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 April 23

by Karen Purze

Did you know that you can set up a trusted contact on your investment accounts? This is like setting an emergency contact, but for your investment accounts. (You already designated beneficiaries on your accounts, right?)

A few years ago, FINRA, the organization that writes and enforces the rules governing registered brokers, enacted a rule that requires all brokerage firms to ask their retail customers to provide the name and contact information for a “trusted contact person” the firm may contact in the event of possible financial exploitation or fraud. 

While useful for anyone, the rule was designed to protect seniors from financial exploitation. If your parent has investment accounts, consider asking them to designate you or their financial power of attorney as a trusted contact. This gives their broker permission to reach out to the trusted contact in case of suspected fraud or if they suspect your parent is sick or suffering from diminished capacity. 

In addition to allowing brokers to contact someone the account holder designates, the rule also allows a firm to place a temporary hold on withdrawals if they suspect financial exploitation. You’d want to know if this happened to your parents, right?

How to set up a trusted contact

If you created an account after February of 2018, you may already have one set. For older accounts, procedures vary. I had to ask for and fill out a special form to have my husband set up as a trusted contact. 

Will a trusted contact have access to my accounts? 

No, setting a trusted contact simply makes it possible for a broker to contact someone besides the account holder if they are concerned about your health, well-being, or welfare. 

Do I have to set up a trusted contact? 

No. The rule states that firms must ask for a trusted contact but you are not required to provide one.

Financial institutions report widespread elder financial abuse (with average losses of $45,000!) Having a trusted contact is no guarantee against loss but it’s far better than finding out long after your parent was the victim of fraud or financial exploitation because nobody was authorized to contact you. 

Now it’s your turn to lead by example: set up a trusted contact on your own accounts, then show your parents how to set up theirs! 

Karen Purze

Extra Credit

Set up a trusted contact in your password manager so someone you trust has access to your passwords in case of an emergency. (You do use one, don’t you?)

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About the author

Karen Purze is the author of Life In Motion: A Guide for Gathering Life’s Vital Details, a workbook to help people get their affairs in order. She is currently working on a memoir about her caregiving experience. Sign up for the Life in Motion Guide newsletter to be the first to hear more!

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