A trusted contact can be an important safeguard for your clients.
A simple conversation today can help protect a client when circumstances change tomorrow.
Trusted Contacts are more than an account-opening field. They provide the Firm with another resource when there are questions about a client’s well-being, possible financial exploitation, changes in contact information, or the identity of a legal guardian, executor, trustee, or Power of Attorney. FINRA Rule 2165 provides an important framework for protecting specified adults and addressing potential financial exploitation.
Making Conversation Comfortable
- Start with protection, not paperwork. Explain that the purpose is to create an additional safeguard if something changes in the client’s life.
- Use plain language. Clients do not need to be familiar with FINRA rules to understand why a Trusted Contact can be valuable.
- Reinforce control. A Trusted Contact cannot make trades, withdraw funds, or act as a Power of Attorney simply because they are named.
What Can You Say to a Client?
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“I ask clients to consider naming a Trusted Contact as an additional safeguard. If we ever have a concern about your well-being, possible financial exploitation, or difficulty reaching you, it gives us someone we can contact.” “This does not give that person control over your account. They cannot make investment decisions or withdraw money just because you named them as your Trusted Contact.” |
Why This Matters
Life changes can affect a client’s ability to manage finances or recognize a potential threat. A death in the family, illness, cognitive decline, isolation, or an unexpected request from a third party can create circumstances that require additional attention. A Trusted Contact gives the Firm another person who may be able to help clarify what is happening and support the client’s protection.
TRUSTED CONTACTS IN PRACTICE
A Small Step That Can Matter Later
The best time to have the Trusted Contact conversation is before there is a problem. When opening an account, make a reasonable effort to obtain Trusted Contact information and explain why it can be useful. For existing accounts, revisit the information when account information is updated and encourage clients to keep the contact current.
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WHO MAKES A GOOD CONTACT? • A spouse or partner • An adult child or other relative • A close friend or another trusted person Look for someone reliable, reachable, and familiar with the client’s circumstances. |
WHAT THE ROLE DOES NOT DO • Does not give account ownership or control • Does not authorize trading or disbursements • Does not make the person a Power of Attorney • Does not require the client to share ongoing account information |
When You Notice Something Concerning
A Trusted Contact can be especially useful when a Registered Representative notices behavior that suggests possible financial exploitation, fraud, diminished mental capacity, or another circumstance that could place the client at risk. Examples may include unexplained withdrawals, sudden changes in financial behavior, a new person attempting to control communications, confusion about transactions, or difficulty reaching a client who was previously responsive.
What Should the Registered Representative Do?
- Pause and assess. Do not assume that every unusual event is exploitation. Take the concern seriously and gather the facts.
- Document the conversation. Keep clear notes of meetings, calls, communications, and material exchanges relating to the concern.
- Contact Compliance. Compliance can help determine the appropriate next step, including whether a Trusted Contact should be contacted.
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