Here’s some information to help you understand what a Trusted Contact is, and why you should consider naming one.
What’s a Trusted Contact?
A “Trusted Contact” is a person that you authorize your brokerage firm to contact if your broker has a reasonable belief that your account may be exposed to possible financial exploitation or fraud.
In 2018, FINRA (the organization that regulates brokerage firms) introduced the Trusted Contact rule, designed to protect older adults from financial exploitation.
The rule requires that brokerage firms, like Schwab, make reasonable efforts to identify a “Trusted Contact,” a person to contact if the firm has a concern that the client is incapacitated or is the target of a scam.
Firms must request this information when opening or updating an account. However, you can decline this request, as clients are not required to provide a Trusted Contact.
Why would you add a “Trusted Contact person” to your brokerage account?
Adding a Trusted Contact person to your brokerage account can help prevent possible financial exploitation and fraud, and protect your account’s assets.
It’s never too early to add a Trusted Contact to your account, says Schwab.
While you aren’t required to have a Trusted Contact on file with Schwab, it may help them move more quickly and decisively when addressing suspected financial exploitation or diminished capacity situations. While you may already have a power of attorney or spouse listed with Schwab, the presence of a Trusted Contact on your relationship provides an additional resource for them to contact if they identify a possible issue.
Under what circumstances would Schwab or any other brokerage firm contact a “Trusted Contact person?”
A Trusted Contact is someone who Schwab can get in touch with to:
- Discuss activities or other possible red flags that might indicate you’re being financially exploited
- Confirm your current contact information
- Confirm your mental or physical health status
- Confirm the identity of any legal guardian, executor, trustee or holder of a power of attorney
- Address other limited circumstances when permitted by law
It’s important to note that Trusted Contacts are unable to view account information, execute transactions or inquire about account activity unless they’re also an authorized party or have view-only access to your account.
Who can I name as a Trusted Contact?
Trusted Contacts are usually family members or close friends—people you trust and who are likely to be in the best position to know your current situation, but you are free to name whomever you wish.
They must be age 18 or older.
You can designate up to two Trusted Contacts at Schwab. Trusted Contacts are applied to your entire brokerage relationship with Schwab, so you don’t have to worry about naming individual contacts for each account.
How can you add a “Trusted Contact person” to your brokerage account?
There are several convenient ways you can add a Trusted Contact to your accounts.
Give us a call directly, or call Schwab Alliance at 1-800-515-2157, or log in to your account to add a Trusted Contact online.
By the way, many brokerage firms will be sending notices (via e-mail or regular mail) to their retail account customers that include instructions for adding a Trusted Contact person to an account. Before clicking on any link in an e-mail notice about a “Trusted Contact person,” make sure you verify that your brokerage firm actually sent the e-mail.
Questions? Ask us! It’s all about keeping you and your assets safe.