This Rule Interpretation Bulletin provides information about the interpretation and application of the Rule of Conduct in the FP Canada Standards Council™ Standards of Professional Responsibility that outlines the obligation of QAFP® professionals and CFP® professionals (collectively “financial planners”) to inform their clients of the value of naming a Trusted Contact Person (“TCP”). This Rule came into effect on June 1, 2024.
What is a TCP?
A TCP is an individual designated by a client, in advance, to act as a point of contact for the financial planner in specific, agreed upon, circumstances. A client can designate one or more TCP contacts.
Situations where a financial planner may contact a designated TCP include:
- where the financial planner has concerns about the client’s ability to manage their financial affairs due to a potential mental capacity concern (this could be a temporary point-in-time concern),
- concerns about financial exploitation, and/or
- in circumstances where the financial planner is unable to reach their client.
Having a TCP in place provides the financial planner with express consent to contact the TCP and share confidential information in the agreed upon circumstances. This Rule is designed to enhance client protection, especially for vulnerable clients, by allowing financial planners to maintain a line of communication with a trusted individual selected by the client.
Financial planners should encourage their clients to name a TCP that the client trusts to act in their best interests and has the requisite sophistication and maturity to engage in potentially difficult conversations with the financial planner about the client’s personal situation.
A suitable TCP is typically not involved in the client’s financial decision-making. Ideally, the TCP will have knowledge of the client’s financial circumstances and overall personal situation. Often the TCP is a significant other, family member or close friend, but a TCP may also be a caregiver or professional such as an accountant or lawyer who can advocate on the client’s behalf.
TCP versus Power of Attorney
A TCP does not have the legal authority to act on behalf of the client and/or the authority to make financial decisions for the client. A TCP is a complement to, and not a substitute for, a Power of Attorney for Property (“POA”). Unlike a POA, a TCP does not have the legal authority to make financial decisions for the client.
Clients should avoid naming the same individual as both TCP and POA. While clients may appoint the same person, doing so can be problematic. Segregating these two roles may reduce the risk of a lack of objectivity by an individual named as both TCP and POA and provide a better network of support for the client.
Requirements
Financial planners are required to inform their client of the benefits and value of identifying and designating a TCP. The Rule also requires that financial planners record, in writing, the client’s decision with regards to naming a TCP. Should the client choose not to name a TCP, the financial planner should periodically reengage with the client to ensure they understand the benefits and value of identifying and naming a TCP and ask if the client is ready to do so.
Financial planners should periodically review the TCP appointment to ensure it remains appropriate, current and reflects any changes in the client’s situation or preferences.
Confidentiality
Compliance with this Rule may assist financial planners in meeting their professional obligations relating to client confidentiality. Naming a TCP, and having the client provide advanced consent, in writing, for the financial planner to share necessary information with that TCP in specific circumstances, ensures a mutual understanding with regards to what can be shared and when. To ensure that the financial planner is complying with their confidentiality obligations they should document, in writing, through the TCP form or otherwise, who, when and what can be shared with the appointed TCP.
Benefits to Ensuring Clients Name a TCP
Ensuring a TCP is named by a client can enhance the client’s experience by, among other things:
- Reducing Barriers to Communication: a TCP can serve as an additional point of contact for financial planners throughout the engagement. In situations where the client may be unavailable or unresponsive, the TCP can relay important information and/or updates, to the client and the financial planner, ensuring that the client’s financial matters continue to be addressed without unnecessary delay.
- Fraud Prevention: Financial fraud is a growing concern, especially for individuals who may be vulnerable. A TCP can serve as an additional layer of security. If a financial planner is concerned about or notices suspicious activity or signs of financial abuse, they can reach out to the TCP to verify the client’s situation, helping prevent or mitigate potential losses or future abuse. Leveraging a TCP to mitigate the risks associated with client vulnerability can protect both the client and financial planner from potential disputes or claims.
- Emergency Situations: If a client becomes incapacitated, either temporarily or permanently, or is hard to reach (e.g. the client is away for an extended period and cannot be contacted), the TCP can be leveraged to assist.
Explaining the value and benefit of naming a TCP to a client and supporting the client in understanding the role of the TCP, also serves to demonstrate commitment to ethical practice and clients’ best interests, aligning with obligations under Principle 1, Duty of Loyalty to the client, as set out in the Standards of Professional Responsibility.
TCP Form
Should the client choose to name a TCP, the financial planner should have the client sign a document (this can also be included as part of the engagement letter), setting out the individual(s) name and contact information and express consent for the financial planner to reach out to the TCP in identified circumstances. Note that if the client chooses not to name a TCP, this decision must also be documented in writing. The document naming the TCP should among other things, outline:
- The TCP and their contact information;
- The information that can be shared with the TCP;
- The circumstances that could lead to the financial planner contacting the TCP; and
- The client’s signature confirming their understanding and agreement.
Within the FP Canada Certificant portal, there is a sample TCP form that financial planners can leverage to comply with this Rule. Use of this TCP form is not mandatory, but financial planners may find it helpful as a reference or starting point. The form is not meant to be used “as is” but rather to be adapted by the financial planner for the particular client situation. In addition, financial planners may wish to consult with their firm’s legal or compliance department to ensure compliance with any requirements set by the financial planner’s firm (if applicable) and other applicable laws, regulations, rules or established policies of governmental agencies and other applicable authorities. The form should also be adapted to reflect the financial planners’s specific client and scope of engagement.
Professional financial planners can also find helpful information in the Standards of Professional Responsibility including in the guidance under the Rule, to further guide their understanding.
