Why would a fee-based investment advisor need my Social Security number?
I am planning on using an investment advisor to help better allocate my holdings. I would make all the trades through my online broker. Is there a reason that the advisor would need my Social Security number and other details?
By federal law, you are supposed to do due diligence on any potential financial advisor and he/she is required to do due diligence on you. You must give the advisor and your broker your name, address, telephone, email, social security, work history, income, net worth, and investment objective. Your advisor is similarly required to give you all of that information including his/her social security number and full set of identical personal data. Usually both of you are also required to have this information notarized in order for that person to be your advisor. In addition, that advisor has information about him/her at http://finra.org/ where you can see a list of all complaints about that advisor, when he/she began business, and other important details including his IARD and CRD (registration) information. Be sure to fully read the information about any potential advisor at the above web site to be sure you aren't dealing with an unscrupulous person--or, worse yet, someone who isn't even listed in the federal registry.
As a Registered Investment Advisor, the advisor is required to know and understand his/her clients and asking for the SS number is very common.
On the other hand, if you are not opening an account with the advisor there is no real need to know the SS number. However there may be a State requirement that the advisor have that info. Rules can vary by State.
Absolutely! There is a rule that FINRA imposes on securities licensed agents called, "The Know Your Customer Rule". If any recommendations are being requested of the advisor, he is required to acquire this information. There is also the Patriot Act which requires we authenticate who someone is if we are writing any business with them.
Your social security number is NOT so much for the Advisor as it for the Custodian who is retaining the funds. This is law. EVERY custodian will run your SS# through the system. As a result, it is not uncommong for our firm to receive from our Custodian a signed W9 verifying a social security number, a Patriot Act Flag etc.