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The Advisor Delta™ is your essential guide to mastering the wealth management industry. Hosted by Worldsource Wealth Management, this podcast delivers expert advice, actionable insights, and innovative strategies to grow and elevate your practice.
Join industry leaders for interviews, thought-provoking roundtables, and quick-fire 'Ask Me Anything' Q&A sessions, as we cover everything from emerging trends to leadership development. The Advisor Delta™ is more than just a podcast—it's a partner in your success. We aim to provide high-value industry insights while building a community of like-minded professionals who can learn from each other’s’ experiences.
Start listening today and unlock the tools, strategies, and inspiration you need to elevate your wealth practice with The Advisor Delta™. For more episodes and insights, don’t forget to subscribe and visit us at www.worldsourcewealth.com. And remember, together, we can take your practice to the NextLevel™.
Narrator: Welcome to The Advisor Delta™, the practice management podcast dedicated to helping investment advisors grow their business and reach their goals. Whether you’re looking to scale your practice, streamline operations, adapt to emerging technology, or deliver value to clients - this is the place for actionable insights, thoughtful leadership and innovative strategies. Brought to you by Worldsource Wealth Management. Let’s dive in!
Kristen: Welcome to another episode of The Advisor Delta™. I'm Kristen McElhone, National Vice President, Partnerships and Advisor experience at Worldsource Wealth Management and your host for today's episode. Back by popular demand, I'm thrilled to welcome back a fantastic guest, Natasa Morfesis, our Senior Vice President, Dealer Compliance at Worldsource Wealth Management.
Kristen: Our last discussion on email fraud was so informative, so I'm really excited to chat again today.
Nat: Thanks, Kristen. I'm just as excited to be here and have the opportunity to share some knowledge again.
Kristen: Today we're diving into an important topic that many of us will encounter at some point in our financial journeys, understanding our personal financial dealings and the roles of executors and powers of attorney, also known as POAs.
Kristen: Whether you've been asked to serve in one of these roles, or you're helping clients prepare for their futures. This episode will help bring clarity to the many duties, decisions, and nuances behind these roles. Thanks again for joining us today, Nat. So can you get us started by walking us through the basics?
Kristen: What's the real distinction between an executor and a POA and where do their responsibilities begin and end?
Nat: Oh, sure. Absolutely. Very huge differences. Uh, one, you're alive and when you're dead, POAs are enacted, uh, while you're alive or while the client is alive. So a power of attorney can act on your behalf if you're incapacitated, if you choose to have them act on your behalf, et cetera.
Nat: Executors don't kick in until you, as the individual, has passed away. It is very significant to note that powers of attorney actually cease to be enforceable once you've passed away. Oh, okay. Or once the client has passed away, and many people don't understand that. A lot of 'em are confused with, I've given someone, they're, they're my power of attorney after I've died.
Nat: Well, no, they're not. You can't be a power of attorney after the individual has passed away. So very significant differences between the two appointments.
Kristen: Mm-hmm. And so what are some of their roles in those two different roles that differentiate them? Like what kinds of things or decisions are they helping with supporting
Nat: powers of attorney can make, and there's two types of power, actually.
Nat: There's many types of powers of attorney, but there are two general ones that are used. One is being power of attorney over health to make decisions while you're alive. For example, if you're in the hospital and you're incapacitated. And someone has to decide whether or not you should have a blood transfusion or have a surgery that a doctor is recommending.
Nat: Your power of attorney at that point can step in and make decisions over your health, including clients who have advanced dementia, where A POA is required. They can make decisions over your living accommodations or your long-term care needs, et cetera. An executor has the responsibility and the liability to distribute your estate after you have passed based on the wishes that you've established within your will.
Nat: And what kinds of things does a financial POA get involved in? A financial POA comes with a lot of responsibility as the power of attorney over finance or over property. Mm-hmm. Power of attorney over property, which encompasses the financial aspect of, uh, someone's life, comes with a great deal of responsibility.
