Wisdom Wealth Strategies Logo

Trusted Contacts: Who is Your Back-Up?

Get the latest expert financial tips and advice + access to our free financial checklists.

In almost every sport, key players have a back-up in place. Top of mind is the second string in football and the relief pitcher in baseball. In sports, and in life, it’s important to have someone you can count on to step in on your behalf when you can’t be there yourself. In your financial life, you’re the key player. Let’s make sure you have a back-up, just in case.

The Basics.

In 2017, the SEC approved the role of trusted contact person as part of a FINRA Rule 4512 amendment. The amendment requires your account custodians (the company that holds your money in your account) to encourage you to name a trusted contact as an extra line of defense for your investment accounts. If the custodian feels you are being financially exploited, they then have a back-up person they can talk to about some of their concerns. The additional input may enable them to delay disbursing funds from your account “where there is a reasonable belief of financial exploitation.” [Source]

When It Applies.

While the primary aim of the FINRA amendment is to prevent financial elder abuse, there are at least two scenarios when a trusted contact can be useful:

  • If you are unavailable, and the custodian believes your account may have been compromised
  • If you are cognitively impaired

Common Scenarios.

Imagine you’re on a mid-Atlantic cruise, and your advisor receives a suspicious request from “you.” They try, but cannot reach you to verify it’s really you. If there is no trusted contact to reach out to, they may have little choice but to execute the trade and disburse the funds as ordered. If a trusted contact can instead provide evidence that the order is likely fraudulent, your advisor may be able to place a temporary hold before disbursing the funds.

Similarly, if a loved one is exhibiting signs of dementia, a trusted contact can help prevent them from falling prey to financial exploitation. What if your aging parent tries to empty out their own bank account to help a “friend” in need? If your parents have named you as a trusted contact, an advisor who suspects foul play can reach out to you, explain the circumstances, and receive your “second opinion.”

Additional Tips.

If you’ve named someone as a trusted contact, your financial advisor or account custodian can discuss some of your relevant circumstances with them, and gather pertinent information from them. But a trusted contact cannot make any financial decisions on your behalf, nor can they view your account. Unless you grant it to them separately, a trusted contact does not have a financial power of attorney, as described in [this post – link to Financial Power of attorney post].

The Wisdom Wealth Strategies team has a form available that you can complete to add your trusted contact to our records. Just send an email to Wisdom@WisdomWS.com and we’ll send it your way.


wisdom wealth strategies


Andrea L. Blackwelder, CFP®, ChFC, CDFA® and Joseph D. Clemens, CFP®, EA are the founders and partners of Wisdom Wealth Strategies. Their shared passion is simple: to bring financial empowerment, understanding, and peace-of mind to people who wish to improve their financial future, build wealth for their families, and achieve financial independence. Click here to find out more about how you can work with the Denver Financial Advisors at Wisdom Wealth Strategies.

Download our Free Financial Planning Worksheets

Join our mailing list to receive your 2021 and 2022 Tax & Financial Planning Guide, as well as your Net Worth Statement and Spending Plan.