On the Money with Dynamic Funds

PARTICIPANTS

David Portal
VP, Systemized Solutions

Ellen Bessner
Financial Industry Litigator and author

Announcer: You're listening to On the Money with Dynamic Funds. From market insights and analysis to personal finance, investing, and beyond, On the Money covers it all, because when it comes to your money, we're on it.

David Portal: Welcome to another episode of On the Money. I'm your host, David Portal, and today we've got a really special guest joining us. We're going to dive into a topic that every investor should understand, the key differences between having a power of attorney versus having what's known as a trusted contact person. To help us break it all down, we've brought in one of the top professionals in the field. Ellen Bessner is pretty much a rock star in the financial world. She's been working in the industry for over 20 years and wears many hats.

She's a renowned author, a leading litigator at the prestigious Babin Bessner Spry Law Firm, and she sits on various committees, including two on investor protection. With that unique perspective, she's the perfect person to bridge the gap between defending advisors and champion investor rights. Without further ado, let's give a warm welcome to Ellen Bessner. Ellen, thank you so much for joining us today.

Ellen Bessner: Thanks so much, David. That was a great introduction. Thank you.

David: I'm really looking forward to dive into this topic with you. Let's get right into it. What exactly is a trusted contact person and why do clients need one?

Ellen: This is a relatively new idea that the Securities Commission has come out with. It is across the board for every advisor and every client. The whole concept is very similar to an emergency contact when, for example, you go to the dentist or the doctor and they pull out that form and they say, "So if something happens badly in this chair or in this office, who do we call?"

David: Is it the same as a power of attorney?

Ellen: No, completely different. A power of attorney is a document that usually a lawyer drafts for somebody who wants somebody else to take care of their financial situation if and when something bad happens to them. It could be, God forbid, somebody gets into an accident, and they want to appoint somebody. If I can't do my banking and I can't pay my bills, somebody should be appointed for that. Sometimes you appoint two people jointly, but basically, it's to step into the shoes of the client and take care of their financial situation.

That's a power of attorney for property. A trusted contact person is completely different. All a trusted contact person is, it's, as I said, like the doctor or the dentist, it's in case your advisor can't find you or there's a dip in the market and you're on a holiday and you forgot to tell your advisor and they're trying to call you and they're not hearing back from you. The advisor gets a really weird text, and they say like, "This doesn't sound like Ellen. I'm getting this text from my client Ellen; it doesn't sound like her. What is this?"

They could try and call me or email me and they're not getting through to me. If I have a trusted contact person, they could call them, like it would be maybe my brother or my sister or my partner, or it could be my spouse, or it could be my grown child. It could be a neighbor, just to say, "Hi, we can't find Ellen. Is everything Okay?"

Then they can say, "Yes, she's fine. She's in Tanzania. She's climbing Kilimanjaro in East Africa. She's having the time of her life. Do you need her? Because we have her contact information where you can find her."

David: That brings about the question about information. What kind of information can be shared or provided?

Ellen: Let's talk about power of attorney again. I'm going to contrast it between the power of attorney and the trusted contact person. In a power of attorney situation, let's say it's you, David. I appoint you and I say, "Oh, my God, David Portal. He's so fantastic. I totally trust him. I'm going to appoint David Portal as my power of attorney for property." I go to a lawyer, and I say, "Can you draft up this thing?" They draft it up and they say-- basically, they give David the powers that I want to give him should something happen to me.

If the advisor needs to call upon you, David, as my power of attorney for property, my attorney, then the advisor will, obviously, have the document, they'll look at the document, they'll make sure that you have the powers you say you have. They'll authorize you and make sure that they know who you are. Then they will give you a lot of information like my statements and all kinds of information so that you can manage my property.

On a trusted contact person situation, this is completely different. There is absolutely no financial information shared between the advisor and the trusted contact person, nothing, no statements, no finances, no investments, no banking, zero, because the trusted contact person is not authorized like the power of attorney for property would authorize an attorney.

