In 2018, the Financial Industry Regulatory Authority (FINRA) adopted a new rule which allows an investor to authorize her or his adviser to contact another person, a “Trusted Contact Person,” in limited circumstances, for assistance and input with an investment account. It is not a requirement to name a Trusted Contact Person (you may also name an alternate individual), but there are a number of very important reasons why you should consider naming someone you trust as your Trusted Contact.[1]

Why should I name a Trusted Contact Person on my investment account?

  • If your adviser cannot reach you, adding a trusted contact person to the account may help your adviser ensure that your current address and contact information are correct.
  • If your adviser suspects that you are experiencing a health issue, adding a trusted contact person to your account may help your adviser confirm your current health status.
  • Adding a trusted contract person to your investment account may help your adviser respond to possible financial exploitation or fraud in your account and thus protect your account’s assets.
  • Adding a trusted contact person to your advisory account may help your adviser verify the identity of any legal guardian, executor, trustee or holder of a power of attorney on your account.

Are there limits on what my trusted contact can do?

Yes, there are limits. While we may share specific information about you with your trusted contacts, we will not grant them access to your account information (unlike an attorney in fact under a Statutory Durable Power of Attorney).   This means that your Trusted Contact cannot  make trades on your behalf, change your investment or bank account ownership address, complete a withdrawal or make other transactions on your investment account.

Who can act as a “Trusted Contact Person and how do I add them to my account?”

A “trusted contact person” is a person that you authorize your SWP agent to contact in limited circumstances.  A Trusted Contact must be at least 18 years of age and you may add an alternate contact as well.   When you open a new investment account or log on  to look at your current investment account, you are able to complete the “Trusted Contact Person” authorization for each of your accounts[2].  To add a contact, you will need to know their phone number and physical address. An email address is helpful, but not required.  Finally, make sure to let your contact person and any alternate know that you have named them as your “trusted contact.”

We hope that this blog has answered any questions on why to consider naming a Trusted Contact on your investment accounts.  Please call us to discuss this matter further should you need additional information.

[1] The SEC’s Office of Investor Education and Advocacy and FINRA urge investors to consider adding a Trusted Contact Person to their investment accounts.

[2] Trusted Contact Authorizations are not used for charitable giving accounts or workplace retirement plans, such as a 401(k).