Name ‘trusted contact’

Helping financial institutions protect accounts is critical

Banks, brokerages and insurers increasingly want to have someone to call or email in case they notice suspicious activity and can’t reach the account holder.

Anyone’s accounts can be vulnerable if they’re displaced by natural disaster, wind up in the hospital, suffer a brain injury or are traveling and hard to reach. Helping your brokerage, bank or insurer connect with someone who knows what’s going on in your life could protect your money and prevent financial catastrophe.

“I love the idea of the ‘trusted contact,’ because it can really head off any fraud or exploitation before it snowballs out of control,” said Amanda Singleton, a family caregiving expert for AARP and an estate planning attorney in St. Petersburg, Fla.

Naming a trusted contact doesn’t give that person authority over your accounts or the ability to see balances or make changes, said Gerri Walsh, senior vice president of investor education at the Financial Industry Regulatory Authority, the nongovernmental organiin zation that regulates the securities industry, including brokerages.

Instead, your trusted contact can help financial services companies reach you or identify others who might help.

If you’re incapacitated, your contact might connect the company to your legal guardian or the person with power of attorney over your accounts.

If you’ve died, your trusted person could provide contact information for the executor of your estate or the successor trustee of your living trust.

You aren’t required to name a trusted contact, but financial services companies recommend it. Ideally, a trusted contact is someone you’re confident will protect your privacy and act responsibly.

“It could be an adult child, a close friend, an attorney or some other trusted person,” said Deborah Royster, assistant director for the Consumer Financial Protection Bureau’s Office for Older Americans.

Thwarting fraud

The push to name trusted contacts started out of concern for older Americans being scammed out of their life savings. More than 369,000 cases of financial fraud of older adults are reported each year, causing $4.84 billion losses, according to a January report by Comparitech, a cybersecurity research company.

Comparitech estimates the real toll is 8.68 million cases and more than $113.7 billion in losses each year.

To help reduce that toll, two new FINRA rules were approved in 2017. The first allows brokerages to put temporary holds on withdrawals when financial exploitation is suspected, and the second requires brokerages to “make reasonable efforts” to get customers to name trusted contacts.

Beware email requests

One thing you shouldn’t do is respond to emails that seem to be from your financial institution asking you to name a trusted contact. Those may be scams. Instead, call your financial institution or look on its website for a form that lets you name a trusted contact.

If your financial institutions offer the option, it’s a quick and easy way to add protection, said Abby Schneiderman, cofounder and co-CEO of the end-of-life planning site Everplans and coauthor of “In Case You Get Hit by a Bus.”

“People should take two minutes out of their day and name a trusted contact,” Schneiderman said.