Customer Accounts - Introduction
Prior to executing a customer’s order, the firm must open an account for the customer. The representative opening the account should try to obtain all vital financial information relating to the customer. Series 62 candidates can expect to see 10 to 20 questions dealing with customer accounts on their exam.
Prior to opening an account for any new customer, a registered representative must complete and sign a new account form. Account ownership is divided into five main types:
The registered representative should try to obtain as much information about the customer as possible. The representative should obtain:
- Full name and address
- Home and work phone numbers
- Social security or tax ID number
- Employer, occupation, and employer’s address
- Net worth
- Investment objectives
- Estimated annual income
- Bank / brokerage firm reference
- Whether they are employed by a bank or broker dealer
- Any third party trading authority
- Legal age
- How account was obtained
- Whether client is officer, Director, or 10% stockholder of a publicly traded company.
All new accounts must be accepted and signed by a principal of the firm. The principal must accept the account in writing for the firm either before or promptly after the first trade is executed. The principal accepts the account by signing the new account card. The representative who introduced or will manage the account must be noted. Once the account is opened the firm must send the customer a copy of the new account form within 30 days of the opening of the account and within 30 days of any material change in the customer’s information. Firms are also required to verify the account information at least once every 36 months. The customer never has to sign anything to open a new cash account. However, some firms have the customer sign a customer agreement when they open a new account, but this is not required. The customer agreement will state the policies of the firm and will usually contain a pre dispute arbitration clause. The pre dispute clause requires that any potential dispute arising out of the relationship be settled in binding arbitration. A firm may also have the customer sign a signature card. A signature card will allow the firm to verify the customer’s written instructions that are sent in to the firm.
Customers who do not wish to disclose financial information may still open an account, if there is reason to believe that the customer can afford to maintain the account. All registered representatives should update the customer’s information regularly and note any changes in the following:
- Phone number
- Investment objectives
- Marital status
Registered representatives are also required to maintain an accurate and up to date listing of all of their customer’s transactions and investment holdings.
Customers are not required to provide their educational background when opening an account.Holding Securities
ProfessionalsFINRA/NASAA Series 99 Exam Guide
ProfessionalsFINRA/NASAA Series 24 Exam Guide
ProfessionalsTo become a registered investment advisor requires specific licensing, qualifications and regulations, but the greater freedom may be worth it.
ProfessionalsRead an in-depth comparison about working as a Financial Analyst vs. working as an Investment Banker, two highly prestigious business careers.
ProfessionalsMost states require individuals to pass the Series 65 exam in order to act as investment advisors.
Investing BasicsMany people research restaurants or movies, but few select brokers or financial advisors with much research. Here's how BrokerCheck can help.
ProfessionalsRead an in-depth review of a career as a financial planner as opposed to a career as a stockbroker, including how to decide which is best for you.
TermA maintenance margin is the minimum amount of equity that must be kept in a margin account.
Investing BasicsBrokers and registered investment advisors have some key differences. Here's what you need to know.
ProfessionalsIt's possible that Google is looking to get into the robo-advisor business, either as a new venture or as a way to provide more benefits to employees.
The minimum amount of equity that must be maintained in a margin ...
A securities license entitling the holder to register as a limited ...
The Comprehensive Automated Risk Data System (CARDS) is an initiative ...
A regulatory group that reviews documentation that is submitted ...
A examination to ensure a candidate is qualified to become a ...
A person who prepares investigative reports on equity securities. ...
With all the financial organizations out there, knowing what they all do can be as complicated as knowing where to invest. ... Read Full Answer >>
Unfortunately, a CFA charter does not qualify you for any FINRA exam exemptions. Read Full Answer >>
To find out if your employer is a member of the Financial Industry Regulatory Authority or FINRA (previously the National ... Read Full Answer >>
Even if you have completed your Financial Industry Regulatory Authority or FINRA (previously the National Association of ... Read Full Answer >>
The exact nature of a financial advisor's job responsibilities determines whether he must have a Series 7 license. If a financial ... Read Full Answer >>
Financial advisors are not required to have university degrees. However, they are required to pass certain exams administered ... Read Full Answer >>