Quick Answer
At account opening, a firm must disclose in writing that it may contact a trusted contact person to address exploitation, to confirm contact details, health status, or a legal guardian's identity, and as the temporary-hold rule otherwise allows. No trusted contact name is required. Firms keep account information six years after an update, and closed-account information six years after closing.
The trusted contact person disclosure and the account-record retention rule both grow out of the same customer account information requirements, but they protect different things: one protects a vulnerable customer, the other protects the firm's own audit trail.
What Must the Firm Disclose About the Trusted Contact Person?
- At account opening, the firm must disclose in writing (which may be
electronic) that the firm or an associated person is authorized to contact
the trusted contact person and disclose account information to:
- Address possible financial exploitation of the customer.
- Confirm the customer's current contact information.
- Confirm the customer's health status.
- Confirm the identity of any legal guardian, executor, trustee, or holder of a power of attorney for the customer.
- Anything else FINRA's temporary-hold rule for suspected exploitation of a specified adult permits.
An account opened under an older FINRA rule is not exempt from the disclosure for good. The firm owes it in writing when it next updates that account's information, either in the ordinary course of business or because some other law or rule requires the update.
Think of it this way: the disclosure is a permission slip the firm gives itself in advance. It tells the customer, before anything goes wrong, exactly what the firm may say to the trusted contact person and why.
What Happens If No Trusted Contact Is on File?
- The absence of a trusted contact person's name or contact information does not prevent the firm from opening or maintaining the account, provided the firm makes reasonable efforts to obtain it.
Exam Tip: Gotchas
- No trusted contact person on file does not block account opening. The requirement is reasonable efforts to obtain the name, not an actual name in the file.
How Long Must the Firm Keep Account Information?
| What | Retention period |
|---|---|
| Account information that is later updated | At least six years after the date it is updated. |
| The last update to account information, or the original information if it was never updated | At least six years after the account is closed. |
The rule uses two words for two states of the same record. Maintain covers account information that is current or in use. Preserve covers account information that is no longer current or in use.
Exam Tip: Gotchas
- The six-year clock for updated information starts on the date of the update, not the date the account was originally opened.
- Do not read "maintain" and "preserve" as the same word. The firm maintains the record it is using now, and preserves the one it has replaced.
What Should You Check on Exam Day?
- Know what the disclosure covers, and that it ends with a catch-all for anything FINRA's temporary-hold rule permits. The rule states the purposes in one unnumbered sentence, so do not rely on a count of them.
- Confirm the disclosure requirement is about permission to contact, not a requirement to actually obtain a name.
- Match the retention trigger to the fact pattern: an update starts a fresh six-year clock, while unchanged information runs six years from account closure.