Do you have a trusted contact person?

Healthy aging
Matters Beyond Wealth

Learn the difference between a trusted contact person and power of attorney, and why you should have both.

"Think of them as an extra set of eyes and an extra set of arms to reach out and hold you. They can't change anything on your account. They can't do anything to your Wills or your power of attorney documents. They can't make decisions on your behalf. What they can be is someone to reach out to in the case of a concern."
Laura Tamblyn Watts, founder and CEO of CanAge

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Transcript

Intro Speaker:

Hello, and welcome to Matters Beyond Wealth with your host, Leanne Kaufman, president and CEO of RBC Royal Trust. For most of us, talking about subjects like aging, late life, and estate planning isn’t easy. That’s why we’re going to help get the conversation started on this podcast while benefiting from the insights and expertise of some of the country’s top experts. We want to bring you information today that will help to protect you and your family in the future. Now, here’s your host, Leanne.

Leanne Kaufman:

In recent years, much awareness has been brought to older Canadians and their potential vulnerability to scams, fraud, and financial abuse. Of course, older people are not the only vulnerable members of our society. Any one of us can become vulnerable at any stage of life. But statistics do show that scams and frauds targeting older Canadians are on the rise, and with baby boomers, the largest generation in history, entering their senior years, it’s timely that we talk about how we can help protect ourselves.

Hello, I’m Leanne Kaufman, and welcome to RBC Wealth Management Canada’s Matters Beyond Wealth. Today, I’m joined again by Laura Tamblyn Watts, the founder and CEO of CanAge, Canada’s national seniors’ advocacy organization. Laura has emerged as a go-to media commentator and trusted voice for Canadian seniors, underscored by her more than 20 years of experience defending the rights and dignity of older people as a lawyer and as a thought leader. Laura is actively involved in seniors’ legal, financial, and regulatory reform initiatives in Canada, the US, Australia, and the South Pacific, including sitting on several federal government advisory boards and working groups, guiding public policy standards and legislation. She’s an expert in long-term care and resident’s rights and has written numerous papers and contributed extensively to research on aging issues.

Laura joined us in a previous episode where we explored the finding from CanAge’s most recent dementia in Canada cross-country report, and I want to thank Laura for joining us again.

Laura Tamblyn Watts:

Thanks for having me.

Leanne Kaufman:

Laura, you sit on a number of industry groups, and as a specialist in this area, there has definitely been an uptick in both the regulation and the general interest about vulnerable clients and taking financial care of seniors. In broad terms, to kick us off, tell us about the work that you do with these organizations and why they are so interested in the topic of older Canadians.

Laura Tamblyn Watts:

A few years ago, in about 2017, I did a report with Marian Passmore. We went across the country interviewing investment advisors, bankers, accountants, people who are working in the sector, including life insurance and public guardians and trustees, and asked them, “How worried are you about things like mental capacity? How worried are you about undue influence, elder abuse, and so on?” They said it was one of their number one worries, and that they really were all being quite challenged by the fact that this was coming in the door. Or they were worried that it was coming in the door and they weren’t identifying it. And if they did identify it, they didn’t know what to do about it. If they did even know what to do about it, they didn’t know where to go and what to do. Even if they did know where to go, [and] what to do, they didn’t have any tools to do anything about it.

What we saw was the different sectors really start to lean in, the investment sector [was] first, and we saw some real thinking around how is it that we can get around these privacy issues. If you’re really worried that your client is losing mental capacity or they’re the victim of abuse and neglect and you can’t reach out to them, [and] something’s really wrong, but you don’t want to violate privacy—which is, of course, one of the big challenges, and also it’s really hard on your client relationship—how about we see if there’s a trusted contact person? Which is something that the US has done in some of the other jurisdictions. Essentially naming somebody in advance that you give consent to, to let your financial supporter, your advisor, your banker—whatever it is—be able to reach out to somebody if they can’t get ahold of you. Now, I always imagine that means I’m on a cruise ship somewhere having a wonderful time in the sun, but it’s probably more likely that something wrong is happening with my accounts. The trusted contact person has been brought in and is being rolled out across the country through the investment sector.

On the banking side, several years ago, there was the creation of a seniors banking code—now, it’s voluntary, but not very voluntary, frankly. It requires that each bank have a “seniors champion” and that they do good work teaching around these key issues, and then having what we call a “conduct protocol.” So that’s the address when somebody who’s the teller/the front end staff, has something—they probably know their clientele or that they’re worried— that there will be an internal mechanism to let people get help and support along the way. It’s been helpful, but what we know is this is just the tip of the iceberg.

Leanne Kaufman:

We’ve all heard terrible stories of financial abuse of seniors and often being perpetrated by people in a position of trust to that senior. Tell me about the difference between the trusted contact person and maybe the power of attorney, because you and I both know that sometimes the abuse happens because of that power of attorney document as opposed to any other influence that that individual may sway.

