When it comes to your financial health and estate planning, do you have someone in your life that you would consider a trusted contact? What is a trusted contact, and why is such a person good to have? In this blog, we explore FINRA rule 4512, who would be considered a trusted contact, and steps that you can take to make sure that you understand the importance of having a Trusted Contact Person (TCP).
FINRA Rule 4512
FINRA added an amendment to Rule 4512 (Customer Account Information) that members (your financial advisor) make a reasonable effort to obtain the name of, and contact information for, a Trusted Contact Person for a client’s account. All Advisors will be required to ask the client if they wish to provide a TCP when establishing an account or updating an existing account. Basically this allows you to give permission that financial advisors are allowed to share your financial information with a third party in case of emergencies or under certain circumstances (for example, health issues like Alzheimer’s or dementia).
What is a trusted contact?
A trusted contact is a person that the financial advisor in question can talk to for your benefit. It’s important to note that a trusted contact does not need to be the same person as a successor trustee or beneficiary. The TCP you named will not have authority to make transactions or decisions regarding your accounts - they may simply be consulted in cases where the firm and the advisor are having difficulty communicating with the client. The advisor could contact the designated TCP and likewise, the TCP could reach out to the advisor.
Who should I consider for my trusted contact?
Someone you trust should be your trusted contact, whether it is a family member, a beneficiary, or a close friend. It should be similar to someone you would put down as an emergency contact on a hospital form.
After I find a trusted contact, what should I do?
After you’ve selected your trusted contact, you should introduce your financial advisor to that person. Once that introduction has been made, you can begin to educate them to the extent that you choose. Here is where you want to be really transparent. By connecting your financial advisor with your trusted contact, you can create a plan and ensure that everyone is on the same page – and understands the role they will play should the need arise.
How involved should a trusted contact be?
A trusted contact should only be as involved as you want them to be, provided they have the time and desire to do so. Having a third party to discuss ideas and plans can be helpful, especially when it comes to financial and estate planning. If you have any further questions about what a trusted contact is, whom you should choose, and how to plan, Chatterton & Associates is here to help. Contact us today to figure out the steps to take to protect your investments.
Chatterton & Associates