David: That's very clear then. There's a great distinction. What level of authority does the appointee have in each case?

Ellen: The power of attorney document dictates the level of authority that is granted to that authority through the document. The attorney only has the authority that is set out in the document. That is something that is discussed between the lawyer and the client. Let's say I go to a lawyer, and I say, "I really trust David Portal. I think he's fantastic." With regard to my real estate, I don't really want him to be able to sell my house. I want him to manage only my financial situation because I need to have my house and I have enough finances.

What I'm going to do is I'm going to put into the power of attorney for property that David Portal can step into my shoes and instruct my advisor to do anything that I could do with my finances. Trusted contact person has no authority whatsoever. They're going to help the advisor find the client. They're going to help the advisor identify if there's a problem with the client. Let's say, for example, an advisor is trying to contact their elderly client. Every time they call them, which is the normal way that they contact the elderly client, is through a landline. They call their landline. Usually the elderly client answers and they take instructions from that elderly client.

There's a problem with the elderly client. They're not answering the phone or every time there's a phone answered at the house, it's the elderly client's friend or son or somebody else and the advisor is beginning to worry. Luckily, this advisor is a fantastic advisor, and the client gave the advisor the name of a trusted contact person and it's the client's neighbor. What does the advisor do? They pick up the phone. They call the neighbor. They say, "Joe, I'm just concerned about Mrs. Sarnicki. Can you go and check in on her? Because when I call her, all kinds of people are answering the phone and I can't contact her. Is she okay?"

The neighbor goes over there and checks in and then calls the advisor back and says, "Actually, she's not okay." The son came in to live in the house. He's got all kinds of friends. There's all kinds of stuff going on in there. The son is 50 years old. At this point, there needs to be some changes because she's not being taken care of. The neighbor can, for example, call the sister or brother of this elderly client and get people to help her out of this situation. It was the advisor who was able to raise the red flag and bring attention to other people that this client was not okay.

David: It seems then that the person that one names is a pretty important decision. Who do you suggest, Ellen, should be appointed as the power of attorney? Who should be named as the trusted contact person?

Ellen: Let's take a step back, David, if this is okay, and just talk about, so what qualities do you need in a power of attorney for property? That's called an attorney. What qualities would you want? Again, David, if it's my power of attorney for property, I'm going to want somebody who has a financial acumen. They understand finances, they understand investments, they are also organized. For example, I just actually redid my power of attorney for property. I appointed my brother. He and I have been working as co-powers of attorney for property for my mother. He's brilliant. He's so smart. He's so good. He's actually a film editor.

He's not like an accountant, but he's so good with my mom's finances and getting bills paid and making sure he's on top of her game and he has good relationship with her advisor. Really, it's made my job so easy. He's so on top of his game. Then for my trusted contact person, I want to choose somebody who knows where I am and knows what I'm doing. If I go on a long holiday, then, of course, I'm going to want somebody who knows where I am and where to contact me, or if something bad is going on, I'm going to want the advisor to be able to call that person and that person to know what my circumstances are.

Again, I could choose my brother because he always knows where I am, but I think it's not a good idea to pick the power of attorney to be the same person as the trusted contact person. Let's skip now to what is it in the trusted contact person that I need. It is not a financial acumen. It is not somebody organized. It is somebody who has a phone and an email so that my advisor can simply say, "Have you seen Ellen, or do you know where she is?"

They can pick up the phone and call that person, and that's all the trusted contact person has to be able to do, is tell the advisor whether I'm okay or not, to go check in on me because they know where I am, or if I'm in Tanzania or in East Africa climbing Kilimanjaro, which I actually have done, then they know to tell the advisor where I am and how to get through to me if the market turns or something whereby they need to contact me.

David: Now, what if someone can't think of anyone they can name as a TCP? What should they do in that case?

