Trusted Contacts – What They are and Why They Are Important

With 20 years in the industry, it’s safe to say that most clients are predictable to a certain degree. From their mannerisms on the phone, to the structure of their emails, to their typical transactions, we get to know them well. As advisors, we are quick to catch on when we feel something is amiss.

My 85-year-old client, who calls me to discuss market fluctuations in detail, is suddenly sending me a very formal-sounding email requesting large withdrawals to be sent to a brand new bank account we don’t have on file? A younger client who normally takes advice, suddenly demanding very high-risk investments without wanting to have a discussion? A client who has worked with me for 20 years forgetting things that we’ve discussed, such as a death in the family or a recent vacation? All of these are reasons for advisors to be concerned, and with a Trusted Contact Person in place, we are in a position to ensure the safety and well-being of our clients.

The Canadian Investment Regulatory Organization says: “Naming a Trusted Contact Person could help your advisor or investment firm to respond to possible situations of financial abuse or fraud affecting your account among other things. It allows your advisor to know who you trust and who they have permission to contact when they are concerned about your well-being under specific situations.”

Typically, the Trusted Contact Person should be somebody reliable and trustworthy, who is responsible and generally uninvolved in your financial affairs. They are in no way a legal representative for you, simply a person your advisor can contact, if needed.

What a Trusted Contact Person is NOT? They are NOT your power of attorney! While they can give us general information about your whereabouts and well-being, they cannot make decisions on your behalf or have access to any financial information. You would still need to set up a power of attorney with your legal professional, independently of the Trusted Contact Person designation.

They are NOT (necessarily) your beneficiary! Beneficiary designations for registered accounts are important, to identify who you’d want your assets to go to when you pass away. While it may seem logical that, if your advisor is concerned, they may call the beneficiary, they cannot do so without prior authorization from you.

The Trusted Contact Person designation is a key piece of information that is in place to protect you and your interests, and help your advisor do their best work for you.

To a good financial future!