Employer asking me to move my brokerage account

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henryz
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Employer asking me to move my brokerage account

Post by henryz »

After I joined a financial company, I was asked to sign a code of ethics document that asked me to agree to move my brokerage account to the new employer, and that if I got an exception to this rule I would agree to send trade confirmations to my new employer. I called up Compliance to ask for an exception and they flatly said that they there are no exceptions, which sounds incorrect and ingenuous to me. Why am I asking for an exception? Because the trading fees for my current brokerage account are about $1 per trade while with my new employer they are $7 per trade, margin interest rate with my current broker is ~3.7% while with my new employer it is ~7.5%.
I understand that moving an account is normal within the financial industry, but I definitely don't want to pay the added fees and the ridiculous margin interest rate! What are the exceptions I can ask for?
DEBTINATOR
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Re: Employer asking me to move my brokerage account

Post by DEBTINATOR »

When I joined my current company I lost a cell phone, went to a horrible 401k and had to buy my own laptop.

But I’ve more than tripled my income in a few years.

How meaningful is that 7 trade and what did you gain by moving there? Look at the big picture.
Katietsu
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Re: Employer asking me to move my brokerage account

Post by Katietsu »

Here read this old post:

viewtopic.php?t=124616


IMO, you are not being reasonable. It is the price of the new job. Quit trading on margin and buy and hold. Or incorporate your increased trading costs in your opinion of a fair salary. Or look for a new job. Of course, keep pushing the issue without a legitimate argument, and you could be looking for a new job anyway.
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TomatoTomahto
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Re: Employer asking me to move my brokerage account

Post by TomatoTomahto »

@henryz, welcome to the forum.

This is par for the industry. Take the long view.
I get the FI part but not the RE part of FIRE.
123
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Re: Employer asking me to move my brokerage account

Post by 123 »

Employers set their own rules for employees and financial organizations usually require that brokerage accounts be held where the employer's compliance department can monitor them. As another post indicated that is just the "cost" of employment with some financial employers. Depending on your position with the financial organization you may be restricted from doing certain kinds of trading activities and you may have to pre-clear some (or all) trades with your financial organization compliance department before you do them. It's all in the price of working in the financial services area.

If those kinds of conditions don't work for you it may be appropriate to consider alternative employment that does not deal with the area of financial services.

Did you check to see if employees pay the same fees as outside customers or if they are different?
The closest helping hand is at the end of your own arm.
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henryz
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Re: Employer asking me to move my brokerage account

Post by henryz »

Like I said earlier, I understand it is normal to be asked to move the account to the employer. And I also get that I can think of the additional costs as the cost of doing business/increasing my salary. But my original question was about the exceptions that employers/financial industry have in place, so I can make an informed decision (now as well as in the future). My role with the new employer does not involve trading, making stock recommendations, or has access to any insider information. Has anyone utilized an exception in their career so that they didn't need to move their brokerage account?
Thanks!
BSBHead
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Re: Employer asking me to move my brokerage account

Post by BSBHead »

My company asked me to do the same thing and limited us to several brokerage firms. In addition, I have to pre-clear any stock purchase (other than 401k, ETF's, mutual funds, or CD's) or sale prior to making the transaction. And that pre-clearance is actually only for the same day, so if your trade doesn't execute the same day as you put in your order, you are on compliance's no-no list. It's interesting, the crypto crowd cannot be happy at my company either as those trades need to be pre-cleared. No impact to me, but it's interesting where the industry has gone.
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beyou
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Re: Employer asking me to move my brokerage account

Post by beyou »

Have had this for years. Inconveniece to Vanguard, I refuse to “upgrade”’ to their new brokerage platform because they are not on our list of brokers.
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TomatoTomahto
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Re: Employer asking me to move my brokerage account

Post by TomatoTomahto »

My wife, also not directly involved in trading or asset management, had an exception made for an existing Vanguard mutual fund only account that she was allowed to keep.

Never asked for another exception.
I get the FI part but not the RE part of FIRE.
UpperNwGuy
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Re: Employer asking me to move my brokerage account

Post by UpperNwGuy »

Why are you trading on margin?
Topic Author
henryz
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Re: Employer asking me to move my brokerage account

Post by henryz »

BSBHead wrote: Sat Dec 22, 2018 8:05 pm My company asked me to do the same thing and limited us to several brokerage firms. In addition, I have to pre-clear any stock purchase (other than 401k, ETF's, mutual funds, or CD's) or sale prior to making the transaction. And that pre-clearance is actually only for the same day, so if your trade doesn't execute the same day as you put in your order, you are on compliance's no-no list. It's interesting, the crypto crowd cannot be happy at my company either as those trades need to be pre-cleared. No impact to me, but it's interesting where the industry has gone.
Thanks, BSBHead. It helps to know how other employers approach this, so I can be mindful for my next position. Apparently, crypto currencies are not on the list of reportable securities for my employer.
Topic Author
henryz
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Re: Employer asking me to move my brokerage account

Post by henryz »

