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 potentially vulnerable clients from financial abuse and exploitation, regulators introduced the “Trusted Contact Person”. The Trusted Contact Person provides advisors with a tool to help protect clients they suspect are experiencing financial exploitation or diminished mental capacity. Advisors should take reasonable steps to have clients name a Trusted Contact Person and document to their file when opening an account and when updating your client information.
What is a Trusted Contact Person (TCP)?
A TCP is someone, authorized by the client, the advisor can contact when concerned about client 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 the client trusts and can handle potentially difficult conversations about the client’s personal situation. Clients should consider choosing someone who:
- will protect their interests
- will be comfortable talking to the insurance advisor
- knows the client well enough to notice changes in their personal situation
- is familiar with the client’s support network
- is typically not involved in decisions about client finances, the executor, or a beneficiary and
- is not the power of attorney
It is important the TCP is aware they have been appointed as the client Trusted Contact Person and are authorized to speak with the insurance 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 the client and the insurance advisor have someone in place to help protect the client account(s). It is also an opportunity for the client to discuss their wishes with the TCP should they be contacted. Where situations change, the client can update the Trusted Contact Person on file.
Advisors should have this conversation with clients when making the initial sale, opening any subsequent account or policy and when updating the client information during periodic meetings with clients.
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
The client appoints a TCP to act solely as an additional resource to help the insurance advisor make decisions about protecting the client account. Advisors and clients can specifically outline in the client agreement when the TCP should be involved.
To assist advisors in implementing the identification of a TCP in client files, please feel free to use theses templates:
Trusted Contact Person template for HUB Financial Insurance and Segregated Funds
Remember,
Good Business is Compliant and Compliance Matters!