Ellen: There's always somebody to name. Really, it doesn't have to be somebody close to you. It's the person who's most likely to know how to find you or has a relationship with you where they can go and check in on you. I had a case once recently where the client didn't give a TCP and there were concerns about the client's capacity to instruct the advisor and my dealers all call me when they have a problem. I call it Ellen 911. They call me when they don't know what to do. They called me. They said, "Well, what do we do here?" I said, "Well, have you been in touch with the client?"

They said, "Yes." I said, "So have you expressed to the client that you're concerned about him and that you want to make sure he's taken care of?" They said, "Yes." I said, "Did you ask him whether he had somebody who he could call upon to help him?" They said, "Yes, we did. The problem is he doesn't have anybody." I said, "What about a nephew or a niece or a distant relative?" This is a gentleman who never got married, never had children.

What they did was they went back to him, and they really searched and he came up with a niece. He goes, "Yes, I have a niece in British Columbia, and she can help me. She can help with this situation." He was willing to find somebody, but he just didn't know who to call. You sometimes just need to help them really think through. I think it's also really important that they understand the value of picking a trusted contact person so that there is somebody to call and help this elderly gentleman in this case.

David: What about the time that comes when somebody notices their spouse or someone close to them, like a parent, is starting to have some capacity issues? If that happens, how might the client manage the relationship with their advisor and with the advisor's firm?

Ellen: It actually happened in my family. My mother is alone, and she's very independent, super independent. We were noticing that she was becoming forgetful. I said to her, first of all, I said to her, "Where's your power of attorney document, both for your health and for your property?" She said to me, "I gave it to you years ago," and I said, "Yes, but you told me not to open it. I never knew what was in there." She goes, "Okay, go ahead and open it." It's crazy to give somebody a power of attorney document and tell them not to open it because they should know that they're power of attorney.

Anyway, that was what she did. Then I looked at it and I wasn't a power of attorney. She was giving it to me for information purposes. When I looked at who she chose for the power of attorney, I knew it didn't make any sense. I spoke to her about it, and this was a time very early on where she was becoming forgetful. The first thing I would say is, people are really private, and people are really sensitive about, and it is depressing to face up to becoming forgetful.

If you're really close to this person, you know how to communicate with them best. Gently talk to them about what's their plan, like where are their documents. What we did was I sat with her, we hired a lawyer, we changed her powers of attorney. She says, "I want to make sure all my children know exactly what's going on." I'm like, "For sure." We're four children. We're very close. We love my mother. We want to do what's best for her. We're like, "Mom, spend your money. It's not for us."

We all really want to act in her best interest. The first thing I would suggest is to talk to the person and make sure they have their power of attorney for property and their power of attorney for health in place. They've chosen the right people. Sometimes these things are 10 years old and they've chosen people who are not even around anymore.

David: Let's segue into the advisor's role in all of this now. Is it advisable for an advisor to meet the client's TCPs and power of attorneys before any incapacity issues arise?

Ellen: I don't think it's important necessarily to meet the TCP. It's really great if the TCP knows that they are a TCP, a trusted contact person. I think there's great value in meeting the attorneys. There might be more than one. I actually said to my mom, "Whenever you're ready--" and it was very early days, like I did not wait until she didn't have capacity anymore because she wouldn't have been able to change her powers of attorney, which was really important that she did. I said to her, "When you're ready, I will go with you to your advisor." I'm really experienced. I was, of course, very proactive.

I would suggest that the advisors gently, before it's too late, talk to their clients about, "As you get older, I think it's really good to check and make sure that your powers of attorney are in place, that they're drafted properly, that you've appointed people who you still think are appropriate people." Open the dialogue. If clients are-- clients will feel cared for. I'm hopeful that they won't feel offended. I'm hopeful that clients will feel cared for, as my mother did when she was ready. They may not jump on it in the first suggestion, but they go away. They'll think about it, they'll realize that the advisor who's always cared for them is also caring for them now.

David: This is an important question. Is the advisor or the banker required to take direction from the power of attorney?

