Do you have a ‘trusted contact person’?
While the concept of a “trusted contact person” has been around since 2018, regulators are currently encouraging brokerage firms to ask you to name yours. The goal? To provide you with “additional protection.” This is what you need to know.
“Trusted contact” is a term used in FINRA’s customer account information rule (rule 4512(a)(1) (F)), which you can view at tinyurl.com/uy66acjk. FINRA, the Financial Industry Regulatory Authority, regulates the brokerage industry.
Under the rule, when you open an account (or update it), the brokerage firms must ask you for the name of a trusted contact. You have the option of saying yes or no.
The goal is to give authority to the firm to talk with someone about your account in case of a problem — perhaps the brokerage firm lost contact growing up your parents believed your sister and you could “soar” in the outside world. Did they envision a career trajectory that would lead to you being named CEO of PepsiCo at age 50 in 2006, and then serving as CEO and chairman for the next 12 years?
Nooyi: Everybody in my family had been in government jobs or worked in banks — the state bank and things like that. That’s who everybody in my family went to work for. So when my parents were thinking about soaring, they thought I’d get a good government job or a good job as a teacher or a good job in a bank and rise in that nicely and steadily. That was their definition of soar.
Then my sister went to business school. That’s what broke open this whole thing for us, and the corporate world was introduced to us. Until then, we didn’t know what the corporate world was.
Q: When you became PepsiCo CEO in 2006, you were one of 11 women to serve as CEO of a Fortune 500 company. In 2021, there are 41 women Fortune 500 CEOs. How would you assess the extent of progress made — or not made — toward gender equality in the top ranks of corporate America?
Nooyi: Between 2006 and 2021, we’ve gone from 2 percent of Fortune 500 companies’ CEOs being women to slightly less than 9 percent. On the other hand, we can also say, “After all these with you due to a natural disaster, or there is concern about potential fraud.
Because brokerage firm policies can differ, read your firm’s brokerage agreement to see when it will share information with the trusted contact.
In this example, you authorize the firm to reach out to your trusted contact:
“If there are questions or concerns about [your] whereabouts or health status;”
“If [the firm] suspects that [you] may be a victim of fraud or financial exploitation;”
“If [the firm] suspects that [you] might no longer be able to handle [your] financial affairs;”
years, we’ve only gotten to 8.5 percent with women being CEOs of Fortune 500s — that’s not a very good thing.”
For the most part, I’m going to say we’re making progress. It’s just too slow.
Q: In light of your focus on gender equality, some people questioned your decision to support a male successor, current PepsiCo CEO and Chairman Ramon Laguarta. How did you respond to that criticism?
Nooyi: I was asked why I didn’t replace myself at PepsiCo with a woman — but they never asked a male CEO “Why didn’t you replace yourself with a woman?”
I realized that all of the women that we had developed and mentored at PepsiCo had left a little before the top to run companies that were smaller or not as global as ours. So we lost a bunch of women.
As I dug even further, I realized at the entry level there were a lot of women who came into the organization, but by the time you got to level two or three, many of them left because they just didn’t know how to cope with balancing motherhood with the job and the stresses were just too much. They just quit or went to much more manageable jobs.
I also realized that to have women CEOs — who are very good for companies, good for society and good for decision-making — we needed to rebuild the pipeline and make sure that we provide a support system for women to stay in the workforce while also having a family.
Q: In the book, you describe PepsiCo as a
“To confirm the identity of any legal guardian, executor, trustee, authorized trader, or holder of a power of attorney;”
“If [the firm] has any other concerns or is unable to contact [you] about [your] account(s) held at [the firm].” (Also see this Securities and Exchange Commission’s Investor Bulletin at tinyurl.com/8yb4f42r.)
You would be giving authority to the firm to judge when these circumstances arise.
What information might the brokerage firm share with your trusted contact?
Again, read your brokerage agreement.
In this example, the firm can share “nonpublic personal information.” That includes “financial account information and balances, recommendation for purchase of a security or insurance product, and ... personally identifiable financial information (i)
company that values diversity and inclusion. But many people were offended by a 2017 Pepsi ad in which Kendall Jenner hands a police officer a can of Pepsi during a protest because they believed it trivialized social justice issues and showed insensitivity to the African-American community. What did you learn from that controversy?
