What Is a Trusted Contact on a Financial Account, and Why Do You Need One?
A trusted contact is a person you authorize your financial firm to contact if there are concerns about your well-being, possible financial exploitation or fraud, or if the firm is unable to reach you. A trusted contact does not have access to your money and cannot make financial decisions on your behalf.
When you think about being financially prepared, you may think about having an emergency fund, keeping your estate documents up to date or making sure your beneficiaries are current.
But there’s another simple step that can add an important layer of protection to your financial life: naming a trusted contact.
What Does a Trusted Contact on a Financial Account Do?
A trusted contact is someone you authorize your financial firm to contact in certain circumstances if there are concerns about your well-being or financial safety.
This might be an adult child, sibling, close friend or another person you trust.
Think of a trusted contact as an additional point of contact your financial professional may be able to reach when something doesn't seem right.
For example, your financial firm may contact this person if it has been unable to reach you, has concerns that you may be the victim of financial exploitation or fraud, or needs help confirming certain information about your circumstances.
Can a Trusted Contact Access Your Money?
No. Naming someone as your trusted contact does not give that person access to your money or authority over your financial accounts.
A trusted contact cannot make trades, withdraw money or manage your investments simply because they are listed as your trusted contact.
You remain in control of your accounts and financial decisions.
This is an important distinction because some people may hesitate to name a trusted contact out of concern that they're giving someone else control over their finances. That's not what a trusted contact designation does.
When Might a Trusted Contact Be Helpful?
There are several situations when having a trusted contact on file may be valuable.
For example, your financial advisor may have difficulty reaching you after several attempts. You may be traveling, hospitalized or otherwise temporarily unavailable. A trusted contact may be able to help your financial firm determine how to reach you or confirm that you're okay.
A trusted contact can also be particularly important if your financial professional notices unusual activity or has concerns that you may be the target of fraud or financial exploitation.
Suppose a longtime client suddenly requests a large withdrawal and explains that the money must be sent immediately to someone they've never mentioned before. If the circumstances raise concerns about possible fraud or exploitation, having a trusted contact on file may provide another avenue for helping protect the client.
It may also be helpful if there are concerns about changes in a client's health or ability to manage financial matters safely.
What Is the Difference Between a Trusted Contact and a Power of Attorney?
A trusted contact and a power of attorney serve very different purposes.
A power of attorney may give another person legal authority to act on your behalf, depending on the document and the powers you've granted.
A trusted contact does not have that authority.
Your trusted contact is someone your financial firm has permission to contact under certain circumstances. Naming one does not give up control of your accounts or your financial decisions.
Having a trusted contact also does not replace appropriate estate planning documents, including a power of attorney.
Who Should You Choose as Your Trusted Contact?
Choose someone you know well and trust.
Ideally, this person should understand you and your circumstances well enough to recognize when something may be unusual. They should also be someone who is likely to be reachable if your financial firm needs to contact them.
Many people choose an adult child, sibling or other relative, but your trusted contact doesn't necessarily have to be a family member. A close friend or another trusted individual may also be appropriate.
The important thing is choosing someone you trust and keeping their contact information current.
Why Is a Trusted Contact Important for Financial Preparedness?
Financial preparedness isn't always about making big financial decisions. Sometimes it's about putting simple safeguards in place before they're ever needed.
Naming a trusted contact is one of those safeguards.
Take a few minutes to check your financial accounts and ask whether you currently have a trusted contact listed. If you do, make sure the person's name, phone number and other contact information are still current.
It's a small task that can become very important if an unexpected situation arises.
Trusted Contact FAQs
Does a trusted contact have access to my financial account?
No. A trusted contact does not have access to your money or financial account simply because you've designated them as your trusted contact.
Can a trusted contact make trades or withdrawals?
No. A trusted contact cannot make trades, withdraw funds or manage your investments based solely on being named as your trusted contact.
Can I change my trusted contact?
Yes. If your circumstances or relationships change, you can update your trusted contact. It's a good idea to periodically review the information you have on file.
Does my trusted contact have to be a family member?
No. Your trusted contact may be a family member, close friend or another individual you trust.
Is Your Trusted Contact Information Up to Date?
As part of your financial preparedness checklist, take a moment to find out whether you have a trusted contact listed and whether that information is still accurate.
If you're a client of D. Gates Wealth Management and aren't sure whom you have listed, or you'd like to update your trusted contact information, reach out to our team at 239-424-8305. We're happy to help.
This information is provided for educational purposes only and should not be considered individualized financial, legal or tax advice.