Who is Your Plan B?
By Gerald Rome, Colorado Securities Commissioner ~
The world is complicated, and as much as we sometimes don’t want to admit that we need help, from time to time, we all do. This can be especially true when it comes to our financial well-being, and is perhaps most important to recognize and accept as we age. Taking advantage of seniors can take many forms, from email, mail, and phone scams by strangers to theft, manipulation, and coercion from family members, friends or caregivers. This is an unfortunate reality, but luckily regulators and members of the financial industry are working to come up with some easy, painless ways to help ensure that if you or a loved one is ever targeted by exploitation, something can be done about it before your hard-earned money is in the hands of a crook. Just a few months ago, the Financial Industry Regulatory Authority (also known as FINRA) enacted a rule to encourage investors and assist brokerage firms in protecting clients. This new tool is called the “Trusted Party Rule,” and I encourage everyone, young and old, to ask your financial adviser about it at your next meeting.
Brokerage firms will be asking their customers to provide the name and contact information for a “trusted contact person.” This is someone who can be reached if the firm suspects fraud or exploitation is occurring or might be about to take place. It’s important to note that you do not have to agree to provide this information, but if there is a trusted son, daughter, or person in your life, it’s an excellent idea to give your financial firm permission to contact them in the event of questions or concerns.
There is a similar provision in our Senior Safe Act passed through the efforts of my office in 2017. But there are often questions raised about privacy, independence, and the possibility that the trusted third party may turn out to be someone who shouldn’t have access to an account. Let us address these concerns one at a time. These rules are not meant to violate your privacy, or to invite intruding or prying eyes into your financial situation. That’s why it’s important that you are given the ability to choose whomever you feel is the best person to potentially be contacted if you are sick, incapacitated, or not in the best situation to make financial decisions.
Many people question how this provision is different from a Power of Attorney, or assume that most people will simply select their POA as this contact, but we actually advise against it. The trusted third party will not have the powers or access to accounts that a Power of Attorney might. Rather, he or she will simply be someone who can assist a firm in next steps should your account be compromised, or can inform a firm if you have fallen ill or changed locations.
Remember, insurance policies that we buy for our health, automobiles, and homes are necessary means by which we can protect ourselves and what’s important to us. They are “Plan Bs” that we hope to never have to use, but are always thankful are in place when the need arises. Identifying a trusted contact at your financial firms is free, and provides the same protections for your hard-earned wealth and savings. I urge you to consider advising your financial adviser of such a contact at your next meeting. And if you have questions, always feel free to reach out to the Division of Securities by calling our consumer hotline at (303) 593-6720.