Trusted Contacts - Who Do I Trust?

Chad Hassinger |

By Susan R. Kuczera, CFP®, ChFC
Manager - Compliance & Operations

January 24, 2019

Elder financial abuse is a growing problem, and is often under-reported, under-recognized and under-prosecuted.  According to a 2011 Cornell University Medical Center study, 98% of incidents of elder financial abuse went unreported. Yet, the reported loss by victims in 2010 was greater than $2.9 billion!  The numbers are staggering.

At the end of 2017, FINRA updated Rule 4512 (Customer Account Information) to require custodians to ask clients for the names and contact information of persons that the client might want the custodian to reach out to, in the event the custodian was having trouble reaching the client, or if the custodian had some concerns about whether the client was really directing activity related to the investment account.  This rule was effective in February 2018, and you may recall seeing this new form, or being asked about identifying a Trusted Contact Person when new account information is updated. At this time, whether or not you provide this information is optional, but custodians are required to ask. However, it may be in your best interest to do so.

There is a bit of confusion surrounding this information and what your advisor or custodian will do with it. Many clients are reluctant to have their financial information shared with anyone other than family, and even family sharing is often difficult.  First, let's clarify what information is shared when reaching out to a Trusted Contact, and then discuss some of the reasons why we or the custodian might be reaching out.

The purpose of the trusted contact is to identify someone we can get in touch with in the event we're concerned about your health, your well-being, or your welfare (due to exploitation, endangerment or neglect).  Unless the trusted contact is also your designated Power of Attorney (POA), identifying a trusted contact does not grant them access to trade or move money related to your accounts.  We do suggest that the person identified as your trusted contact NOT be the person identified as POA, as many cases of financial abuse are committed by POAs.  We do not provide any information about account numbers, account types or account values of specific investments.

Here are some examples of when your advisor may want to reach out to your trusted contact:

  • A client calls us for her annual review.  During the call, the advisor clearly hears a third party 'coaching' the client to transfer funds, and the client sounds distressed or confused.  The advisor decides to call the trusted contact to share their observations.

  • An advisor or operations staff notes that a client has called several times with questions regarding the same check and seems to have trouble understanding the answers.  Concerned that the client may have a health issue, the advisor determines that reaching out to the trusted contact may be an appropriate next step.

  • A client is scheduled to meet with his advisor at the office, but collapses in the lobby while waiting.  After calling 911, the advisor notes her trusted contact and places a call to that person to alert him or her of the client's situation.

  • The niece of an elderly client reaches out to the advisor with questions about her aunt's account. She was concerned that a caretaker was stealing monies from her aunt.  The niece was not identified as the aunt's POA nor as anyone else authorized by the aunt with the advisor to receive information.  Also, the aunt was not on the phone with the niece.  The advisor did not provide any information and the niece got very angry with the advisor. The advisor later places a call to the trusted advisor, as well as tries to reach the client directly, to see if there was an issue with the client.

As financial advisors, individual state laws determine whether we are mandated to report financial abuse that we might observe or suspect.  Indiana requires 'all persons' to report cases of suspected abuse, neglect or exploitation (via online reporting or via hotline 800-992-6978) to its Adult Protective Services unit.  Illinois provides contact information to the Attorney General's office through a Senior Citizens Consumer Fraud Hotline (800-800-1409 or online at  We can also provide contact information of our professional partners that are actively involved in these types of cases.

Lastly, Strategic encourages its clients to have family meetings in order to share relevant information about each family's wishes and hopes for the future financial wellbeing.  These types of meetings will go a long way towards reducing or avoiding potential financial abuse as your advisor gets to know future beneficiaries and can help educate them on financial management.

Unless otherwise expressly indicated, the opinions or views expressed in this article are the author's own and do not reflect, and may differ from, the opinions or views of Strategic Financial Group, LLC or others within Strategic Financial Group, LLC, including its officers, managers, owners, employees or other service providers.