Ellen:The way the power of attorney document usually is drafted is that it permits the dealer and the advisor to take instructions from the attorney as if they were in the shoes of the client. It doesn't compel them. The reason why it doesn't compel them is because if the attorney is giving the advisor or the dealer instructions that are not suitable for the client, then the advisor and the dealer have to say, "Hang on a second here. We can't take those instructions." The advisor has to be able to say, "That's not in the client's interest." They can because that's usually the way a proper power of attorney for property is drafted.

David: : Ellen, one question that's been bugging me is, should the power of attorney be the same person as the trusted contact person?

Ellen: I think I alluded before that it's not a good idea. I'm going to give you an example, David. One of the reasons for a trusted contact person is if the client is being defrauded. Sadly, in my practice, there are many times where I get calls from a dealer and they say, "We're getting these instructions from the attorney that has been appointed under the power of attorney for property, and we're worried about these instructions because they're taking out a lot of money from this account. When we ask questions about the purpose of the money, the answers don't make sense. We're really worried and we're not sure where to turn."

If there's a trusted contact person, then they can turn to that person and they can say, "Okay." Especially, advisors know their clients. When they call the trusted contact person, they might say, "Look, I'm worried about--" and let's go back to that other example where, let's say, it was the son who was the power of attorney for property and he's calling the advisor and saying, "I need this X number of dollars and they're big dollars and it's for my mom. She needs ramps in the house now so that she can get her wheelchair into the house because we have three stairs."

Then he calls back and he says, "Well, we need a new dishwasher, and we need a new roof, and we need a new this and a new that." The account is being depleted, and the worry is that the advisor actually drives past the house and sees there's nothing going on. There doesn't seem to be a new roof that's being replaced. There are no ramps that are on the stairs. When he last saw the client, the client was fine, except that she was losing her memory a little bit. She was physically fine. This advisor knew the client very well. This advisor also had a TCP who was different than the attorney, which was the son.

He called the TCP and again asked the TCP, "Can you please go check in on this client?" The TCP called back and said, "This is not going well. There are no ramps. There isn't a new dishwasher. The client seems disoriented. I'm concerned about what's going on here." At that point, the TCP, which was the neighbor in this case, contacted the police and contacted the siblings of this elderly woman. They got the locks changed and they kicked the son out of the house. One of the siblings moved in with this elderly woman and took care of her. There was a very happy ending because there was a separate TCP than the power of attorney document appointed as attorney. It was really, really lucky. It was really, really a good ending.

David: I think that was incredibly informative. Thank you for your time and expertise today. I think we know the difference now between the trusted contact person, the power of attorney, and why you would name one over another. Thank you to you, our listeners. Have a great rest of your day.

Announcer: You've been listening to another edition of On the Money with Dynamic Funds. For more information on Dynamic and our complete lineup of actively managed funds, contact your financial advisor or visit our website at dynamic.ca. Thanks for joining us.

Announcer: This audio has been prepared by 1832 Asset Management LP and is provided for information purposes only. Views expressed regarding a particular investment, economy, industry, or market sector should not be considered an indication of trading intent of any of the mutual funds managed by 1832 Asset Management LP. These views are not to be relied upon as investment advice, nor should they be considered a recommendation to buy or sell. These views are subject to change at any time based upon markets and other conditions, and we disclaim any responsibility to update such views.

To the extent this audio contains information or data obtained from third-party sources, it is believed to be accurate and reliable as of the date of publication. 1832 Asset Management LP does not guarantee its accuracy or reliability. Nothing in this document is or should be relied upon as a promise or representation as to the future. Commissions, trailing commissions, management fees, and expenses all may be associated with mutual fund investments. Please read the prospectus before investing.

The indicated rates of return are the historical annual compound total returns, including changes in unit values, and reinvestment of all distributions does not take into account sales, redemption, or option changes, or income taxes payable by any security holder that would have reduced returns. Mutual funds are not guaranteed. Their values change frequently, and past performance may not be repeated.