In an effort to protect America’s aging population and vulnerable adults from financial exploitation, FINRA implemented a new regulation that requires brokerages to “make reasonable efforts” to obtain trusted contact information for accounts. Additionally, FINRA member firms now can place a temporary hold on the distribution of funds that are believed to be financially exploited. While first approved by the SEC in February 2017, the rule officially took effect on February 5, 2018, spurring financial services firms to implement trusted contact features in the past few weeks.
In January, Charles Schwab added the option to add a trusted contact online, prominently displaying a Trusted Contact link on its main private site Service flyout menu. The dedicated page outlines the purpose of a trusted contact and offers a form to enter the contact’s name, phone number, email, mailing address and relationship to the client.
Schwab Trusted Contact Lightbox
Fidelity followed suit in early February, introducing a Trusted Contact page to the public and private site Customer Service section. The page provides information about what trusted contacts are and how they benefit users. Selecting the Add a Trusted Contact button opens a form for clients to enter their chosen contact’s name, their relationship to contact, and the contact’s address, phone number and email address. A dropdown at the bottom of the form allows clients to select specific accounts to which to assign the contact. Fidelity stands out for providing examples of when and why the firm would reach out to the trusted contact, such as diminished capacity and a medical emergency at the office.
Fidelity Trusted Contact Page (Truncated)
Similarly, later in February, TIAA introduced a Your Trusted Contacts page to the private site My Profile section. Clients can choose up to three trusted contacts, and a lengthy description outlines what trusted contacts are and what they have access to. TIAA asks for the most information: contact name, relationship to the client, date of birth, country of residence, address, phone number and email address.
TIAA Trusted Contacts Questionnaire
Also in February, Morgan Stanley added a notification to its private site Announcements page that encourages clients to contact the firm if they would like to learn more about adding a trusted contact to their account. While notable for raising awareness of the feature, the firm does not currently provide a way to add a trusted contact online, a potential oversight that may dissuade some users from adding a contact.
Morgan Stanley Trusted Contact Notification
E*TRADE joined the movement in February, adding a Trusted Contact section to its private site My Profile section. Clients select an account from a dropdown menu and then enter the name, country code, phone number, email address and relationship to client. A disclaimer at the top of the page states that effects of adding a trusted contact.
E*TRADE Trusted Contact Page
Most Recently, Vanguard added a Trusted Contact link to its private site Account Maintenance page. In small print, the page defines the purpose of a trusted contact and reminds clients that a trusted contact should be a “person you’d trust to provide an informed and objective assessment about your whereabouts, well-being and health status.” The client must enter the contact’s full name, phone number, mail address, email and relationship to client.
Vanguard Trusted Contact Page (Truncated)
Some firms, like Merrill Lynch, offered a way to easily add a read-only trusted contact online prior to the regulation. However, most firms (nine) in Corporate Insight’s e-Monitor coverage group fail to offer this online capability, with the majority of full-service firms relying on advisors to set up a trusted contact for clients. Brokerages, especially full-service firms that are more likely to have an aging clientele, should consider promoting this capability online so that clients are aware of the offering.