Trusted Contacts: What You Should Know

In 2018, FINRA released a new rule regarding trusted contacts. This blog will go over what a trusted contact is and why you should have one in order to protect you from being exploited financially as well as from fraud. If you want to know more regarding trusted contacts and how they can benefit you, keep reading!

What is a trusted contact?

A “trusted contact person” is a person that you authorize your brokerage firm to contact in limited circumstances, such as if your broker has trouble reaching you or has a reasonable belief that your account may be exposed to possible financial exploitation. (FINRA)

A trusted contact person is different from a Power of Attorney. A trusted contact serves only as a point of contact. A trusted contact:

  • Has no authority over your money.
  • Cannot make decisions on your behalf.
  • Cannot access your account balance, account activity, or other account information.
  • Cannot change your account information, contact details, or other account elections. This includes nominating, updating, or removing other trusted contacts.

Why do you need a trusted contact?

Adding a trusted contact person to your brokerage account may help your brokerage firm respond to possible financial exploitation and fraud in your account and protect your account’s assets. For example, your brokerage firm may reach out to a trusted contact when:

  • Addressing possible financial exploitation or fraud in your account.
  • Confirming your current contact information, if your brokerage firm cannot reach you.
  • Confirming your current health status, if your brokerage firm suspects you are sick or suffering from diminished capacity.
  • Confirming the identity of any legal guardian, executor, trustee or holder of a power of attorney on your account. (Investor)

How can you add a trusted contact to your account?

Adding a trusted contact to your financial accounts is optional, but is a step we recommend as part of your overall wealth planning. The forms to designate a trusted contact are short and simple. Please contact us at 301-907-9790 to discuss adding a trusted contact to your accounts today.

Sources: https://www.finra.org/investors/insights/consider-adding-trusted-contact-to-your-account

https://www.investor.gov/introduction-investing/general-resources/news-alerts/alertsbulletins/investor-bulletins-30