The Canadian Security Administrators published a paper in June 2019 titled “Suggested Practices for Engaging with Older or Vulnerable Clients.”
The paper states “As the human body ages, it is normal for changes in the brain to take place. These changes may not have a noticeable effect on one’s ability to perform routine financial tasks, such as paying bills, but can become more obvious when one faces more complex or unfamiliar financial decisions…” These changes make older clients vulnerable to potential financial exploitation and diminished mental capacity.
A financial advisor may be among the first to notice diminished capacity. Perhaps the elderly client begins to struggle with managing normal financial decisions.
Also, the advisor may suspect foul play if a client begins withdrawing funds from their account outside of their normal activity. Perhaps someone is stealing from that client and withdrawals are going to a thief.
In cases like these, you might expect the financial advisor to be proactive and contact someone to help. Perhaps a family member or a good friend. However, privacy laws are in place to protect clients, which presents a roadblock.
A solution is for the client to identify a trusted contact person (TCP). Then the financial advisor would have the client’s permission to contact the TCP if they suspected declining mental capacity or wrongdoing.
Ideally, to maintain checks and balances in the system, and avoid any conflict of interest, the TCP should not have an interest in the client’s account or assets or be involved in making financial decisions. A TCP should be a trusted and neutral person.
For example, a client’s Power of Attorney for Property would not be a good choice for a TCP. They would be able to sign on behalf of the client and therefore should not be in a position to be called on if there was any potential foul play, or something they have done inappropriately.
I suggest considering a TCP for yourself or family members who are in their retirement years.