Have you been asked by a financial institution to provide the name and contact information for a ‘trusted contact’ but are left wondering why this is necessary?  

Organizations that exist to protect investors from fraud and abuse – such as the Financial Industry Regulatory Authority (FINRA), North American Securities Administrators Association (NASAA),  and The U.S. Securities and Exchange Commission Office of Investor Education and Advocacy (SEC OIEA) – recommend listing a trusted contact on your accounts essentially as an emergency contact in the event they are unable to get ahold of you.  

At Cassaday & Company, our clients may know their ‘trusted contact’ to be referred to as their ‘Client Advocate,’ as we have always offered our clients the opportunity to declare a trusted person in their life as a contact we can communicate with, in the event we notice signs of cognitive decline.  

As financial advisors, we are in a unique position to recognize potential signs of cognitive decline, since research indicates that one of the earliest challenges people face in the initial stages of dementia is managing their personal finances.  

While designating a ‘trusted contact’ or ‘Client Advocate’ is not mandatory, it’s highly recommended if you would like an additional layer of safety on your financial accounts.   

Both the FINRA and NASAA websites have helpful information on trusted contacts. Using these resources, we’ve prepared a Q&A to help you understand more about what a ‘trusted contact’ or a ‘Client Advocate’ is, and what they can and cannot do on your behalf.  

WHAT is a ‘trusted contact’ or ‘Client Advocate’?   

FINRA defines a trusted contact as “a person you authorize your financial firm to contact in limited circumstances, such as if there’s a concern about activity in your account and they’ve been unable to get in touch with you.”  

The trusted contact could be a family member, attorney, accountant, or another third party.  

It is recommended that your trusted contact be someone you believe would respect your privacy and know how to handle the responsibility of being named a trusted contact.  

At Cassaday & Company, we refer to a ‘Client Advocate’ broadly as someone we can check in with to make sure you’re doing ‘okay’ if we happen to notice unusual signs or recognize a potential problem.  

Your ‘trusted contact’ or ‘Client Advocate’ may or may not be the same person listed in your power of attorney. To make that decision, you should consider the circumstances. For example, if your child is listed as your power of attorney but they do not live near you, it may make more sense for you to list a close friend or neighbor as your ‘trusted contact’ or ‘Client Advocate’ instead of your child.  

Can I have more than one ‘trusted contact’ or ‘Client Advocate’? 

Yes, you can establish multiple ‘trusted contacts’ or ‘Client Advocates’ for your accounts.  

Establishing multiple could help you from having to change these designations later on.  

WHY should I have a ‘trusted contact’ or ‘Client Advocate’? How would it help me?  

Trusted contacts can communicate with your investment professionals in the event that your investment professional cannot get ahold of you. It could be because you are traveling, have been displaced by a natural disaster, may be undergoing a health issue, or perhaps there is concern about fraud. 

Simply put, a ‘trusted contact’ is someone who can help your financial institution help you.  

WHO should have a ‘trusted contact’ or ‘Client Advocate’?  

Anyone who has an investment account.  

What CAN a ‘trusted contact’ or ‘Client Advocate’ do on my behalf? 

When you designate a ‘trusted contact’, you grant a financial firm permission to reach out to someone you trust and share your account information under specific, limited circumstances. A trusted contact will only share what is necessary to help manage your account.  

Trusted contacts can:  

• confirm your current contact information 

• confirm your current health status 

• confirm the identity of any legal guardian, executor, trustee or holder of a power of attorney 

U.S. broker-dealers are obligated to provide, and other financial firms may offer, a written disclosure outlining these details. 

What CAN’T a ‘trusted contact’ or ‘Client Advocate’ do on my behalf?   

Being named a trusted contact does NOT make someone a power of attorney, legal guardian, trustee, or executor.  

A ‘trusted contact’ or ‘Client Advocate’ CANNOT:  

• make trades in your account 

• make decisions about your account or act on your behalf (unless they are also named your power of attorney)  

HOW can I name a ‘trusted contact’ or ‘Client Advocate’ to my account?  

Contact your financial institution or investment professional at any time to add a trusted contact to your account. 

If you are a Cassaday & Company client, please reach out to your advisor to establish one or multiple ‘trusted contacts’ or ‘Client Advocates’.  

If you decide to name a ‘trusted contact’ or ‘Client Advocate’ to your account, it’s a good idea to have a conversation and let them know your intent prior to adding them in this capacity.  

WHEN should I add a ‘trusted contact’ or ‘Client Advocate’ to my account? 

A widely held belief is that many think they know when they will need help, and it’s not necessary for them to act now because they’re in good health.  

However, it’s always a good idea to plan for the unexpected. It’s never too early to add a ‘trusted contact’ or ‘Client Advocate’ to your account.  

If I have a power of attorney, do I need a ‘trusted contact’ or ‘Client Advocate’?  

Yes. Even if you have a power of attorney, there are benefits to appointing a ‘trusted contact’ as well.  

For instance, what if you and your power of attorney are impacted by the same emergency?  Or if your power of attorney gives into temptation and decides to take some money from your accounts for themselves?    

While a ‘trusted contact’ cannot make decisions for you, they can add a layer of protection, especially in the scenarios above.  

 Questions?  

We are happy to answer any questions you have about naming a ‘trusted contact’ or ‘Client Advocate.’  

Proactive planning now can help you mitigate future risks, and we are here to guide you every step of the way.  

Please contact your advisor or reach out to our office at (703) 506-8200 or info@cassaday.com.  

Disclosure: The information provided above was obtained from FINRA & NASAA websites. Facts presented have been obtained from sources believed to be reliable. Cassaday & Company, Inc., however, cannot guarantee the accuracy or completeness of such information, and certain information presented here may have been condensed or summarized from its original source.