Do you need Trusted Contacts for your financial accounts?
Yes!
Early in 2020, the SEC’s Office of Investor Education and Advocacy, together with FINRA, issued an Investor Bulletin urging all of us to consider adding a Trusted Contact Person to all brokerage accounts. This advice has been expanded to all financial accounts. While it is not mandatory to list a trusted contact, it is highly recommended to do so.
Financial institutions want to have someone to contact when they notice suspicious activity or have a reasonable belief that an account has been exposed to exploitation and they can’t reach the account holder or there is a concern that the account holder is vulnerable due to health issues. Or, they may need to reach out to the trusted contact because they cannot reach the account holder due to out-of-date contact information. The trusted contact may, if necessary, be able to connect the financial institution to a legal guardian or power of attorney.
Trusted contacts are important not just for older people. It is good for everyone to have this protection in place. Financial catastrophe can happen due to displacement by a natural disaster or even if you are unreachable because of travel outside the country. This can be easily prevented by having someone who knows what is going on in your life available for your financial institution to connect with if needed.
The role of the Trusted Contact is to provide or confirm information; that person cannot make or approve any transactions on your accounts. The Trusted Contact cannot make decisions or changes to your account on your behalf and will not be given access to detailed account information such as balances or transactions. You do not give up any control over your finances by naming a Trusted Contact.
The Trusted Contact should be someone that you can trust to protect your privacy and who you know has your best interests at heart. The only other requirement to be a trusted contact is to be over eighteen.
It is advisable to name a Trusted Contact who does not also currently have control over your finances, ownership interests in your accounts, or authorizations to access, transact on, or withdraw money from your accounts.
Naming a Trusted Contact is a simple process. You may be asked to add a name when you log onto your account. If not, you can always call your financial institution to ask how to set up the Trusted Contact. Some firms will send a notice with instructions for adding a Trusted Contact to your accounts.
Before clicking on any link in an e-mail notice about a “trusted contact person,” make sure you verify that your firm sent the e-mail. Instead of replying, call the financial institution or check its website for information for adding the name of a Trusted Contact.
Adding a Trusted Contact is well worth the few minutes it takes. If an emergency happens, you will have already identified the person your financial institution can contact to help protect your interests.
Please feel free to call (215-836-4880) or email the office (ellend@regardingyourmoney.com) to set up an appointment to discuss any financial questions you may have. Or visit us at regardingyourmoney.com
Sources: SEC Office of Investor Education and Advocacy, Nerd Wallet, Consumer Financial Protection Bureau