Nat: You can make banking decisions, you can make investment decisions. You can write checks on behalf of the individual. You have POA over. It carries a lot of responsibility, but it can also be abused in some cases, not in all cases. I don't wanna allude that POAs over property shouldn't be established because they're very important, but the person you are giving power of attorney to is someone that you should be able to trust.
Nat: Someone that doesn't gain financially from you. Mm-hmm. And someone that has the maturity to understand the responsibility of having that type of power of attorney over an individual
Kristen: and can the same person act in all three of those that we've discussed so far? The power of attorney for property, for health, and the executor.
Nat: They can, and a lot of people establish POAs and executors to be the same people. A lot of them establish them to be their children.
Narrator: Okay.
Nat: Or their spouses. One thing we always recommend is don't make your POA and your trusted contact person. Oh, okay. Be the same. One. A TCP should be established that is separate and independent from the POA role because in the very extreme cases where A POA is taking advantage of a client, you want to be able to call somebody that's not.
Nat: The POA and not related to the POA to discuss your concerns. That's great advice
Kristen: for advisors and other registrants. There've been a lot of articles recently discussing conflict of interest. How does being a POA or an executor fit into that and create a potential conflict?
Nat: It screams conflict. It's not allowed under regulations, and it's not allowed under any type of regulation.
Nat: We're not just talking CIRO. Whether you're a financial planner or an accountant, this is a conflict. It's not supposed to be in effect. Mm-hmm. It shouldn't be in effect. And as an advisor, it could ruin your, your career
Kristen: For sure. And I could see why a client would look to these people. I mean, they seem the ideal, the ideal candidate.
Nat: It happens a lot with elderly clients. Mm-hmm. Uh, generally those that don't have any immediate next of kin or those who intend on leaving their estate to charities. A lot of the times, advisors don't even know that they've been appointed as POAs or executors. So it's extremely important if a client brings it to your attention, you need to change it.
Nat: You need to notify your dealer immediately. Okay. And you need to change it. You cannot nor should you be a POA or an executor to any client, and that includes any client of your dealer. It's not just your immediate client. If you are POA or executor to a client that has an account at your dealership, that is also clearly not allowed.
Nat: So who should an advisor recommend for one of these roles? Good question. A lot of the provinces have public guardians and trustees. That is a great recommendation. A lawyer could be another recommendation, a neighbor, just not you, the advisor, and more importantly, don't recommend your assistant or someone else in your office.
Nat: We've recently had a case where an admin assistant who is an employee of the advisor, was put down as the executor to a client's will. Oh, okay. And what the regulator has come back with is your employee is an extension of you, the advisor. So whatever rule is applicable for you, it's applicable to your employee.
Nat: And it doesn't matter that your employee is not a registrant, there's still an extension of you and your office, so don't do it.
Kristen: Probably also a great tip to make sure that advisors are sharing this type of information with everyone in their office because it may just be something that they're not aware of that they can't do, and it's not something they're ever discussing with the advisor they're working with.
Kristen: So
Nat: you're right. Another good tip. And if, if it comes to light, if you become aware, it's never too late to tell your dealer and seek guidance. There are exceptions to the rules. First degree relatives are exempt, first degree relatives as defined in the CRA act, right? You can be your wife's POA and executor.
Nat: You can be your kid's POA, and executor. Your parents are allowed. There are unique situations where we've even extended it to your aunt and uncle that don't have children or other. Relatives. So there are exceptions to be made, but please do not think it's automatic. The exception has to come from your compliance department at your dealership.
Nat: Don't assume you can be your mother's power of attorney or executor. 'cause that's an assumption that shouldn't be made. And we know what it makes people.
Kristen: So even if. You're dealing with that very close relative. Make sure you're letting your dealer know. And should you also then be letting the client know if it, if an exception is made, should it be you be letting that client slash relative know that there is a conflict, is there a requirement there to make sure that is made aware to them?
Nat: Absolutely. Okay. You should disclose the conflict. What you should also do though is speak to your relatives or your family, your immediate family before they spend the money on a lawyer drawing up POA documents or wills. This is hundreds of dollars mm-hmm. That the client might be forced to spend. Again, we had a very recent example where the advisor was, uh, executor over her client's will.
