Tools for Protecting What’s Yours – Trusted Contact Person

In the first post of our series “Tools for Protecting What’s Yours” we discussed Financial Power of Attorney, when it applies, circumstances a POA might be used, and other additional information.

In this post, we will be covering a Trusted Contact Person.

TRUSTED CONTACT PERSON(S)

In 2017, the SEC approved the role of a trusted contact person as part of a FINRA Rule 4512 amendment. The amendment requires your account custodians (brokers) to encourage you to name a trusted contact as an extra line of defense for your investment accounts. If the custodian feels you are being financially exploited, they then have a back-up person they can talk to about some of their concerns.

While the primary aim of the FINRA amendment is to prevent financial elder abuse, there are at least two scenarios when a trusted contact can be useful:

A scenario when a trusted contact person may be beneficial is: Imagine you’re abroad on a vacation, and your broker receives a suspicious trade order from “you.” They try but cannot reach you to verify it’s really you. If there is no trusted contact to reach out to, they may have little choice but to execute the trade and disburse the funds as ordered. If a trusted contact can instead provide evidence that the order is likely fraudulent, your broker may be able to place a temporary hold before disbursing the funds. Similarly, if a loved one is exhibiting signs of dementia, a trusted contact can help prevent them from falling prey to financial exploitation. What if your aging parent tries to empty out their own bank account to help a “friend” in need? A trusted contact can give a second opinion on the matter when an account custodian reaches out to explain the circumstances.

Additionally…

If you’ve named someone as a trusted contact, your broker or account custodian can discuss some of your relevant circumstances with them and gather pertinent information. But a trusted contact cannot make any financial decisions on your behalf, nor can they view your account. Unless you grant it to them separately, a trusted contact does not have a financial power of attorney.

Naming someone as a trusted contact can be crucial tool when planning to protect what’s yours. We hope that this information provides you with some clarity as you plan. We can help put you in touch with select professionals to assist with legal aspects – or we ourselves can help you sort through the logistics involved. With offices in Rutland and Williston, Vermont Copper Leaf Financial develops a customized wealth management plan designed to integrate every aspect of your financial life. Our approach is to provide clarity and calm amidst the chaos. Where there is uncertainty, we look for facts. We call our approach evidence-based investing. Call us today at 802-878-2731 to schedule a strategy session and begin building your road map to financial success. You can also email us at info@copperleaffinancial.com or visit our website.