Mirador Real Advice Blog

The Trusted Contact Person

May 16, 2024

In the early 2000s, I received a call from Betty. She was requesting that I send her an amount of money that seemed unusual for her level of wealth and her typical spending habits. So, I carefully asked her what was going on. To my surprise, she told me that she needed to purchase a typewriter so she could type her Nobel Prize acceptance speech. Now, don’t get me wrong, Betty was no dummy, but from my extensive “Know Your Client” interview prior to accepting her as a client, I knew that a Nobel prize was not at all likely for her. So, I said I would like to meet her regarding the withdrawal request, and I went to her small apartment in east downtown Calgary. It was quite different from my previous visits – much more cluttered and not as clean. We had a nice conversation, but it was clear that she was suffering from some sort of dementia. She lived alone and had no close relatives. I remembered that she attended my University of Calgary continuing education classes with a friend who had also started a portfolio with me. So, I called this other lady and she agreed to meet Betty and intervene. The typewriter request was forgotten and Betty’s friend got her some help via the Kerby Centre and all worked out well.

In the 1960s, when I was 5 through to around 8 years old, I had a Sunday school teacher who was a wonderful man and a major influence in my life. We traded the same Charlie Brown Christmas card for the longest time, keeping in touch. Decades later he contacted me about his investments. He had retired from his position as the president of a major Calgary company. He became a client, and we enjoyed the re-kindled relationship for years. He came to my office late one year and I noticed a significant change in his speech and cognitive ability. We both lived in the south of Calgary so after the meeting I asked if he could give me a lift home. My car was parked downstairs in the underground parkade, but I wanted to check my suspicions further. It was the scariest car ride of my life! His day-to-day abilities had clearly deteriorated substantially. We went to his house, where his wife thought I was from the auto repair shop and proceeded to show me the art collection. They had a son in Calgary, and I met with the son to discuss the situation. Sometimes families don’t see things, or don’t see them the same, or don’t think with risk management in mind. The son got them help and made some changes around the home. Eventually, they were moved into a care centre. It could have been disastrous, but it all worked out safely and with respect and dignity.

More recently, but still quite a number of years ago, Frank and Audrey called me. They were quite distraught about their adult son’s financial situation. Somehow this son had developed a shopping addiction and had racked up sizable credit card debt. The son was young enough that the debt was well beyond a year’s salary and Frank and Audrey felt they should pay off the credit cards for him. We met and discussed the amount required to pay off the credit cards relative to their portfolio value (it was over 10%), and how it would affect their retirement income. I recommend a debt consolidation and payment service as well as some counselling services. Things were resolved, the family is happy, and the clients did not have to risk their financial well-being and lifestyle.

closeup of credit cards

Okay, so what’s the point of my stories, what is the real advice? To me, it is that a good wealth advisor does more than help you with wealth planning and investing your money. A good wealth advisor simply does what needs to be done to protect their clients, as soon as they become aware that something might not be quite right. And this is what I have always done as you can tell from these stories. But, not all advisors think this way, and this has created numerous liability issues for financial institutions over the years.  

So in recent years, the regulators decided to act by making sure that investment advisors have a “Trusted Contact Form” on file for each client, regardless of their age. The form identifies whom the advisor should contact if they have any concerns regarding possible financial exploitation of the client or any concerns about the client’s mental capacity as it relates to the client’s financial decision-making or lack of decision-making. It is completed and signed by the client. The Trusted Contact is not a power of attorney or trade authorization and it doesn’t allow the Trusted Contact person to make investment decisions or transact any business with us. It is simply the person I should call if any scenarios like I wrote about above occur. A thorough and responsible KYC process should have this, but most firms have a simple one-page check-the-box KYC Trusted Contact Form or no form. Mirador can always be counted on to take full care of our clients because we are all one big family.

The other real advice for you is that no matter your age and health, make sure that your advisor has a Trusted Contact form on file that meets your wishes. Recently, a good friend who seemed healthy and is around the same age as me (not THAT old) recently had a stroke and spent months in ICU. What a wake-up call. You never know what might happen tomorrow. Your personal risk management might be as important as your investment risk management. A Trusted Contact form may be invaluable in reducing your future personal risk. 

If you would like to know more about personal risk management relating to your overall wealth plan, please reply to this email or call me at 403-608-4664.

Stan Clarke, 

Investing for Income Believer