In 2018, the Financial Industry Regulatory Authority (FINRA) enacted a new rule designed to help protect senior investors.
Under this rule, financial advisors are required to make reasonable efforts to obtain the name of and contact information for a "trusted contact person" upon opening a new account or when updating account information for existing clients.
What is a trusted contact person?
A trusted contact person is intended to be a resource for your financial advisor in administering your account, protecting your assets, and responding to possible financial exploitation.
Your trusted contact person should be someone to serve as your advocate should personal circumstances arise, such as a change in your health, capacity, availability, behavior, or financial activity. This person must be over the age of 18.
What role does a trusted contact person serve?
Should you choose to assign a trusted contact person, your financial advisor will be authorized to provide that person information pertaining to your account.
Your financial advisor will be able to confirm with your trusted contact person whether another individual or entity has been given legal authority to act on your behalf (e.g., an agent you've given power of attorney, named successor trustee, etc.).
Furthermore, your financial advisor will be able to communicate with your trusted contact person regarding individuals who claim legal authority for you and determine the legitimacy of their legal claim.
What are the limitations of a trusted contact person?
Your appointed trusted contact person cannot:
• Place trades on your behalf,
• Change your account ownership or address, or
• Complete withdrawals or other transactions on your account.
Your authorization to name a trusted person is optional, and you may change your trusted person at any time by notifying your financial advisor in writing. Also be aware that your financial advisor is not required to contact your trusted person.
If you have any question on naming a trusted contact person, please contact your financial advisor.