StreetSmarts: Trusted Contacts on Your Investment Accounts

Hi, my name is Nancy Sutton and I’m the Senior Client Service Manager at Howe & Rusling. In this segment of StreetSmarts I’m going to discuss the importance of having a Trusted Contact on file with both Howe & Rusling and the custodian who holds your investments such as Fidelity or Schwab. 

A trusted contact is someone who Howe & Rusling and your brokerage firm can get in touch with to discuss suspicious activity or other possible red flags that might indicate you are being financially exploited.

FINRA, or the Financial Industry Regulatory Authority, created a rule to allow custodians to ask seniors over the age of 65 for the name of a Trusted Contact.  FINRA views the protection of senior investors, as well as baby boomers who are retired or approaching retirement as a top priority.  Because many American investors are nearing retirement and control a substantial portion of investments assets, FINRA encourages firms like ours to obtain the information as a best practice. 

You may have noticed on all new account applications that there is an option to name such a person.  The Trusted Contact would be listed on your accounts as someone we could talk to in case of suspicious activity.  The Trusted contact is intended to be a resource for the custodian and Howe & Rusling to help protect your assets.  It is important to note that the Trusted Contact does not become a joint owner and has no authority over your accounts.  The trusted contact will not be able to view your account information, execute transactions in your accounts or inquire about account activity unless that individual has that authority through another role on the accounts such as a power of attorney or trustee.

We suggest that if you have not done so already that you allow us to help you collect the information.  We have added an addendum to our client agreement that collects the names and contact information  of your trusted contact as well as your Power of Attorney (if you have one) and other members of your professional team such as your accountant and attorney.   We will retain the information and review it routinely and make updates as requested.  We will also assist with the brokerage forms to make sure the custodian’s records reflect the information.  You may have already been contacted by the custodian and given the option of naming the trusted contact on-line.  We feel it is important to discuss the choice in person and as your portfolio manager, we are happy to help you have that conversation. 

When choosing a trusted contact, you should be comfortable with the idea that the custodian may disclose to your Trusted Contact or get information from them about your health status including physical and mental capacity.  You must also be willing to let the custodian provide them complete financial information about your accounts.  You can have more than one Trusted Contact on file, and we encourage you to provide more than one in case one is not reachable in the future.  You can add, update or remove a Trusted Contact at any time. 

It might be the best option to choose someone younger because there is a risk that a person your own age might also become impaired by issues associated with aging.  For this reason, your spouse or sibling may not be the best choice.  The contact person should be someone you trust to do the right thing, who can take responsibility for your privacy and use good judgment if issues were to arise.  The trusted contact must be at least 18 years old.  It’s also important to note that Howe & Rusling cannot act as your trusted contact.

As your advisor, we focus on protecting and growing your investments and watching out for you, our valued client.  We are very happy to assist in getting this critical information on file at Howe & Rusling and with the custodian who holds your assets.  We will be reaching out to see if we can help you update this critical information.  Especially in this time of such uncertainty, we want you to know that your safety and well-being is paramount to all of us at Howe & Rusling.

Thank you for watching today’s episode of StreetSmarts.

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