Nooyi: It was an ad done to show more unity between the races. There was no intent to offend anybody. If you look at all the social media, in the first 18 to 20 hours, it was widely positive. Then it turned negative. The minute it turned negative, and I heard that people were offended, I told the beverage guys to pull the ad that very minute.
We did a lot of thinking and introspection inside the company to make sure such an incident would never, ever happen again.
PepsiCo is about the most inclusive company I’ve ever worked with. So many of us at PepsiCo were mortified that this mistake was made — unknowingly, because we never intended to hurt anybody.
Q: What do you make of the widespread adoption of remote working during the pandemic? To what extent can it help to support a better balance of work and home life, particularly for women professionals?
Nooyi: During the pandemic, technology advanced with Zoom, Teams, (Amazon) Chime and all that — so you have more ability to do conference calls and meet people virtually. We didn’t have those capabilities ubiquitously available before the provided by a consumer to a financial institution; (ii) resulting from any transaction with the consumer or any service performed for the consumer; or (iii) otherwise obtained by the financial institution.”
Why would the firm do this? “To address possible financial exploitation; to confirm the specifics of [your] current contact information or health status or the identity of any legal guardian, executor, trustee, or holder of a power of attorney; or as otherwise permitted by FINRA rules.”
Well enough. What happens next? Are there limits on the authority of a trusted contact?
Indeed, there are. The person “cannot make trades in the investor’s account; cannot make decisions about the investor’s account; and does not become a power of attorney, legal guardian, trustee or executor by
pandemic. So now families can think about flexible work and hybrid work situations, and that allows you to manage your family life just a bit better.
I want to contrast that with when I was building my career — we had no iPhones, not even cellphones. Cellphones were just beginning. Technology has helped a lot in terms of juggling family and work.
I’d have been a lot more in touch with my children visually, meaning through FaceTime or whatever (if current technology had been available when Nooyi’s two daughters were growing up.) Of course, they might have told me, “Mom, stop bothering us all the time.” virtue of being identified as a trusted contact,” according to a joint release (tinyurl.com/pkhse8k8) issued by FINRA and the North American Securities Administrators Association.
One more thing: When you provide a trusted contact, you may also be agreeing to indemnify the firm if something goes wrong. Here is an example: You indemnify the firm “from and against any and all claims, judgments, taxes, fines, penalties, damages, liabilities, costs, and expenses” related to “any claim, judgment, or proceeding arising out of or relating to [the firm] contacting, or failing to contact,” the trusted contact.
What can go wrong? I can only guess. What can go right? Potentially preventing fraud.
The concept of protecting a customer is laudable. How well this works
Q: From early 2019 until recently, you served as co-chairwoman of AdvanceCT, a nonprofit that works closely with the state government on economic development issues. After the pandemic struck, you additionally served as co-chair of Connecticut’s advisory committee on the state’s economic reopening.
How would you assess the state’s economic recovery since the first wave of the pandemic and its long-term economic prospects?
Nooyi: Over the past two years, we’ve had net inmigration, and businesses are coming back to Connecticut. We have fintech, life will depend on the circumstances, including the brokerage firm’s protocols after engaging with the trusted contact. If you have any experiences you want to share with my readers, write to me at readers@juliejason.com.
For more information on the subject go to finra.org/trustedcontact, which includes an explanatory video.
Julie Jason, JD, LLM, a personal money manager (Jackson, Grant of Stamford) and author, welcomes your questions/comments (readers@juliejason.com). Her awards include the 2020 Clarion Award, symbolizing excellence in clear, concise communications. Her latest book, a curated collection of Julie’s columns, is “Retire Securely: Insights on Money Management From an Award-Winning Financial Columnist.” To hear Julie speak, visit juliejason.com/events.
sciences and consumer products all coming back to Connecticut.
I think you’ll see even more announcements as more businesses look at Connecticut, look at our story and say, “This is a damn good state to do business in. It’s strategically located, it’s got a great workforce, great governing structure, wonderful governor. Let’s come here.”
I feel great about the state. My husband and I have made Connecticut our home. We haven’t fled to any other state. We are in Connecticut, and we are staying put.