Laura Tamblyn Watts:

I think of abuse and neglect on a spectrum. There’s lots of folks who frankly are picking this up, good people who are doing their job, they’re teachers, they’re accountants, they’re auto repair workers, and they’re just trying to make [it] through their own day. Then all of a sudden, they have this extra burden, this real challenge that falls upon them, and it’s hard. They may get mixed up about what they’re supposed to do. They may end up thinking that they’re supposed to run their mom’s money like their own money, or maybe they just put it all in one account.

Those are often, as I say, goodhearted people who don’t know that they have to do a very specialized kind of what we call “trust accounting.” Which is frankly a giant pain, which is one of the reasons that I think it’s really important if you can get a trust company to do it, you should, because it gets people in real trouble.

On the other hand, further along the spectrum, there’s people who really take advantage. When it comes to abuse and neglect, it’s about two-thirds family and friends and one-third strangers. Two-thirds family and friends! When it comes to financial abuse, it’s more like 50/50, only in the sense that there are people who then latch onto you and then become family and friends.

What we’re looking at overwhelmingly is the people who you trust most are also the people who are most likely to abuse and neglect you. I know that sounds terrible.

So, we think about a power of attorney document, which is a document where you slip on the shoes of somebody else and you become them in this legal fiction, right? You’re not your own person. You’re not spending your own money. You’re not doing the things that you want to do. I’m slipping on the shoes of my mother. I’m running her money in the way that she would want to do it. But you know, it’s a big power. And you can start signing checks. Sometimes it’s hard to figure out what you’re supposed to do, and sometimes you think to yourself, you know, that extra $100,000 that my mom will never know is going missing, that could really help me.

Leanne Kaufman:

The impatient inheritors, I’ve heard them called.

Laura Tamblyn Watts:

The impatient inheritors. I had a conversation with somebody and I asked what they did for a living and they said they were a waiter. I said, “Oh, I was a wait staff for years.” They said, “No, no, I’m waiting for my inheritance.” What’s happened, Leanne, is people don’t wait anymore. What they do is they get appointed to become that power of attorney. That attorney! And that gives them the power. Particularly if they may not get the money in the inheritance. As people are living longer than ever before that impatience is starting to make its way in to get the money before the person dies. That’s a real trend we’ve seen. So, what do you do about it?

People say, “Well, if I have a power of attorney, if I’ve picked an attorney, shouldn’t I pick them as my trusted contact person?” Look, it depends on your life. I like somebody else, because if something goes wrong with them, you at least have somebody else that you trust. Now, not everyone will, and that’s the reality. Some people may have one person in their life, and if that’s the case, [in] my personal opinion—you’re only getting my personal opinion here—is you should maybe think about having a trust company start making your decisions for you and have a trusted contact person as somebody who’s there to help you when it needs to be.

Leanne Kaufman:

Help me walk through this practically for a minute. The trusted contact person is only going to be contacted by my financial institution if they are worried that something is not quite right. Either in the way I’m managing my own affairs, or they suspect there might be someone unduly influencing me. Have I got that right?

Laura Tamblyn Watts:

You’ve got that perfectly right. Imagine, if you will, a person, I’m going to call them Tanya, they go to the bank once a month, they take some withdrawals out, they pay some bills in person, they may still be really connected to the branch, and then all of a sudden things start going really strangely. Maybe she’s showing up with a gym bag and wants money, [or] maybe she’s trying to cash in all of her accounts. These are some big red flags. And by the way, they really do happen, I’m not making this up. You try to talk to that person, but if you can’t and there’s clearly something wrong, who do you reach out to next? Well, you’ve got this advanced consent and you can reach out to the trusted contact person.

Here’s another example. What if you’re looking at the accounts and some big red flags [are] going off? All of a sudden, this very conservative person is now investing heavily online in cryptocurrencies. This is a big jump. Or alternatively, has given large chunks of money to somebody else or transferred things. These are real red flags. You may see that one of the people involved in those red flags is that person who’s been appointed as the attorney pursuant to the power of attorney. Is it a really good idea to call them first? Probably not. You already have the consent of the client to reach out to that trusted contact person.

(You should, of course, try to be contacted first as the client, but if you can’t do that for whatever reason, you have someone that you can talk to safely, and you’ve been clear about what you’ll talk to.)

Clearly, you’ll be discreet. You’re not going to immediately dive into every concern that you have. You’re going to try to figure out where that person is, are they okay? You haven’t had a chance to get in contact with them, and that you would like to get in contact with them. If all of those things you still can’t do, you are allowed to disclose your worries about their health or their finances.

Leanne Kaufman:

For people who are listening as clients, are they rightful to be concerned about their privacy? For example, do they have a good sense of when the trusted contact person might be contacted and when they won’t?

