Naming a Trusted Contact Person: Why it Matters

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As we age, we may experience a decline in health or cognitive capacity that could result in difficulty making financial decisions independently. Unfortunately, relying on the help of family members, caregivers and friends can increase the risk of financial exploitation and fraud. One way to safeguard against potential future financial harm is by naming a Trusted Contact Person (TCP).

Who is a Trusted Contact Person?

If you invest with a financial institution or investment firm, your advisor is required to ask you about providing a Trusted Contact Person (TCP). The decision to name a TCP is optional and it’s your choice if you would like to name someone. Providing your advisor with consent to contact your TCP is similar to providing them with an emergency contact. Depending on the consent you provide, your advisor could contact your TCP in the following circumstances:

  • You cannot be reached after repeated attempts and where failure to contact you would be unusual
  • The advisor has concerns you are being financially exploited
  • The advisor has concerns about mental capacity as it relates to your ability to make financial decisions
  • Your advisor needs confirmation of your legal representative (e.g. power of attorney, executor, trustee)

For example, your advisor may contact your TCP when they cannot reach you because you have taken an extended vacation and forgot to inform them. Or, in more sensitive situations, your advisor may contact your TCP to ensure the validity of a request that they believe is out of character.

What can and can’t my Trusted Contact Person do?

A TCP’s sole purpose is to help safeguard your financial assets by being an additional resource to help your advisor make decisions that best protect your account. Your advisor might contact your TCP to discuss:

  • Concerns about your mental capacity and ability to make financial decisions
  • Signs of financial mistreatment or abuse they’ve observed
  • Concerns that you are being scammed

Your TCP is different than a power of attorney. A TCP is not permitted to manage your finances or make financial decisions on your behalf.

Who should be your Trusted Contact Person?

A TCP should be a mature family member or friend who you trust, and you should feel comfortable that they can handle difficult conversations about your personal situation if they arise. Consider choosing someone you know will protect your interests, is familiar with your support network, and is not typically involved in your financial decisions. You should also ensure the person you select agrees to take on the role and is comfortable talking to your advisor.

While naming a TCP on your account is optional and not a legal process, it can provide you valuable peace of mind knowing that your advisor has someone you trust to help safeguard your financial assets now and in the future.

To learn more about assigning a TCP to your accounts, please visit our Investing as you age page or speak to your registered advisor.

A trusted contact person: Enhancing your financial protection as you age

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For those that invest with a financial institution or firm, you now have the ability to provide your registered advisor with a contact person that you trust. This person can play an important role in protecting your financial assets in certain circumstances.

As of December 31, 2021, advisors are required to take reasonable steps to obtain the name of someone you would like to have as your Trusted Contact Person (TCP), should they suspect you are experiencing financial exploitation or diminished mental capacity.

What is a Trusted Contact Person?

As you age, you may experience a decline in your health and cognitive abilities due to medical issues, pre-existing conditions or the natural aging process. In these circumstances, you may become more reliant on others in making financial decisions, potentially exposing you to financial abuse and fraud by those who do not have your best interests at heart.

To help safeguard potentially vulnerable clients from financial abuse and exploitation, the Canadian Securities Administrators, of which the Alberta Securities Commission is a member, introduced the TCP. A TCP is someone you can have listed on your account informing your advisor of who you trust and who they can contact in limited circumstances. This could include:

  • If you are unable to be reached
  • If your advisor has concerns you are vulnerable and being financially exploited
  • If you are having a health issue and your advisor needs to confirm your wellbeing
  • If your advisor needs confirmation of your legal representative

For example, your advisor may contact your TCP when they cannot reach you because you have taken an extended vacation and forgot to inform them. Or, in more sensitive situations, your advisor may contact your TCP to ensure the validity of a request that they believe is out of character.

What can and can’t my Trusted Contact Person do?

A TCP’s sole purpose is to help safeguard your financial assets by being an additional resource to help your advisor make decisions that best protect your account. Your TCP:

  • cannot authorize transactions on your behalf
  • cannot make decisions on your behalf
  • will not be given access to your detailed account information

Who should be your Trusted Contact Person?

