Consumer Connection: What is a trusted contact?

By Sonya Sellmeyer, Consumer Advocacy Officer for the Iowa Department of Insurance and Financial Services

The Iowa Department of Insurance and Financial Services together with the Financial Industry Regulatory Authority (FINRA), the North American Securities Administrators Association (NASAA), and the U.S. Securities and Exchange Commissioner’s Office of Investor Education and Advocacy (SEC OICA) are encouraging consumers with investment accounts to provide their financial firms with a trusted contact.

A trusted contact is an individual you authorize your investment firm to contact in certain instances. The trusted contact cannot make trades or decisions regarding the investor’s account and does not become a power of attorney, trustee, executor, or legal guardian. Designating a trusted contact may be helpful in several circumstances. The investment firm may reach out to the trusted contact when they are concerned about fraud, are unable to reach the account owner after numerous attempts, in the event of a natural disaster, or have concerns about a health issue.  When the firm reaches out to a trusted contact, the firm is only able to release information that is reasonably necessary to assist the firm in the administration of the account.

The authorized individual may be a family member, friend, attorney, accountant, or other reliable party over age 18.  The firm needs the contact’s name and contact information. You may have more than one individual as a trusted contact. The contact’s information may be provided by the account owner to an investment professional at any time. Your online account may also allow you to add the contact information. If you receive an email from your investment firm with a link to add this information to your account, consider logging directly into your online account instead of clicking on a link in an email. Having a trusted contact is not required, but strongly recommended.

Also, a long-term care policy may have a similar option on the application. Including a secondary contact that does not live in your household protects against an unintended lapse of the policy. If a premium goes unpaid, the company would send a notice to the secondary contact as a protection against a lapse.  The contact you put on the long-term care application is not responsible for the premium but can inquire with the owner of the policy about the lapsed premium payment.

If you would like to add, change, or inquire about the trusted contact on your investment account, contact your financial professional. Also, let your contact know of the designation in case they are contacted by the company. Check other financial accounts you may have to see if any options such as a trusted contact exist.  Adding these layers of protection to your accounts and policies will keep your assets safe.  Call the Iowa Department of Insurance and Financial Services at 877-955-1212 if you have any questions.