At some point in life, adults may experience a decline in financial awareness and health due either to a crisis or the natural aging process. In these situations, they become reliant on the help of family members or caregivers to assist them in making financial decisions, making them possible targets for financial fraud and exploitation. This risk is even higher for those who have cognitive impairment.
To help protect yourself or a potentially vulnerable family member or friend from financial abuse and exploitation, regulators have introduced the “Trusted Contact Person”. The Trusted Contact Person provides a layer of protection people that may potentially be vulnerable or that you suspect are experiencing financial exploitation or diminished mental capacity. You should take reasonable steps to have a Trusted Contact Person. It should be someone you know and trust, for obvious reasons.
What is a Trusted Contact Person (TCP)?
From my perspective as an advisor, a TCP is someone, authorized by a client, that can be contacted when there is concerned about personal or financial wellbeing under situations that could include:
- Advisor cannot get in touch with the client.
- Advisor has a concern the client is being financially exploited.
- Where health issues exist, and the advisor needs to confirm client wellbeing.
- Advisor needs confirmation of the client’s legal representative(s).
- Advisor seeks to ensure the validity of a request that is out of character where they believe the client may be financially exploited.
Who should be a Trusted Contact Person?
A TCP should be someone you, your family member or close acquaintance can trust and can handle potentially difficult conversations about that person’s personal situation. You should consider choosing someone who:
- will protect your interests
- will be comfortable talking to your advisor
- knows you well enough to notice changes in your personal situation
- is familiar with your support network
- is typically not involved in decisions about your finances, is your executor, or is a beneficiary and
- is not your power of attorney
It is important the TCP is aware they have been appointed as your Trusted Contact Person and that they are authorized to speak with your advisor if contacted.
Why is it important to name a Trusted Contact Person?
A health crisis may strike at any time, rendering a person vulnerable to financial exploitation or issues that might affect capacity to make financial decisions. While naming a TCP is not a legal process, it can provide peace of mind knowing that you and your advisor have someone in place to help protect your account(s). It is also an opportunity for you to discuss your wishes with the TCP. Where situations change, the advisor can update the Trusted Contact Person on file.
Perhaps you know of someone who should have this conversation?
What the Trusted Contact Person cannot do?
- TCP cannot authorize transactions on the client’s behalf.
- TCP cannot make decisions on the client’s behalf.
- TCP cannot be given access to client detailed account information
A person appoints a TCP to act solely as an additional resource to help an advisor make decisions about protecting that person’s account. Advisors and clients can specifically outline in the client agreement when the TCP should be involved.
There are many scams and bad actors out there on the phone and online, who are ready and willing to exploit those who may be vulnerable. It is a good practice to protect yourself or your loved ones and consider appointing a Trusted Contact Person.
If you would like to talk about appointing a Trusted Contact Person for yourself or someone you know, feel free to reach out to me with any questions here: FREE 15 MINUTES WITH KB
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THIS ARTICLE IS PROVIDED AS A GENERAL SOURCE OF INFORMATION ONLY AND SHOULD NOT BE CONSIDERED TO BE PERSONAL INVESTMENT OR LEGAL ADVICE. READERS SHOULD CONSULT WITH THEIR FINANCIAL OR LEGAL ADVISOR TO ENSURE IT IS SUITABLE FOR THEIR CIRCUMSTANCES.