What is a Trusted Contact and why should I have one?

This year, as you meet with family and friends, we encourage you to consider naming a “Trusted Contact Person”. A “trusted contact person” is a person that you authorize your brokerage firm (Schwab in the case of our clients) to contact in limited circumstances, such as if your broker has trouble reaching you or has a reasonable belief that your account may be exposed to possible financial exploitation.  For example, if Schwab cannot get ahold of you, they may contact the trusted contact.  Or if they are concerned about your mental or physical health they may contact the trusted contact.  However, it is important to make clear that a person who is assigned as a “trusted contact” does not have any authority over an account.  They cannot call in to get information on the account or request any transactions unless they are already an authorized party.

If you are wondering why you have never heard of a “Trusted Contact”, it is fairly new program.  The SEC began recommending that investors provide a “Trusted Contact Person” only in the last few years.  Investors are not required to provide the information, and as a result most do not.  In fact, there appears to be a great deal of confusion over what a trusted contact does, what authority a trusted contact has, and why investors would ever provide this information. Even though the “Trusted Contact” does not have any authority over the account, a contact can be important if we cannot reach you.  Occasionally, clients do have medical emergencies, diminished capacity, or simply are out of reach. In those cases, it is helpful to have a “Trusted Contact” who we can call and find you.

If you would like to assign somebody to a “trusted contact,” the only rule is that the person assigned must be older than 18 years old. Schwab generally, recommends it not be somebody who already has authorized access to your account and instead be somebody that you trust and would be the most likely to know your current situation. You are also limited to 2 “trusted contacts” for your entire Schwab profile. Therefore, if you have already named someone for that position, then you do not have to name them each time you open an account.

If you did not assign anyone when you first opened your Schwab account, you can add a trusted contact at any time here the quick steps:

1.       Log into your Schwab Account

2.       Clicking the “Profile” link in the upper right-hand corner

3.       Choose “Trusted Contact” from the drop down menu

4.       Click the green “Add Trusted Contact” in the middle of the screen

If you have any questions, please feel free to contact us and we can help you with the process.