Every new account requires a new account form. This is one of the most important documents you will encounter as a registered representative. The function of the new account form is two-fold: it helps the registered representative establish a trusting relationship with the client, plus it fulfills a number of regulatory requirements.

Despite differences from firm to firm in the content or format of the new account form, the basic customer information that must be collected before an order is placed remains the same. Lack of proper documentation may result in disciplinary action, including fines, dismissal and injunctions against performing securities transactions.

Information Required
The FINRA requires the registered representative to provide the following information when opening a new account for a customer:

  • Customer's name and residence
  • ┬áif Customer' is of legal age
  • The signature of the registered representative opening the account
  • The signature of the principal approving the account
  • Whether distributions should be reinvested or paid out as cash
  • Customer's occupation, and name and address of the employer
  • Whether or not the customer is affiliated with another FINRA member
  • Citizenship
  • Name of any person with authority to make transactions in the account

Furthermore, according to NYSE Rule 405, the registered rep should have a basic understanding of the customer's present financial situation, risk tolerance, investment objectives, current income, investment holdings and net worth, tax status and financial needs.



Classification of Accounts

Related Articles
  1. Financial Advisor

    FINRA Rule 2273: Your Recruiting Questions Answered

    An in-depth look at and Q&A on FINRA's new recruiting practices rule, which goes into effect in November.
  2. Financial Advisor

    Finra Releases Q&A Guidance on Recruiting

    FINRA has issued further guidance on its recruiting practices rule, which includes clarifying the definition of a former customer.
  3. Insights

    FINRA: How It Protects Investors

    Find out the history of FINRA, and how it's organized to monitor the markets and protect investors.
  4. Investing

    A Guide to Bank Accounts

    Find out which type of bank account suits your specific needs.
  5. Investing

    What Is A Trading Account?

    A trading account enables an investor to buy and sell securities.
  6. Personal Finance

    Accountant: Job Description & Average Salary

    Discover what the job description of an accountant entails, along with education and training, salary and skills necessary for success.
  7. Financial Advisor

    What Advisors Need to Know About Cross Selling

    FINRA is undergoing a review of the cross-selling activities of broker-dealers. Here is what the regulator is zeroing in on.
  8. Personal Finance

    10 Bank Promotions That Pay You To Open An Account

    Find out which banks are running cash promotions this summer.
  9. Personal Finance

    Handling High-Yield Savings Accounts

    Is this the savings route for you? Read on to find out what these accounts have to offer.
Frequently Asked Questions
  1. How do you calculate r-squared in Excel?

    Calculate R-squared in Microsoft Excel by creating two data ranges to correlate. Use the Correlation formula to correlate ...
  2. What is the Difference Between International Monetary Fund and the World Bank?

    Learn about the International Monetary Fund and the World Bank and how they are differentiated by their respective functions ...
  3. Where Did the Bull and Bear Market Get Their Names?

    The terms bull and bear are used to describe general actions and attitudes, or sentiment, either of an individual (bear and ...
  4. What's the difference between Google's GOOG and GOOGL stock tickers?

    Learn the difference between Google's GOOG and GOOGL ticker symbols. Splitting shares into classes prevents management from ...
Trading Center