Customer Accounts & Documentation

Opening Accounts

• Before or promptly after the first transaction, firms must obtain essential facts: customer name, residence, age, employment, tax ID, investment objectives, financial situation, risk tolerance, and whether the customer is associated with another member.
• The new account form is approved by a registered principal. For discretionary authority, written trading authorization from the customer and principal approval are required before discretionary trading begins.

Account Types

• Individual accounts are owned by one person. Joint accounts may be JTWROS or tenants in common; know survivorship rules.
• Corporate, partnership, and trust accounts require legal documents showing authority to trade. For corporations, a corporate resolution identifies authorized persons.
• UGMA/UTMA custodial accounts are for the minor's benefit, irrevocable gifts, and are controlled by the custodian until age of majority under state law.

Documentation and Updates

• Customer signatures are not required on the new account form itself under FINRA rules, but firms often request them. Material changes must be furnished to the customer and retained.
• CIP under the USA PATRIOT Act requires firms to verify identity and compare against government lists. Trusted contact person information is required for natural person accounts unless the customer declines.
• Retain records, supervise address changes, and be careful with powers of attorney and third-party trading instructions.

Series 7 focus

• Questions often test who can authorize trades, what documents are needed, and how beneficiary or ownership designations affect account handling at death or incapacity.