A power of attorney is a legal document that lets you appoint another person to act on your behalf. In finance it is used to allow someone you trust to handle account tasks, give instructions and make decisions when you cannot or prefer not to.
The person you appoint is often called your attorney or agent. They do not have to be a lawyer. Their authority comes from the document you sign, and it can be broad or very narrow depending on what you want them to do.
Where you will see a power of attorney in investing and trading
In day-to-day markets, powers of attorney most often appear around investment and bank accounts. Common situations include:
- Allowing a trusted family member to manage your money if you are travelling or unwell.
- Authorising a financial adviser to place orders in your account under an agreed strategy.
- Delegating authority within a company so a colleague can sign documents or deal with a broker when a director is unavailable.
On trading platforms and with brokers, the firm will usually ask for its own authorisation form alongside the power of attorney so it can record who is allowed to give instructions. Exact processes, permitted actions and required documents vary by provider and jurisdiction.
Crypto exchanges and wallets tend to work on account credentials and API keys rather than legal documents. Some providers will accept a power of attorney for identity verification and account control, others will not, so you need to check their policy.
Types of authority you can grant
The label power of attorney covers a few different designs. The details and names differ by country, but you will commonly encounter:
- General power of attorney: broad authority to handle financial matters for a period you choose. Often used for convenience. In many places it stops if you lose mental capacity.
- Limited or specific power of attorney: authority restricted to defined acts, for example selling a particular holding, opening an account, or dealing with a single institution. It starts and ends as the document states.
- Lasting or enduring power of attorney for property and financial affairs: designed to continue if you lose capacity, subject to local registration and safeguards. Naming and rules vary by jurisdiction and can change.
- Springing power of attorney: comes into effect only when a condition is met, such as a doctor confirming incapacity, where this structure is recognised.
Brokers and wealth managers also talk about trading authority. This is not always a standalone power of attorney. It is often a firm’s internal mandate that lets an adviser or money manager place trades for you. Two common flavours are:
- Limited trading authority: the agent can buy and sell within your account but cannot move money out, change beneficiaries or alter account ownership.
- Full trading authority: broader rights that may include moving cash, writing cheques or transferring assets. Firms set their own definitions, and you should read the permissions line by line.
Discretionary investment management, where you hire a manager to run your portfolio without asking you each time, is usually granted through an investment management agreement. That agreement may sit alongside a trading authority or power of attorney so the manager can implement decisions and deal with the custodian.
What a power of attorney can cover in finance
The document can be drafted to cover a narrow task or a wide range of activities. Typical powers related to markets and money include the ability to:
- Place, amend and cancel orders for securities, funds or derivatives that the account is permitted to trade.
- Open or close accounts, sign client agreements and receive statements and tax forms.
- Transfer cash between linked accounts, pay fees and settle bills. You can exclude withdrawals to external payees if you wish.
- Communicate with advisers, brokers, custodians and registrars, and access information the firm holds about the account.
Institutions will check the wording, ask for identification for the attorney and may require certified or notarised copies. Some will only accept their own mandated form. If the power is limited, the firm will usually block any instruction that falls outside the scope.
Even with a wide power, assets and tax liabilities remain yours. Statements, contract notes and tax reporting are still in your name unless account ownership is changed.
How it works day to day
Once the paperwork is accepted, the attorney can act within the permissions granted. In practice that means they can phone the dealing desk, submit electronic instructions or sign forms as if they were you, subject to any limits written in the mandate.
Many investors set guardrails. For example, they might cap single-trade size, require prior approval for illiquid assets, or allow trading only in instruments already permitted on the account. Some firms offer read-only online access for oversight even if trading is delegated.
Advisers and managers who use trading authority are typically regulated and owe duties of care. Separate from that, an attorney owes duties to act in your best interests and keep records, but the exact standards and remedies for misuse vary by law.
Examples you might recognise
Two straightforward scenarios show how powers differ in practice:
- Convenience and continuity: An investor signs a limited power of attorney so a sibling can pay household bills and speak to the bank while they work abroad. The document also lets the sibling instruct the broker to reinvest dividends and switch a maturing bond into a short-term fund. The sibling cannot withdraw to a new external payee.
- Professional management: A client hires a regulated manager on a discretionary basis. The manager has trading authority to rebalance, place orders and hold more cash when markets are volatile. A separate restriction says the manager cannot make third-party withdrawals or change beneficiaries.
Risks, safeguards and good practice
- Grant the minimum necessary: Be precise about what the attorney can do and for how long. If you only need help with a single sale or transfer, say so.
- Separate trading from withdrawals: Let an agent trade if needed but keep money movements tightly controlled. Ask the institution what each permission actually enables.
- Keep visibility: Arrange duplicate statements or alerts so you or a trusted third party can see activity. Review transactions regularly.
- Know the firm’s rules: Providers differ on what they accept and how they verify instructions. Some require fresh forms for each account or asset type.
- Update after life events: Marriage, separation, moving country or changing advisers can make an old mandate unsuitable.
Fraud and misuse are rare but possible. Choosing a trustworthy attorney, writing clear limits and keeping records reduces the risk. If something looks wrong, contact the institution immediately and consider revoking the authority in writing.
How a power of attorney ends
A power of attorney can end because you revoke it, it reaches an expiry date stated in the document, or the law says it no longer operates. In many places a standard or general power stops if you lose capacity, while a lasting or enduring version is designed to continue. Death ends an individual’s power of attorney. Companies usually revoke a mandate by board resolution.
Revocation is usually done with a signed notice sent to each institution that relies on the power, often with proof of identity and any registration updates where required. Firms will act on instructions they reasonably accepted before they received notice, so prompt communication matters.
Because the rules depend on jurisdiction and can change, check local requirements and speak to the relevant institutions before relying on a particular structure or wording.