP do?
Let’s say your advisor suspects you may be experiencing a cognitive decline or demonstrating signs of dementia. You could be making uncharacteristic financial decisions or taking on more risk than usual. Or maybe a fraudster has taken control of your email and is sending unusual requests to your advisor, such as asking to sell certain investments and transfer money to an external account.
In cases like these, your advisor will reach out to your designated TCP and ask them if they’ve noticed anything unusual about your recent behaviour or actions. The TCP will respond to the best of their knowledge and may follow up with you to confirm their opinions. Unlike someone with power of attorney, a TCP cannot make financial or health care decisions on your behalf and holds no trading authority over any of your investment accounts. They won’t even have access to your accounts. The primary role of a TCP is to protect your best interests.
Who needs a TCP?
Having a TCP is a best practice, and everyone should consider adding this layer of protection to their investment accounts. However, since seniors tend to be more vulnerable to financial abuse, adding a TCP to their accounts should be a top priority. A TCP is also useful if you travel a lot and may not be easily accessible by your advisor. If your advisor cannot reach you and there’s a crucial, time-sensitive financial matter requiring your immediate attention, the advisor may ask your TCP to provide your contact information.
Confidentiality remains paramount in the advisor-client relationship, so your advisor will only disclose information the TCP needs to know under the circumstances. Similarly, your TCP is only obligated to vouch for your current health or state of mind as it pertains to your financial situation, or provide your contact details to the advisor on an as-needed basis.
A TCP is important to protecting your best interests and ensuring the integrity of your financial circumstances. Naming a TCP can provide you with peace of mind and gives you and your family an added measure of protection and reassurance when it’s needed most.
For more information on how a TCP can help safeguard your finances, contact us today.
This article is a general discussion of certain issues intended as general information only and should not be relied upon as tax or legal advice. Please obtain independent professional advice, in the context of your particular circumstances. iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Investment Industry Regulatory Organization of Canada. iA Private Wealth is a trademark and business name under which iA Private Wealth Inc. operates.
iA Private Wealth Inc. is a member of the Canadian Investor Protection Fund and the Canadian Investment Regulatory Organization. iA Private Wealth is a trademark and a business name under which iA Private Wealth Inc. operates.
This is not an official website or publication of iA Private Wealth and the information and opinions contained herein do not necessarily reflect the opinion of iA Private Wealth. The particulars contained on this website were obtained from various sources which are believed to be reliable, but no representation or warranty, express or implied, is made by iA Private Wealth, its affiliates, employees, agents or any other person as to its accuracy, completeness or correctness. Furthermore, this website is provided for information purposes only and is not construed as an offer or solicitation for the sale or purchase of securities. The information contained herein may not apply to all types of investors. The Investment Advisor can open accounts only in the provinces where they are registered.
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