Why Do Brokers Ask Investors for Personal Information?

When investors contact brokers, they are often surprised by the number of requests for personal information. The broker is just complying with the law and rules set forth by the Securities Exchange Commission (SEC).

Indeed, certain required information must be obtained before a broker can make any trades on behalf of a client. These include your Social Security number or tax ID, your contact information, and whether or not you are an insider at any publicly traded corporation.

Key Takeaways

  • Brokers need personal information to comply with tax laws, anti-money laundering regulations, anti-terrorist financing requirements, record-keeping procedures, and to determine suitable investments.
  • Broker-dealers in the U.S. need a tax identification number (TIN) from their clients, which is usually a Social Security number (SSN).
  • Non-U.S. citizens can usually use a valid passport number, an alien registration card number, or other government-issued ID numbers instead of an SSN.
  • Other frequently requested information includes name, address, and date of birth.

SSN Requirements for Trading Stocks

Broker-dealers in the U.S. are required to record a tax identification number (TIN) for their clients, and this number is usually a Social Security number (SSN). However, there are several other ways for non-U.S. citizens to supply a TIN. In many cases, a valid passport number, an alien registration card number, and other government-issued ID numbers (such as a driver's license number) can be used.

Personal Information

Brokers don't ask investors for their personal information to make conversation. There's a perfectly good reason behind it—they have to ask. The type of information required of a broker is spelled out in Rule 17a-3(a)(17) of the Securities Exchange Act of 1934.

The rule specifically requires the customer's name, SSN/TIN, mailing address, telephone number, date of birth, employment status (including occupation and whether the customer is an associated person of an exchange, a broker, or a dealer), annual income, net worth (excluding the value of a primary residence), and investment objectives.

Tax compliance is one reason that brokers need personal information. Investors need to report capital gains, losses, and dividends to the IRS. And brokers must have this data in order to send the required forms each year.

The SEC lists three other reasons why brokers are required to ask for personal information. They are suitability, record-keeping requirements, and anti-terrorist/anti-money laundering (AML) laws.


Suitability refers to how an investor's financial situation matches the advice and recommendations of a broker. A broker must attempt to understand an investor's circumstances and preferences. The broker should then provide recommendations that are suitable for that person and their investment objectives. A broker who does not do that violates rules laid out by the National Association of Securities Dealers.

Relevant information includes an individual's risk tolerance, financial goals, debts, number of years to retirement, and net worth. A good broker will tailor advice to particular situations. If a broker advises you to take any action that directly contradicts with your financial goals and circumstances, you might even have grounds for legal action.


The SEC requires brokers to maintain a current record of personal information. Note that if a client refuses to provide this data, the broker is excused from following the rule. However, the broker must be able to prove that an effort was made to obtain and document the information.

Keep in mind that some personal information may change over time and that it's the investor's responsibility to volunteer such new information to update the record. A broker may also ask for updates on an annual basis, or periodically send the information it has on file to customers so that they can verify whether it is still accurate. Address changes may be of particular importance because the investor will receive a prospectus and other information for each investment.

Terrorism and Money Laundering

Finally, the broker must provide client information to meet anti-money laundering and anti-terrorist financing requirements. The minimum requirements for this section include:

  • Name
  • Address (home or business address, not a P.O. Box)
  • TIN, such as an SSN
  • Date of birth (for a person)

This information allows the broker to verify the client's identity. The client's personal data is cross-checked against lists of known or suspected terrorists.

These requirements can create issues for misidentified individuals and victims of identity theft. An identity check in such a case may reveal that an identity has been stolen and is being abused for money laundering purposes.

Before reaching out to a broker, it is a good idea to review credit reports for signs of unusual activity. One of the best credit monitoring services would likely be useful in this endeavor. There are also services that monitor Social Security numbers to spot potential theft.

Additional Information

The Financial Industry Regulatory Authority (FINRA) has a list of other personal information a broker may ask when opening an account. Though not required, it suggests that investors pass these details on so the firm can better serve their trading and investment needs:

  • Contact person: They may ask for the name, address, and telephone number of a trusted contact person. FINRA states that this is not a requirement. This information is only needed if the broker is authorized to disclose information in the event of financial exploitation.
  • Type of account: The broker may ask investors if they want to open cash accounts or margin accounts. In a cash account, investors are required to pay for their trades with cash deposits. Margin accounts are needed for using most types of leverage and trading derivatives.
  • Uninvested cash: Investors may also be asked how they intend to deal with cash on hand in their accounts. That includes any money they deposit at regular intervals, dividends, or interest on investments. Automatic reinvestment plans usually boost returns in the long run.

Online Brokerages and Trading Platforms

Some brokerages have traditional offices, which means that investors are able to supply confidential information in person. Transferring data in person can reduce the risk of identity theft. When trading online, investors are often required to give up personal information through the trading platform or app. Due diligence is crucial.

Just as with any traditional broker, investors need to know who is getting their information. Read up on the brokerage's background and check out reviews to see if it is legitimate. Beware of fake apps and online platforms designed to harvest personal information. Legitimate apps will usually have a large number of users and reviews. 

Why do brokers ask for social security?

Brokers ask for your social security or other tax identification number because they must report to the IRS what you earn on investments and provide you with the correct tax forms. They also may require this information to verify your identity and prevent money laundering or terrorist financing.

How do you know if the broker is not a scammer?

If you are unsure, check the Financial Industry Regulatory Authority’s (FINRA) BrokerCheck or the Securities and Exchange Commission’s Investment Adviser Public Disclosure (IAPD) website. Alternatively, you can call FINRA at (800) 289-9999.

Why do you need ID to trade?

Brokers are required to ask for ID to verify your identity and act in accordance with various regulations, including anti-money laundering and terrorism laws and know your customer policies.

The Bottom Line

Don’t be alarmed if your broker starts asking for personal information. They are required by law to ask for certain things, including your name, Social Security and telephone number, date of birth, employment status, and annual income. Normally, getting asked these types of questions is perfectly acceptable.

There are a number of reasons why this kind of information is required. Some are needed to comply with recording keeping and anti-terrorist procedures. Others are collected for tax purposes and to make sure you get recommended the right financial products.

You’re better off providing what is asked of you. However, if you have any doubts ask, and when sharing confidential information online be extra careful.

Article Sources
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  1. U.S. Securities and Exchange Commission. "Broker-Dealers: Why They Ask for Personal Information."

  2. Internal Revenue Service. "U.S. Taxpayer Identification Number Requirement."

  3. U.S. Securities and Exchange Commission. "17 CFR PARTs 240 and 242."

  4. Internal Revenue Service. "Topic No. 409 Capital Gains and Losses."

  5. Internal Revenue Service. "Publication 550: Investment Income and Expenses."

  6. FINRA. "Top NASD Rule Violations."

  7. FINRA. "4512. Customer Account Information."

  8. FINRA. "Investment Accounts: Brokerage Accounts."

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