Updated August 3, 2026. Quick answer: naming a trusted contact costs nothing and gives away no authority. It lets your brokerage call someone if a withdrawal looks wrong — and, under a separate rule, pause the money for up to 15 business days while it checks. It is the cheapest protection available on an investment account.
What a trusted contact is
Under FINRA Rule 4512, Firms must make reasonable efforts to obtain the name of and contact information for a trusted contact person, and disclose in writing that the firm is authorized to contact that person to address possible financial exploitation, or to confirm the customer’s contact information, health status, or the identity of any legal guardian, executor, trustee or holder of a power of attorney.
A customer is not required to name one. Declining does not prevent the account being opened or maintained.
What it is not
A trusted contact has NO transactional authority, no discretion and no control. They cannot trade, authorise a disbursement or direct the account. The hold power belongs to the firm, not to the trusted contact.
That is the feature, not the limitation. It is why naming one carries so little risk: you are not handing anyone power over your money, only permission for the firm to make a phone call. Someone reluctant to sign a power of attorney can still name a trusted contact without giving up anything.
The hold, and its clock
Under FINRA Rule 2165, A firm MAY – not must – place a temporary hold on a disbursement from a Specified Adult’s account where it reasonably believes financial exploitation has occurred, is occurring, has been attempted or will be attempted.
Who is protected. A “Specified Adult” is a natural person aged 65 or older, or a natural person aged 18 or older whom the firm reasonably believes has a mental or physical impairment that renders them unable to protect their own interests.
| Step | Deadline |
|---|---|
| Firm notifies you and the trusted contact | not later than two business days after the hold is placed, to all parties authorised to transact and to any trusted contact – unless the firm suspects that party is involved |
| Initial hold expires | expires not later than 15 business days after the hold was placed |
| Extension after internal review | may be extended by no longer than 10 business days following the firm’s internal review |
| Further extension where reported to a regulator, law enforcement or a court | a further period of no longer than 30 business days where the matter has been reported to a state regulator, law enforcement or a court |
Note the word may. The rule permits a hold; it does not require one. A firm that does nothing is not breaking this rule, which is a reason to ask your own firm what its practice is rather than assuming the protection is automatic.
Who to name
- Someone reachable, who answers unknown numbers.
- Someone who is not a plausible source of pressure. If the risk you are guarding against is a family member, do not name that family member.
- Ideally not the same person as your agent under a power of attorney — two sets of eyes are the point.
- Someone you have actually told. A trusted contact who is surprised to hear from a brokerage is less useful than one expecting the call.
Why this matters more than it sounds
The frauds that empty retirement accounts are built to make the victim press the button themselves. The main federal payment protection may not cover a payment you were tricked into authorising, which makes stopping it beforehand far more valuable than any remedy afterwards. A hold is one of the very few mechanisms that operates before the money is gone.
Related: when the credentials check out but the person is not who they claim · the five features.
General information drawn from IRS, Medicare, HUD and state statute and regulation, not legal, tax or financial advice. Continuing-care law is state law and differs materially between states; every figure here is year-labelled and every source named. Powers of attorney, guardianship and trusts are governed by STATE law and differ materially between states; nothing here is a substitute for reading your own documents or taking advice on your own facts.