Laura Tamblyn Watts:

Think about it as your kids going on a school trip and you put an emergency contact. I’ve never had the emergency contact called. It really is in the case of something dire happening. Most people will never have a trusted contact person reached out to, but what it is, is your choice as a client to provide a name. If you’re really concerned, you don’t have to give one, it’s okay, you don’t have to. The advisor will, however, or the financial supporter that you have, whether it’s banking, investments and so on, they’re going to ask because it’s part of what we call the KYC, which is jargon for know your client.

That means that they’re going to make sure that they know what’s happening in your life. Particularly—as I call it the Hallmark card test or the gift card test—if you’ve sent a card to somebody, it’s a birth, it’s a death, it’s some type of health concern, it’s somebody has moved or someone has moved into long-term care, that’s going to twig your advisor or your financial supporter to start asking you some questions if things have changed in any way. That may mean that your attorney is in a dire situation, or that may mean your attorney themselves is incapable or died.

Having that trusted contact person protects your privacy because you have control about who you pick or if you pick, but you’re going to get someone checking in about that probably annually.

Leanne Kaufman:

Do you think this is only applicable to people who were worried about age related dementia? Or should anyone have a trusted contact person on file?

Laura Tamblyn Watts:

If you are an adult, you should have a trusted contact person, and while we’re at it, you should also have power of attorney documents and a Will.

Leanne Kaufman:

Yes, you should.

Laura Tamblyn Watts:

What I gave my kids when they turned age of majority was their Wills and their powers of attorney. Now, they looked at me a little bit cross-eyed, and they were also hoping that there might be something else in that birthday bundle. But it is for anyone, anyone can cross the road and get hit by a car and be in a medical emergency, need their bills paid and help and support. It’s not age related. Anyone can become incapable at any time, whether it’s through things like mental health, drugs and alcohol, who knows what it’s for. This trusted contact is a thing that should make you feel safe, not worried. Again, you, as long as you’re mentally capable, always have the right of rescinding it, changing it, or not having one.

Leanne Kaufman:

Last question on this one. You talked about the power of attorney stepping into the shoes of the individual. But what about the trusted contact person? Do they have any legal authority or ability to make changes on an account, anything like that?

Laura Tamblyn Watts:

They don’t, and that’s what’s important. Think of them as an extra set of eyes and an extra set of arms to reach out and hold you. They can’t change anything on your account. They can’t do anything to your Wills or your power of attorney documents. They can’t make decisions on your behalf. What they can be is someone to reach out to in the case of a concern, and you have given permission for your financial supporter, your investment advisor, your banker, to talk with them.

Leanne Kaufman:

Thank you, Laura. This has been so informative. As we wrap up, could you leave us with just one thing that you hope listeners take away if nothing else from today’s conversation?

Laura Tamblyn Watts:

Thank you. I think of [it as] having a checkup: you pay your taxes that time of year, the same time, check your personal planning documents and check your contact person. Do it all at the same time, you might as well.

Leanne Kaufman:

Thank you so much, Laura. Talking about the financial abuse in particular of our aging Canadians is something that we all need to be mindful of as a society, not just those of us who work in the financial industry. We really appreciate your thoughts and your insights in this cloudy area. Thank you for talking to us about powers of attorney, trusted contact persons, and all the related topics that we touched on today and why all of this matters beyond wealth.

Laura Tamblyn Watts:

Thank you.

Leanne Kaufman:

You can find out more about Laura on LinkedIn and more about CanAge at canage.ca. If you enjoyed this episode and you’d like to help support the podcast, please share it with others, post about it on social media, or leave a rating and a review. Until next time, I’m Leanne Kaufman. Thank you for joining us.

Outro speaker:

Whether you are planning for your own estate, the needs of your family or business, or you are an executor for a loved one’s estate, we can help guide you, simplify the complex, and support your life’s vision. Partner with RBC Royal Trust and ensure your legacy will thrive for generations to come. Leave a legacy, not a burden™. Visit rbc.com/royaltrust.

Thank you for joining us on this episode of Matters Beyond Wealth. If you would like more information about RBC Royal Trust, please visit our website at rbc.com/royaltrust.

Leanne Kaufman:

Until next time, I’m Leanne Kaufman. Thank you for joining us.

RBC Royal Trust refers to either or both of the Royal Trust Corporation of Canada and or The Royal Trust Company. RBC Royal Trust and RBC Wealth Management are business segments of the Royal Bank of Canada. Please visit https://www.rbc.com/legal for further information on the entities that are member companies of RBC Wealth Management. ®/™ Trademark(s) of Royal Bank of Canada. RBC and Royal Trust are registered trademarks of Royal Bank of Canada. Used under licence. © Royal Bank of Canada 2023. All rights reserved.

This podcast is provided for general information purposes only and is not intended to provide any advice or endorse or recommend any content or third parties referenced in this publication. A professional advisor should be consulted regarding your specific situation. While information presented is believed to be factual and current, its accuracy is not guaranteed and it should not be regarded as a complete analysis of the subject matter discussed.

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