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.
InvestingFind out which type of bank account suits your specific needs.
Personal FinanceDiscover what the job description of an accountant entails, along with education and training, salary and skills necessary for success.
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.
Financial AdvisorAmeriprise is hit with $850K fine in case involving forgery, wire transfers and evidence left in a trashcan.
Financial AdvisorTo become a registered investment advisor requires specific licensing, qualifications and regulations, but the greater freedom may be worth it.
InvestingWhat are the best investment accounts for young investors? A few types to consider.
InvestingAccounting is the recording of financial transactions of a business or organization. It also includes the process of summarizing, analyzing and reporting these transactions in financial statements.
Personal FinanceA checking account is an account at a financial institution, usually a bank, that allows for deposits and withdrawals.
Small BusinessCustomer service is the part of a business tasked with enhancing customer satisfaction.