WHY YOU NEED A TRUSTED CONTACT

YOU’RE probably used to getting (and ignoring) lots of information from your brokerage, mutual fund or investment adviser.

- BY JOHN WAGGONER

But here’s one notification you should pay attention to: a request to designate a trusted contact.

What's a trusted contact? It’s a person 18 or older who can tell your financial institution where you are—and how you are—if you can’t be reached or there’s something suspect about your financial requests or instructions. Suppose, for example, your financial institution notices unusually large withdrawals from your retirement account, or that someone in Brussels has charged the down payment on a BMW to your debit card. Normally, your bank or brokerage will simply call you and ask what on earth you're doing (in so many words).

But what if your financial rep can’t reach you because you're out of town, or you're sick, or you're simply letting your mail pile up? In that case, your trusted contact can tell the bank where you might be, or if there could be some other reason you've been out of touch, such as travel or a natural disaster.

Or what if your actions are suddenly out of character? For financial advisers, there’s a clear reason why clients should have a trusted contact. “Suppose you had a conservative client—he’s paid off his house, doesn’t use credit cards—and one day he calls and says, ‘I need $100,000 and I need it now,’” says Mary Ballin, partner and wealth adviser for Perigon Wealth Management in Walnut Creek, Calif. “It’s a sensitive situation,” she says. “You want to make sure he’s okay.”

Vanguard, the Valley Forge, Pa., mutual fund giant, has a team dedicated to calling attention to accounts whose owners may be having cognitive difficulties or are potentially being taken advantage of, says John Ginelli, head of investor protection at Vanguard. The company uses a mix of surveillance methods, ranging from computer algorithms to referrals from telephone representatives, to flag unusual activity. Only members of the team may reach out to a trusted contact, he says.