The Wiser Financial Advisor Podcast with Josh Nelson

The Wiser Finanial Advisor: Trusted Contacts and POA (#111)

• Josh Nelson

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Today we're going to talk about two important topics that are especially important for people over the age of 62: naming a power of attorney and selecting a trusted contact for your investment accounts.

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Wiser Financial Advisor – Trusted Contact and POA


Hi everyone, welcome to the Wiser Financial Advisor show with Josh Nelson, where we get real, we get honest and we get clear about the financial world and your money. This is Josh Nelson, founder and CEO of Keystone Financial Services. Let the financial fun begin! 


In the Book of Proverbs, King Solomon writes that seeking after wisdom is the wisest thing that we can do, and that's really our mission here at the Wiser Financial Advisor Podcast and in our role as fiduciaries, as Certified Financial Planner investment advisors at Keystone Financial Services. That's what we do for our clients; we seek to learn patterns of success and patterns of failure from people who have come before. We’ve got decades worth of collective experience at Keystone that allows us to be able to look at a lot of situations we've seen before and help you make better decisions about yours now. 

Today we're going to talk about two important topics, that are especially important for people over the age of 62. As I say this I realize that I'm only 15 years away from that. It happens to the best of us, right? We're all gonna get older and need help at some point. But these things that are important for people over the age of 62 are:

  1. Name a power of attorney and 
  2. Name a trusted contact for your investment accounts. 

I'm not an attorney. You’ll probably want to visit with an estate planning attorney, because I'm not giving you legal advice here. I'm just telling you what I've seen and what a lot of our clients have done to protect themselves. These are things that my wife Sarah and I have done too: we've named Powers Of Attorney and trusted contacts in case we're not around for some reason. 

Let's start with the basics. What is the Power Of Attorney aka POA? Why should you consider setting one up? Well, Power Of Attorney is a legal document that gives to someone that you choose, the authority to act on your behalf in case you ever become unable to manage your financial affairs. This could be because you get sick, you get injured or it could be just because the gradual process of aging has meant you're not able to manage that on your own. It’s typical, as people get older and older, that some get to that point where they're going to need some additional assistance. But keep in mind that the person you appoint as your POA can make decisions about your money. They can act on your behalf, meaning that they're standing in for you and making decisions about your money, your property, your investments, to make sure that everything is being properly managed if you can't do it yourself, So, it’s important to decide who that person is going to be. And we'll talk about that because it's got a lot of gravity to it. They can manage all your stuff. 

Why is this so critical? Well, without a POA, if something were to happen to you, your family might have to go through a lengthy and expensive court process just to manage your stuff, your financial assets. The court process can cause a lot of stress. Many of you have been through this with family members when you’ve had to step in and handle their stuff. 

We are not talking here about you passing away; we're talking about you becoming incapacitated. What you're doing is trying to alleviate the stress and complications during a really difficult time, by having this document in place. Having a POA in place is a proactive step to avoid some scenarios that could be very stressful for your family. 

The second piece of the puzzle is naming a trusted contact in your investment accounts. This is a relatively new concept that many financial firms, including ours, have started to embrace. In fact, a legal requirement now will be to offer to put a trusted contact on your account. You can decline that, but we do highly recommend that you name someone. You're saying that we can reach out to the trusted contact if we suspect fraud and we're unable to get in touch with you for some reason. So, the trusted contact won't be able to access the details to manage your investment stuff like your POA. Their role is being that point of contact in case we're concerned for some reason; if we get concerned about activity on your account or your well-being, then that person is somebody we can reach out to as an initial point of contact. It could even be that we're talking to that person to find out if you have a power of attorney or if there are legal estate documents they may be able to provide. 

One of the reasons why it’s said to do this once you’re over the age of 62 is the rise in financial exploitation and scams targeting seniors, The odds of having some kind of diminished capacity go up after age 62, and more than likely you're more susceptible to the bad guys getting in and trying to get you to fall for some scam. We’re to prevent that, and having that trusted contact and Power Of Attorney can help to prevent that stuff. 

Let's talk about who to choose as your Power Of Attorney or trusted contact. This is somebody that you should be able to trust implicitly. Basically they are in a fiduciary role. So you've got to keep in mind that the person you appoint will potentially have access to your sensitive information and be able to make decisions. Therefore, it’s essential to choose wisely. This should be something that's drafted by an attorney or by using a service like LegalZoom that has had attorneys review the documents, so you're able to make some great decisions and make sure the right language is included in the documents. 

It's also important to have a conversation with whomever you're naming. That often doesn't happen. Sometimes people are surprised to find out that they have been named as Power Of Attorney, and all of a sudden they've got this responsibility. You need to let them know what you're doing and why you're doing it. You don't have to share dollar amounts. You don't have to share all the details of your finances, but you do need to be able to share enough so they are aware, and so they can say yay or nay. You want to lay out what would be expected of them. It’s not something to be taken lightly. Some people say, “My life is busy enough and managing the business and the family and all kinds of other stuff and my own personal finances means I may not have the capacity or the desire to step up and do yours.” So please have that conversation. You can name a backup Power Of Attorney. You should visit with your attorney about that. Backup Power Of Attorney means that if for some reason you name somebody and maybe they’ve either passed away, or they’re just not up for it, then it would go on to your backup to fulfill that role. Many financial institutions allow you to add a trusted contact for your online account. That's very easy. You can just contact us if your accounts are through us or by contacting your financial institution

So, if you're listening to this and you're over the age of 62, I highly urge you to take these steps seriously if you haven't done either one of these things. If you think you've already done it, it's good to go back and read those documents because more often than not, I talk to clients and they say, “Yeah, we've got some estate documents but they're really old, 20-30 years old from when our kids were little or something.” And maybe they say, “Oh my gosh, I can't believe we named so and so to do that.” It could be somebody who's passed away, maybe a sibling or even a parent that has passed away, which effectively means there's nobody named. So I highly recommend if you have estate documents, to go back through, read them yourself and make sure they still make sense before making changes or figuring out what to do next.

You’ve worked really hard to get financial security and financial freedom. By setting up a power of attorney and naming the trusted contacts, you're helping to ensure that that security continues. In this world that we're in right now, it can't be emphasized enough how many bad guys are out there who want to get you to part ways with your money. We know that there's gonna be all kinds of great stuff that happens in life but there's going to be some terrible stuff too, and in the case of being incapacitated, we want to make sure that we are set up and that we're protecting our heirs as well. This is not just about us, it's also about reducing stress and helping people out, people who will be there for us or could be there for us in the future. Also, this helps to reduce expenses and reduce mistakes. Oftentimes, when somebody is incapacitated, it’s very sudden, as in the case of a car accident or a sudden injury or other unfortunate scenarios. So, it's really important to have these things in place. And as financial advisors, we like to have copies of these things. If you could provide us copies, that's even better, in case something happens. 

I hope you’ve found this information useful in today's episode and that you will take these steps to protect your financial future. As always, if you have any questions or if you need our help navigating these processes, don't hesitate to reach out. The best way to get in contact with us is just our website at www.keystonefinancial.com . We also love to get feedback, and would love it if you could do us a favor and give us a rating, and go on your favorite podcast service and hit subscribe. Thanks for tuning in. Have a great week and God bless.

The opinions voiced on the Wiser Financial Advisor show with host Josh Nelson are for general information only, and are not intended to provide specific advice or recommendations for any individual. To determine what may be appropriate for you, consult your attorney, accountant, financial or tax advisor prior to investing. Investment advisory services offered through Keystone Financial Services, an SEC registered investment advisor.