What is a Trusted Contact? Do You Need One?

If you’ve not heard of the idea of a “trusted contact” for your brokerage account, you’re not alone. It’s a relatively new concept: In 2018, the Financial Industry Regulatory Authority (FINRA) required all brokerage firms to ask their clients to establish a trusted contact for their investment accounts.

 

What is a trusted contact?

A trusted contact is a person you authorize your financial firm to contact in limited circumstances if they are unable to reach you directly. It may help protect your account from fraud and/or misuse.

 

Why would you establish a trusted contact?

It may help protect your account. For example, if your firm flagged a large withdrawal request from your account as possible fraud, they may want to confirm it with you. But maybe your cellphone isn’t working because you’re traveling internationally. Or maybe you’ve been displaced by a natural disaster. Or maybe you’re having a health issue.

 

A trusted contact can help your firm connect with you, to make sure that you’re aware of (and authorize) any transactions on your account. A trusted contact may be asked to confirm your current contact information, health status or the identity of any legal guardian, executor, trustee or holder of a power of attorney.

 

U.S. broker-dealers are required to provide (and other financial firms may provide) a written disclosure that lays out these details.

 

Who might you name as a trusted contact?

A trusted contact may be a family member, attorney, accountant or another person you trust to handle the responsibility. You may establish more than one trusted contact.

 

What authority does a trusted contact have?

A trusted contact does not have any authority to act on your behalf, execute transactions or engage in activity in your account.

 

A trusted contact is simply someone who can help your financial institution find you, if needed. Unless separately authorized, a trusted contact does not have the authority of power of attorney and they are not granted the authority of a legal guardian, a trustee, or an executor.

 

How can you add a trusted contact to your account?

First, before naming a trusted contact, it’s best practice to reach out to them in advance to let them know. You want to be sure they agree to take on the responsibility.

 

Then, contact your Wealth Advisor and ask to add a trusted contact. You can change or update your trusted contact information at any time. It’s as simple as that!