Why You Should Establish Trusted Contacts

If you're ever incommunicado—whether due to a health matter, a natural disaster, limited cell or Wi-Fi reception, or just a break from technology—you need someone who can relay critical messages to and for you, especially if your finances may be at stake. Planning for the unexpected should include identifying a trusted contact, someone your financial institution can get in touch with if you're unavailable.

When your financial firm suspects fraudulent or unusual activity on your account, the first course of action is to validate the transaction. Generally, that starts with contacting you, but what if you can't be reached?

Having a trusted contact on your account who can discuss urgent, possible red flags adds a second line of defense. A trusted contact can confirm:

• Your current contact information
• Your health status
• The contact information for other authorized parties on the account, such as a power of attorney

It's important to note, however, that a trusted contact is unable to act on your behalf, execute transactions, or engage in account activity unless they're already an authorized party on your account.

While you may not be required to have a trusted contact, establishing one can help your financial firm move more quickly and decisively when addressing fraudulent activity. Even if you already have a power of attorney or spouse listed on your account, a trusted contact provides an additional resource if an issue arises.

In most cases, anybody who's at least 18 years old can be a trusted contact, but we suggest designating a person who isn't already authorized to conduct business or receive information on your behalf. Trusted contacts are usually family members or close friends—people you trust and who are likely to be in the best position to know your current situation—as opposed to your investment advisor, trustee, or power of attorney.

The number of trusted contacts can vary by financial firm (Schwab allows two). Typically, trusted contacts apply to all your personal accounts held at a financial institution, so you don't have to worry about naming individual contacts for each account.

Adding a trusted contact can be just as important as naming beneficiaries to your accounts—it's a step you don't want to skip. You'll also want to review and update your trusted contacts regularly in case their contact information changes or you no longer want them to play this role.