Why You (and I) Should Appoint a “Trusted Contact”

For the past few years, financial services companies have asked me to appoint a “trusted contact”. Banks, brokers and insurers increasingly want to have someone to call or email in case they notice suspicious activity and cannot reach the account holder.

I ignored these requests. Trusted contacts are a great idea for older people with cognitive decline, I thought, but that’s not me.

Then a younger friend developed dementia praecox and I realized we don’t always get enough warning to put such protections in place.

Obviously, trusted contacts aren’t just good for older people. Anyone’s financial accounts could be vulnerable if they are displaced by a natural disaster, end up in hospital, suffer a brain injury, or travel and are hard to reach. Helping your brokerage, bank, or insurer connect with someone who knows what’s going on in your life could protect your money and prevent financial disaster.

“I love the idea of ​​the trusted contact because it can really prevent any fraud or exploitation before it gets out of hand,” says Amanda Singleton, AARP Family Care Expert and St. Petersburg, Florida.


Naming a trusted contact does not give that person authority over your accounts or the ability to see balances or make changes, says Gerri Walsh, senior vice president of investor education at the Financial Industry Regulatory Authority. , known as FINRA. FINRA is the non-governmental organization that regulates the securities industry, including brokerage firms.

Instead, your trusted contact can help financial services companies reach you (if you’re reachable) or identify others who might be able to help you. If you are incapacitated, for example, your contact can link the company to your legal guardian or the person with power of attorney over your accounts. If you are deceased, your support person may provide contact information for your estate’s executor or the successor trustee of your living trust.

You don’t have to name a trusted contact, but financial services companies, as well as regulators and consumer advocates, recommend it. You can change your trusted contact whenever you want or name more than one. Ideally, a trusted contact is someone you know will protect your privacy and act responsibly.

“It could be an adult child, close friend, lawyer or other trusted person that the financial institution can contact for further assistance in trying to reach you,” says Deborah Royster, Deputy Director of the Consumer Financial Protection Bureau. for older Americans.


The push to name trusted contacts began out of concern that older Americans would be ripped off with their savings. More than 369,000 cases of financial fraud by older adults are reported to authorities each year, causing losses estimated at $4.84 billion, according to a January report by Comparitech, a cybersecurity research firm.

But this type of fraud is notoriously underreported, often because victims are embarrassed, fear others will think them incapable, or protect the perpetrators, who may be relatives, caregivers or neighbours. Comparitech estimates the actual toll could be 8.68 million cases and more than $113.7 billion in losses each year.

To help reduce this toll, two new FINRA rules were approved in 2017. The first allows brokerages to temporarily suspend withdrawals when financial abuse is suspected, and the second requires brokerages to “make reasonable efforts” to get customers to name trusted contacts.

Until now, other financial services companies such as banks, credit unions and insurers do not have similar rules. Even so, some offer the ability to name trusted contacts on accounts, Royster says.


One thing you shouldn’t do is respond to emails that appear to be from your financial institution asking you to name a trusted contact. These can be scams to steal your passwords or create other havoc, says FINRA’s Walsh. Instead of responding to these emails, consider calling your financial institution or searching their website for a form to name a trusted contact.

If your financial institutions offer this option, it’s a relatively quick and easy way to add a layer of protection to your accounts, says Abby Schneiderman, co-founder and co-CEO of end-of-life planning site Everplans and co. -author. from “In Case You Get Hit by a Bus: How to Organize Your Life Now for When You’re Away Later.”

“People should take two minutes out of their day and name a trusted contact,” Schneiderman says.


This column was provided to The Associated Press by personal finance website NerdWallet. The content is for educational and informational purposes and does not constitute investment advice. Liz Weston is a NerdWallet columnist, certified financial planner and author of “Your Credit Score.” Email: [email protected] Twitter: @lizweston.

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