A TCP should be a mature family member or friend who you trust, and you should feel comfortable that they can handle difficult conversations about your personal situation if they arise. Consider choosing someone you know will protect your interests, is familiar with your support network, and is not typically involved in your financial decisions. You should also ensure the person you select agrees to take on the role and is comfortable talking to your advisor.

In recognition of June Senior’s Month and World Elder Abuse Awareness Day (June 15), the Alberta Securities Commission (ASC) reminds older Albertans to work with your advisor to put a TCP in place. In a recent study conducted by the ASC, nearly 60% of Albertans aged 65 and over were approached with what they felt was a possibly fraudulent investment. While naming a TCP on your account is optional and not a legal process, it can provide you valuable peace of mind knowing that your advisor has someone you trust to help safeguard your financial assets now and in the future.

Developing the right mindset and processes to invest wisely and avoid fraud

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For any investor, novice or experienced alike, there can be pitfalls and challenges that potentially lead you to making unsuitable investments.  These pitfalls include cognitive biases, poor planning, and even missing the red flags of fraud. To help you recognize these pitfalls and define sound practices and behaviours that will help you improve your approach to investing, consider the following core principles.

Behaviour and mindset – Investing is not just the act of buying or selling investments. It is also about your mindset and processes. Over confidence, anxiety, and the fear of missing out can lead you to jump into inappropriate investments that are tied to hot trends and new innovations, or fall prey to fraudulent or misguided get rich quick schemes. The best way to avoid these challenges is to refine your processes.  Start by developing a financial plan and goals before you actually make that first investment. Your plan doesn’t have to be complicated, but by having your goals laid out can help you maintain your focus and avoid the noise and distractions in the market. For investors that recognize that their emotional discipline may not be strong enough to avoid these traps, the assistance of registered investment professionals may be needed. Utilizing the services of a registered financial planner or financial advisor may provide the dedicated service, and peace of mind, to help you choose the suitable investments that will help you achieve your financial goals.

Investment literacy and fraud knowledge – To invest successfully, start by developing your understanding of securities, in addition to investing principles and strategies. As you build your knowledge and your portfolio, you may want to explore more advanced investments like exempt market securities, options trading or even crypto assets. Recognize the limitations of your investment knowledge and consider taking time to talk to registered investment professionals and assess what new investment opportunities might fit best within your financial plan and risk tolerance (your ability and willingness to take risk with your money).

While knowing the inherent risks to investments is essential, understanding and recognizing the risks of fraud and scams is just as important. A recent study conducted by the Alberta Securities Commission (ASC) found that nearly half of Albertans have been approached by what they felt was possibly a fraudulent investment opportunity. Some of the key signs of fraud include promises of high return rates with little to no risk, exclusive or time-sensitive investment offers, offshore and tax-free investments, and insider tips. Understanding these signs and the situations and scenarios in which they can be presented can help you better safeguard your money and assets. To learn more about investment scams and how to recognize, avoid and report them, investors should review the red flags and scams sections of CheckFirst.ca, brought to you by the Alberta Securities Commission.

Proactive measures – By taking a few proactive steps you can help reduce the chances of your portfolio underperforming, and prevent you from taking on unsuitable investments and falling for fraud. Some suggested steps include thoroughly researching the legitimacy and suitability of investments before investing and regularly monitoring the performance of your investments and your portfolio as a whole. By taking the time to do this, you can better validate new investment opportunities and ensure your existing investments are tracking towards your goals.

In addition to these proactive measures, one of the most important steps you can take before investing with any financial advisor, firm or brokerage, is to conduct the necessary due diligence. Generally speaking, financial advisors, firms, and brokerages must be registered to offer you securities. By checking registration at CheckFirst.ca, you can ensure you are working with registered professionals and businesses that are compliant with securities law before you hand over your money.

Investing wisely may seem complicated, but following these core principles as part of your investing process will lead to a more successful and enjoyable journey and help you avoid common mistakes and fraud.