Financial Background
A client's financial situation may change, so it is important for representatives to verify periodically that the customer's information is still accurate. Clients may not be forthcoming with such changes, but clues such as changes in purchases and sales may indicate otherwise.

Objectives
As an investor ages, his or her risk tolerance, investment time horizon and goals change. All clients will modify their investment objectives to match changes during their lifetime.

Address Changes
A change in address may affect the ability of a registered rep or broker-dealer firm to serve a client. If a broker-dealer or rep is not registered in the state in which a client now lives, no business may be transacted until the registration is updated.

Transferring Accounts
When a customer wishes to transfer an account from one broker-dealer to another, the customer must sign a transfer request with the new member firm, which is mailed to the carrying firm.

Both member firms must coordinate their activities to expedite the transfer:

  • the client's new firm must immediately submit the transfer request to the carrying firm, and
  • the carrying firm must either validate the instructions or take exception within three (3) business days.
  • Any exceptions must be resolved in an expeditious manner by the two firms.
  • Causes for exceptions to the transfer include incomplete or improperly signed transfer instructions or having no record of the account. Otherwise, the carrying firm is obligated to make the transfer as quickly as possible.

Upon receiving the transfer instructions, the carrying firm must cancel all open orders and not accept new orders. It must return the transfer instructions to the new member firm with a list of securities positions and any money balance in the account. It has four (4) days to complete the account transfer to the new member firm following the validation of the transfer instructions. Most firms today use the automated customer securities account transfer services of the National Securities Clearing Corporation's Automated Customer Account Transfer Service, or ACATS.

Account Statements
Broker-dealers are required to provide customers with a statement at least quarterly, although if any activity has occurred in the account, the usual practice is to provide a statement for the month in which the activity has occurred. The account statement contains the following information:

  • Cash balances
  • All security positions
  • Activity in the account since the last statement

You will often need to explain to your clients when and why they will receive statements. Some clients dislike receiving statements on a monthly basis because they don't like the extra paper, so you must explain to them why your firm is obligated to send a statement when there is activity in the account.

Death or Incompetence of the Account Owner

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