Who Can You Trust? Four steps to naming a TCP

You’re likely familiar with the ‘Trust Fall’ – a team-building exercise that has been around long enough now that it’s already been parodied to death in film and television. More recent research into the nature of workplace community and productivity has shown the exercise itself is not all that effective in building real, long-term trust between coworkers. Real trust is built through ongoing collaboration, mutual-respect, and openness of communication on real-world problem resolution.

Which begs the question—who do you trust? Especially when it comes to your finances?

The Canadian Securities Administrators (CSA), the umbrella group of provincial and territorial regulators (including the Manitoba Financial Services Agency), have recently made legislative amendments to strengthen protection of older and vulnerable clients through two new avenues; Trusted Contact Persons (TCP) and Temporary Holds.

A TCP is someone who can be contacted by an adviser or firm under specified circumstances—specifically, if there’s a concern about the validity of a transaction(s) and/or whether you are at risk of financial exploitation. Guidelines for establishing a TCP strongly suggest they not necessarily have a financial interest in your affairs, and they cannot also be cited as the attorney in a Power of Attorney (POA) document.

In a perfect world, a TCP would probably not be needed. However, research shows that one-in-three Canadian adults personally know an older adults who has experienced some form of financial abuse. In addition, the majority of financial exploitation occurs at the hands of family and friends.

Having a trusted contact in place and on record with your financial institution—who has absolutely no ability or authority to transact on the account (i.e. withdraw funds)—is actually of benefit if the POA is the perpetrator of the abuse. If a firm has a reasonable belief that a client is being financially exploited, or lacks mental capacity to made an informed decision, they may put a temporary hold on a transaction request. The TCP is also notified about the concern, and may assist the firm in determining the right course of action. In this way, a TCP can act as a second level of protection for vulnerable individuals.

It’s important to note that a TCP is NOT mandatory, it is optional, and consumers absolutely have a choice on whether or not to appoint someone in this role. Your financial adviser or firm cannot force you to have a TCP. These rules have been established to help prevent the financial exploitation of seniors and other adults who may have diminished capacity.

So who should you choose as your TCP? It’s a bit of a balancing act. You should consider:

  • Someone who does not necessarily have a financial interest in your affairs. This often precludes a partner, children, or close relatives.
  • The person cannot also be cited as the attorney in your POA document. Again, this will often preclude certain people you are close with.
  • Someone who knows you well enough that you can depend on them to act in your best interests.

So who do you know who fits that description? As mentioned in the first paragraph, it’s probably someone you have known a long time, have a good rapport with, and doesn’t need your money!

As outlined here, there are the four steps to naming a TCP.

  1. Identify the individual that you would like to name as a TCP.
  2. Advise them of the responsibilities and confirm with them that they are willing to take on this role.
  3. Provide the individual’s name and contact information such as their phone number and email to you adviser/firm.
  4. Provide written consent to your adviser or firm that they may contact the TCP in specified circumstances.

While naming a TCP is not mandatory, and isn’t needed to open or maintain an investment account, it’s a relatively easy way to create an additional layer of financial security for yourself should the need arise.

Roughly 77 percent of all Canadians hold some form of investment. By 2030, adults age 65+ are expected to account for 23 percent of Canada’s population. Also consider that approximately seven percent of seniors have been or will be diagnosed with some form of dementia, including Alzheimer’s disease. When combined with the figures on senior financial abuse, it paints a startling picture of just how many individuals could be at risk of financial exploitation in the years ahead.

With that in mind, naming a TCP doesn’t seem like a bad idea. Think about who you trust.

~ Jason Booth

Communications Coordinator, Manitoba Financial Services Agency

2020  BMO RRSP Study – 77 per cent of Canadians have investments
Stats Can – By 2030 – seniors (65+) will make up 23 percent of Canadians
Alzheimers Society – Seven percent diagnosed with dementia including Alzheimer’s disease.

 

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