Nat: They were married. Well, unfortunately, they're now divorced. That is now no longer an arm's length relationship. An ex-husband is not someone you can be executor or power of attorney to if they're your client, and she is now in a situation of you need to give that up. Unfortunately, your ex-spouse now needs to redo their will, which you would hope they would've redone anyway, or the client needs to be all air quote “fired”.
Nat: We need to send them a letter and say, I'm sorry, we can't deal with you as a firm unless you change your will.
Kristen: So what happens if an advisor mistakenly steps into a conflict situation?
Nat: Reach out to your compliance department. Reach out to your dealer. They're there to support you, and they're there to guide you.
Nat: You're not gonna get in trouble for making a mistake, but you will get in trouble if you're caught in a situation that you should have reported.
Kristen: For those looking to take practical next steps with their clients after this episode, what considerations or client review processes should they be thinking about before starting those conversations?
Nat: It should be part of the client review annual process. You know, you're sitting down with your clients, just bring it up. You know, have you done your wills? Have you done your power of attorney documents? Great. I just as a reminder, I want you to be very much aware. I am not allowed, it's a conflict of interest.
Nat: My regulator doesn't allow this, my dealership doesn't allow this. And I will add for all the advisors out there that are, uh, serial registrants. If you're watching the mandatory compliance courses on the CIRO website, this is one of the things they talk about, right? They are taking it so seriously, they're actually putting it into their educational content.
Kristen: So if you could leave our listeners with one final takeaway today, the single most important thing for them to keep in mind when it comes to executors and POAs, what would that be?
Nat: You can't do it. Don't think about it. Don't ask to do it. Encourage your clients to do it properly through a lawyer and have a third party unrelated to you set up as POA or executor as an advisor.
Nat: Stay away from it. Thank you so
Kristen: much for joining us today to discuss such an important and often misunderstood topic. There's so many complexities here. There's clearly so much more we could cover, but this has been a really valuable foundation that we can build on. Executors and power of attorneys are clearly not just technical terms, the roles that many of us will face personally, whether we're planning ahead helping a loved one, or being asked to serve ourselves.
Nat: The only thing I might add is the fact that no good deed goes unpunished, so I know you're gonna wanna help your clients and maybe you think you're doing 'em a favor. But it's not your client that's gonna end up suing you in the end. It's their beneficiaries, their relatives, some long lost cousin. So do yourself a favor as an advisor.
Nat: Stay away from being POA or executor. This has been
Kristen: so insightful, Nat. These conversations aren't always easy, but as we've heard today, understanding the responsibilities and boundaries behind these roles can bring real peace of mind. The more we understand, the more confident we become in navigating these situations.
Kristen: Clarity brings confidence after all.
Nat: Thank you, Kristen. You know what, it's been great.
Kristen: Let's do this again. For sure. Thank you for listening and have a great day.
Narrator: Thanks for tuning into The Advisor Delta™! We hope you found today’s episode valuable to supporting your practice. For more episodes and insights, don’t forget to subscribe and visit us at www.worldsourcewealth.com. And remember, together, we can take your practice to the NextLevel™.
The views and opinions expressed in this podcast are those of the participants only. This podcast is for informational purposes only and does not constitute financial, legal, or professional advice. Listeners are encouraged to seek professional guidance for their specific needs. Worldsource Wealth Management does not endorse any products, services, or companies mentioned in this episode.
Worldsource Financial Management Inc. is a mutual fund dealer. Worldsource Wealth Management Inc. is a dual-registered firm, both as a mutual fund dealer and an investment dealer. Both Worldsource Financial Management Inc. and Worldsource Wealth Management Inc. are members of the Canadian Investor Protection Fund (CIPF) and the Canadian Investment Regulatory Organization (CIRO) and subsidiaries of Worldsource Group of Companies Inc., a wholly owned indirect subsidiary of the Fédération des caisses Desjardins du Québec (FCDQ), which is part of the Desjardins Group.