From 'Trusted' to 'Emergency': FINRA Proposes Key Terminology Shift to Boost Investor Safeguards
A critical line of defense for investors may be getting a rebrand. The Financial Industry Regulatory Authority (FINRA) is weighing whether swapping the term "trusted contact" for the more familiar "emergency contact" could significantly improve investor protection and participation.
The concept is straightforward: investors name someone their brokerage firm can reach out to if advisors spot potential red flags. These warnings signs, as outlined by legal experts, include sudden large withdrawal requests, uncharacteristic shifts to high-risk investments, or a client appearing fearful or secretive—especially when accompanied by a newly influential third party.
Yet, despite its importance, a 2024 FINRA study found only 42% of surveyed investors had designated such a contact. This low uptake has prompted a regulatory rethink. In a recent notice, FINRA posed the central question: would the term "emergency contact"—a phrase commonplace in employment and healthcare settings—"bring significantly more value to investor protection" and "increase customer comfort and participation"?
The proposal follows feedback from industry groups who argue the current terminology creates unnecessary hesitation. "Clients agonize over who they 'trust the most,' which can lead to inaction," noted the Securities Industry and Financial Markets Association (SIFMA). Meanwhile, St. John's University School of Law's Securities Arbitration Clinic reported widespread confusion, with many investors fearing they were handing over decision-making power—a misconception FINRA has explicitly countered.
"A trusted contact has no authority to transact on your account," clarifies a FINRA investor bulletin. "They are simply a resource for the firm in concerning situations."
The comment period on this proposed change, part of broader rule revisions aimed at combating financial exploitation, remains open until March 2026.
Voices from the Public
Michael R., Retired Portfolio Manager, Boston: "This is a sensible, low-cost adjustment. 'Emergency contact' immediately conveys urgency and a standard safety procedure. Removing the emotional weight of 'trust' could get more people to participate, which is the ultimate goal."
David Chen, Financial Advisor, San Francisco: "In practice, I've seen clients freeze up when asked for a 'trusted' person. They worry about family dynamics or offending someone. 'Emergency contact' is neutral and functional. It frames it as a routine, protective measure, which is exactly what it is."
Susan Miller, Consumer Advocate, Chicago: "This feels like regulatory tinkering at the edges. The real issue isn't the name—it's that firms aren't incentivized enough to proactively monitor and act on these red flags. Renaming a form won't stop exploitation if the follow-through is weak. It's a cosmetic fix to a systemic problem."
Eleanor Vance, Elder Care Coordinator, Florida: "For my senior clients, clarity is everything. Many have 'emergency contacts' at their doctor's office already. Using the same term across different aspects of their lives reduces confusion and lowers barriers. This small change could have a big impact on a vulnerable population."