Who Do You Want Watching Out for You? A ‘Trusted’ Contact? Or An ‘Emergency’ Contact?

Column distributed by Hearst Connecticut Media Group.

Links to resources referenced:

Bakhtiari & Harrison: Trusted Securities Lawyers
- https://bhseclaw.com/blog/finra-trusted-contact-rule/#what-percentage-of-investors-have-named-a-trusted-contact-according-to-the-text
  - Related column excerpts:
    - “The idea behind a trusted contact is to give your brokerage firm someone you want them to call if the firm believes something is amiss. A red flag would be ‘sudden and uncharacteristic behavior, such as requests for large withdrawals, liquidations of long-held securities, or wiring money to foreign accounts,’ quoting a post by nationwide law firm Bakhtiari & Harrison, which handles securities arbitration and litigation.”
    - “Another would be a change in behavior -- when a client is ‘appearing fearful, secretive, or flustered, especially when accompanied by a new, overly influential third party like a “new friend,” caregiver, or online acquaintance.’”
    - “Or what about an ‘abrupt [change] to investment strategies, especially a shift from a conservative to a high-risk portfolio, or transactions that seem inconsistent with the client’s financial situation and long-term goals.’”
FINRA Regulatory Notice 26-02
- https://www.finra.org/rules-guidance/notices/26-02
  - Related column excerpt:
    - “Sounds good, but, you have to ask why only 42% of those surveyed by FINRA actually had a trusted contact. The study (FINRA Foundation’s ‘National Financial Capability Study: 2024 Investor Survey’) is referenced in FINRA Regulatory Notice 26-02, published in early January of this year.”
FINRA Regulatory Notice 25-07
- https://www.finra.org/rules-guidance/notices/25-07
  - Related column excerpt:
    - “As background, the term ‘emergency contact’ was first suggested last year (see Regulatory Notice 25-07) when commenters said that customers might be more familiar with or receptive to alternative terminology, such as ‘emergency contact’ instead of ‘trusted contact.’”
SIFMA Comment on FINRA RN 25-07
- https://www.finra.org/sites/default/files/NoticeComment/SIFMA%20Comment%20ON%20FINRA%20RN%2025-07%20%28July%2014%202025%29.pdf
  - Related column excerpt:
    - “The Securities Industry and Financial Markets Association (SIFMA): ‘We have received numerous reports of individual clients attempting to weigh which person they ‘trust the most,’ which can lead to inaction by the customer. … Explicitly permitting alternative names to be used … would likely have a positive impact on uptake.’”
LPL Financial Comment on RN 25-07
- https://www.finra.org/sites/default/files/NoticeComment/LPL%20Financial%20Comment%20on%20RN%2025-07_July2025.pdf
  - Related column excerpt:
    - “LPL Financial: ‘[T]hat wording [emergency contact] is more commonly used in other contexts such as employment, healthcare, and similar circumstances. This will avoid customer confusion and increase the probability that retail customers provide that information.’”
St. John's Comment Letter RN 25-07
- https://www.finra.org/sites/default/files/NoticeComment/St.%20John%27s%20Comment%20Letter%20RN%2025-07.pdf
  - Related column excerpt:
    - “St. John’s University School of Law’s Securities Arbitration Clinic: ‘Many customers, including our clients, are confused about the type of authority granted to a trusted contact. They fear that they are handing over decision-making power if they provide information for a trusted contact.’”
FINRA Investor Bulletin: Why You Should Consider Adding a Trusted Contact to Your Account
- https://www.finra.org/investors/insights/trusted-contact
  - Related column excerpt:
    - “By the way, ‘Naming someone as a trusted contact person does not give that person any authority to act on your behalf, execute transactions or engage in activity in your account,’ quoting the 2025 FINRA Investor Bulletin ‘Why You Should Consider Adding a Trusted Contact to Your Account.’”
FINRA Investment Accounts: Brokerage Accounts
- https://www.finra.org/investors/investing/investment-accounts/brokerage-accounts#trusted-contacts
  - Related column excerpt:
    - “To learn more, see FINRA’s Investment Accounts webpage and What is a Trusted Contact? video.”
Vimeo: “What is a Trusted Contact?”
- https://vimeo.com/605785441
  - Related column excerpt:
    - “To learn more, see FINRA’s Investment Accounts webpage and What is a Trusted Contact? video.”