Thanks beyou and TomatoTomahto. From your answers I understand the exceptions are pretty limited in scope even for people who do not manage funds or give client advice.
123
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Re: Employer asking me to move my brokerage account

Post by 123 »

The kinds of situations I have seen accepted as exceptions have been things like a "Managed Account" elsewhere where the employee is paying an AUM fee and doesn't exercise any trading authority over the account. If it's a joint account with someone else and the other person already has to have the account somewhere else for compliance with THEIR employer that can be a reasonable exception. There can be murky situations where household member, like a girlfriend/boyfriend/roommate living in the same household has an account that the employee doesn't have authority over but that the compliance people really should monitor,

If it's basically your own individual self-directed (tax-deferred or taxable) account they're going to require that it be moved.
The closest helping hand is at the end of your own arm.
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jainn
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Re: Employer asking me to move my brokerage account

Post by jainn »

Just curious...how would they have access to your personal financial transactions or knowledge of accounts you are in possession? They do not have access to your 1040 do they, as a mortgage company would when applying for a loan, etc?
I’ve always wondered about this when I’ve seen the topic come up but haven’t seen this answered.
I don’t see why you wouldn’t just continue to keep your funds wherever they are as long as you aren’t violating any federal or state laws.
fourkids
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Re: Employer asking me to move my brokerage account

Post by fourkids »

SEC compliance at a financial firm is serious business and you are required to follow the rules.
Get on board or find a different job.

and absolutely do not try to hide any of your accounts or investments. you sign code of ethics and other compliance documents that require you to disclose. you could get fired immediately
toofache32
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Re: Employer asking me to move my brokerage account

Post by toofache32 »

Fascinating this was presented to you in a "code of ethics" document. It's as if they are testing you. So you want to charge your company's clients at rates that you yourself balk at?? On the other hand, it's interesting that the company wants to take advantage of you by requiring you to pay their higher fees. Sounds like a "contract of adhesion".
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celia
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Re: Employer asking me to move my brokerage account

Post by celia »

henryz wrote: Sat Dec 22, 2018 6:55 pm Why am I asking for an exception? Because the trading fees for my current brokerage account are about $1 per trade while with my new employer they are $7 per trade, margin interest rate with my current broker is ~3.7% while with my new employer it is ~7.5%.
How do you think that looks to any company when you personally support their competitors? To me, it is the same as if you worked for a car manufacturer and drove a competitor's car to work each day and parked it in a highly visible spot.

If you like your current brokerage so much, maybe that is where you should be working.
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beyou
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Re: Employer asking me to move my brokerage account

Post by beyou »

toofache32 wrote: Sun Dec 23, 2018 1:06 am Fascinating this was presented to you in a "code of ethics" document. It's as if they are testing you. So you want to charge your company's clients at rates that you yourself balk at?? On the other hand, it's interesting that the company wants to take advantage of you by requiring you to pay their higher fees. Sounds like a "contract of adhesion".
Nope. I have a list of brokers I may use, including Schwab and Etrade, and some less economical options. Yes my own employer is an option, but one of many. Nobody has ever contacted me with any pressure to use the home grown products. Our 401k yes, but outside that, lots of flexibility. Vanguard brokerage is not on the list, but directly held mutual funds are allowed, from ANY fund provider. Directly held meaning the old platform, though when Vanguard phases out the old platform, I may make a case that I hold their funds “directly” on the only platform they have.
London
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Re: Employer asking me to move my brokerage account

Post by London »

jainn wrote: Sat Dec 22, 2018 11:06 pm Just curious...how would they have access to your personal financial transactions or knowledge of accounts you are in possession? They do not have access to your 1040 do they, as a mortgage company would when applying for a loan, etc?
I’ve always wondered about this when I’ve seen the topic come up but haven’t seen this answered.
I don’t see why you wouldn’t just continue to keep your funds wherever they are as long as you aren’t violating any federal or state laws.
You are also giving them access to your trading records. They will use a provider (sometimes PTCC), who will look across all brokers for someone with your name/SSN.

If you work in the industry, there are only two ways not to comply. You can have an account that is fully directed by a financial advisor. Or you have a spouse who also works in the industry that has an account that is mandated to be at a different broker by their firm. You can then keep that account but your firm will get the statements.
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Re: Employer asking me to move my brokerage account

Post by Jack FFR1846 »

celia wrote: Sun Dec 23, 2018 3:13 am
henryz wrote: Sat Dec 22, 2018 6:55 pm Why am I asking for an exception? Because the trading fees for my current brokerage account are about $1 per trade while with my new employer they are $7 per trade, margin interest rate with my current broker is ~3.7% while with my new employer it is ~7.5%.
How do you think that looks to any company when you personally support their competitors? To me, it is the same as if you worked for a car manufacturer and drove a competitor's car to work each day and parked it in a highly visible spot.

