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Financial literacy and naming a “trusted contact” for U.S. brokerage accounts

Author

Listed:
  • Matthew Sommer

    (Janus Henderson Investors)

  • HanNa Lim

    (Kansas State University)

Abstract

Using data from the 2021 National Financial Capability Study (NFCS), this research investigated the relationship between financial literacy and naming a “trusted contact.” In early 2018, FINRA enacted Rule 4512 that requires brokerage firms to make a reasonable effort to obtain a trusted contact for all retail account owners. A trusted contact is someone who can be contacted in limited circumstances to discuss the welfare of the account owner. Based on a sample of 2046 respondents, approximately 40% reported naming a trusted contact. A logistic regression analysis indicated a negative relationship between objective knowledge and naming a trusted contact, while a positive relationship was found with subjective knowledge.

Suggested Citation

  • Matthew Sommer & HanNa Lim, 2024. "Financial literacy and naming a “trusted contact” for U.S. brokerage accounts," Journal of Financial Services Marketing, Palgrave Macmillan, vol. 29(2), pages 582-589, June.
    • Handle: RePEc:pal:jofsma:v:29:y:2024:i:2:d:10.1057_s41264-023-00227-7
    DOI: 10.1057/s41264-023-00227-7
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    References listed on IDEAS

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    1. Daniel W. Richards & Maryam Safari, 2021. "Disclosure effectiveness in the financial planning industry," Qualitative Research in Financial Markets, Emerald Group Publishing Limited, vol. 13(5), pages 672-691, June.
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    4. Beth Pontari & Andrea Stanaland & Tom Smythe, 2009. "Regulating Information Disclosure in Mutual Fund Advertising in the United States: Will Consumers Utilize Cost Information?," Journal of Consumer Policy, Springer, vol. 32(4), pages 333-351, December.
    5. Dalia Hussein El-Sayed & Eman Adel & Omar Elmougy & Nadeen Fawzy & Nada Hatem & Farida Elhakey, 2020. "The influence of narrative disclosure readability, information ordering and graphical representations on non-professional investors' judgment: evidence from an emerging market," Journal of Applied Accounting Research, Emerald Group Publishing Limited, vol. 22(1), pages 138-167, December.
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