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.
The FINRA requires the registered representative to provide the following information when opening a new account for a customer:
- Customer's name and residence
- if 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
- 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
Financial AdvisorAn in-depth look at and Q&A on FINRA's new recruiting practices rule, which goes into effect in November.
Financial AdvisorFINRA has issued further guidance on its recruiting practices rule, which includes clarifying the definition of a former customer.
Financial AdvisorFind out the history of FINRA, and how it's organized to monitor the markets and protect investors.
Financial AdvisorLearn about NYSE Rule 407 and how it may impact you as a financial advisor or investment broker. What you don't know about this regulation can hurt you.
Personal FinanceDiscover what the job description of an accountant entails, along with education and training, salary and skills necessary for success.
InvestingA trading account enables an investor to buy and sell securities.
Financial AdvisorAmeriprise is hit with $850K fine in case involving forgery, wire transfers and evidence left in a trashcan.
Managing WealthLearn about the average salary of an accounting research manager as well as the necessary skills, experience and education, and licenses to hold this position.
InvestingFind out which type of account suits your specific needs.
Financial AdvisorTo become a registered investment advisor requires specific licensing, qualifications and regulations, but the greater freedom may be worth it.