Trusted Contact: What It Is and Why You Need One

We say it all the time: financial decisions are personal. The decisions our clients make are based on personal goals, values, and preferences. Ours is not purely a business of numbers and reports; it is a business of people.

As you plan for your financial future, you may not realize how many people can and should be involved in the process. At this time of year, as tax season approaches, it’s helpful to keep a few key players in mind.

For example, now is a good time to review the beneficiaries for your IRA and other retirement and non-retirement accounts. Each IRA requires its account owner to delineate beneficiaries. Review those designees, make sure your financial advisor can identify them for you, and make any desired changes.

Another important designee to review is the trusted contact. While it’s not mandatory to list a trusted contact, doing so can be a powerful tool in case of emergencies and can provide peace of mind throughout the year.

What is a trusted contact?

According to the SEC, a trusted contact is “a person that you authorize your brokerage firm to contact in limited circumstances, such as if your broker has trouble reaching you or has a reasonable belief that your account may be exposed to possible financial exploitation.” This person is intended solely to interact with your financial advisor regarding your wellbeing.

“It’s helpful to have a trusted contact when we can’t get in touch with someone, when someone may not be in their right mind, when they’re ill, etc.,” explains K&B Partner and COO Yasmeen Mock. “They’re essentially an emergency contact—someone we can get in touch with to make sure our client is okay.”

In many cases, clients name their children as trusted contacts, but others name friends, neighbors, colleagues, or other individuals who would be likely to confirm their current health and safety status.

What a trusted contact isn’t

It’s important to note that a trusted contact has limited visibility into and no control over your financial affairs. Notably, being a trusted contact does not grant someone power of attorney—that is, the ability to act legally and financially on behalf of someone who is otherwise incapacitated. A trusted contact can speak with your financial advisor and attest to your health and wellness, but they cannot:

Work on your behalf
Learn how much money you have in your accounts
Withdraw money from your accounts
Transfer money into or out of your accounts

Why name a trusted contact?

A trusted contact is named solely for your benefit. In an age of increasing financial fraud, a trusted contact can help safeguard against nefarious actions that could jeopardize your financial wellbeing. Naming a trusted contact adds another layer of protection.

How to designate a trusted contact

If you are a current K&B client, you can call us to determine whether you have already named a trusted contact, review whom you have on file, or make any changes. We’re always happy to discuss the qualities and attributes of an ideal trusted contact, talk through the differences between trusted contact and power of attorney, and brainstorm who in your life might be the best person to select.

When you work with K&B, you work with a team that takes pride in getting to know you, your circumstances, and the key players in your life. We’re always happy to extend our service beyond financial matters as we help our clients in their investment journey.