If you like your current brokerage so much, maybe that is where you should be working.
Having worked as technical support for car companies, that wouldn't happen. Say the plant makes Chevy Tahoe/Suburban/GMC Yukon. Those driving vehicles made at the facility get to park in the "A" lot, closest to the plant. Those driving other GM vehicles park in the "B" lot, next to the "A" lot. Those driving other US traditional nameplates park in the "C" lot, a bit farther away. If you drive another nameplate, you park in the "D" lot. If you have to drive your wife's Honda Accord because your Suburban is in the shop, you park in the D lot.....not some highly visible lot.

In addition to this, some factory buyers (I'm thinking Huntsville Chrysler) have glassed offices that overlook the visitor parking lot. Drive in with a Chrysler vehicle, they see you (and they absolutely do look) and your appointment is on time. Drive in with another traditional American nameplate vehicle and the buyer is 15 minutes late and will excuse himself at the normal time, giving you 45 minutes instead of an hour. Drive in with a foreign car and everyone forgets about the appointment. My reps all drove Chrysler made vehicles.
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SQRT
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Re: Employer asking me to move my brokerage account

Post by SQRT »

celia wrote: Sun Dec 23, 2018 3:13 am
henryz wrote: Sat Dec 22, 2018 6:55 pm Why am I asking for an exception? Because the trading fees for my current brokerage account are about $1 per trade while with my new employer they are $7 per trade, margin interest rate with my current broker is ~3.7% while with my new employer it is ~7.5%.
How do you think that looks to any company when you personally support their competitors? To me, it is the same as if you worked for a car manufacturer and drove a competitor's car to work each day and parked it in a highly visible spot.

If you like your current brokerage so much, maybe that is where you should be working.
Actually, the issue is compliance not whether the employer has a good product. Compliance is mandatory and very important.
SpaceCowboy
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Re: Employer asking me to move my brokerage account

Post by SpaceCowboy »

Get to know your Compliance Officer. It’s a huge hassle for them to keep track of all the outside accounts. You need to provide duplicate statements, duplicate confirmations and ask for permission to open any account that you have control over. They don’t have to give you permission, it’s totally up to them.
Their job is much easier if you go with the program and your accounts are kept in house. The systems are all setup to provide the needed oversight and track the restricted lists etc.
bondsr4me
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Re: Employer asking me to move my brokerage account

Post by bondsr4me »

fourkids wrote: Sun Dec 23, 2018 12:29 am SEC compliance at a financial firm is serious business and you are required to follow the rules.
Get on board or find a different job.

and absolutely do not try to hide any of your accounts or investments. you sign code of ethics and other compliance documents that require you to disclose. you could get fired immediately
+1

The broker that I was formerly with REQUIRED me to have all outside brokerage accounts be approved BEFORE I funded them (not mutual fund accounts) and also have all trade confirmations and statements mailed directly to the compliance department..no and’s if’s or but’s about it.
I also had to pay my broker an annual fee for each account to cover the cost of compliance.

OP, do what your broker requires...above all, don’t try to hide outside brokerage accounts or you will be in BIG trouble.
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HueyLD
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Re: Employer asking me to move my brokerage account

Post by HueyLD »

That’s why several brokerages still allow mutual funds only accounts because of the SEC regulations.

It is not an optional thing to opt out. And complaining won’t do any good unless you are willing to resign and get another job in a different industry.
jminv
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Re: Employer asking me to move my brokerage account

Post by jminv »

henryz wrote: Sat Dec 22, 2018 6:55 pm After I joined a financial company, I was asked to sign a code of ethics document that asked me to agree to move my brokerage account to the new employer, and that if I got an exception to this rule I would agree to send trade confirmations to my new employer. I called up Compliance to ask for an exception and they flatly said that they there are no exceptions, which sounds incorrect and ingenuous to me. Why am I asking for an exception? Because the trading fees for my current brokerage account are about $1 per trade while with my new employer they are $7 per trade, margin interest rate with my current broker is ~3.7% while with my new employer it is ~7.5%.
I understand that moving an account is normal within the financial industry, but I definitely don't want to pay the added fees and the ridiculous margin interest rate! What are the exceptions I can ask for?
You need to judge whether a $6 difference in trading fees and increased margin rates are worth more to you than the job. From the company's point of view, having outside accounts is a compliance hassle.
FitnessNYC
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Re: Employer asking me to move my brokerage account

Post by FitnessNYC »

toofache32 wrote: Sun Dec 23, 2018 1:06 am Fascinating this was presented to you in a "code of ethics" document. It's as if they are testing you. So you want to charge your company's clients at rates that you yourself balk at?? On the other hand, it's interesting that the company wants to take advantage of you by requiring you to pay their higher fees. Sounds like a "contract of adhesion".
It's not a contract of adhesion; he is at will to leave the employer. It's perfectly reasonable for the employer to require employees to use their brokerage services because the collection and review of numerous employees' brokerage account information can be difficult to manage unless the process is simplified by the use of a single brokerage by all employees. One reason for such review is that employees with knowledge of customer trading activity can exploit such knowledge at the expense of customers e.g. front running. Profiting at the expense of customers by using their confidential information is "unethical"--this is a correct use of the term "ethics". Moreover, it's not "fascinating" that the document is called a code of ethics. SEC Rule204a1 requires investment adviser firms to have a "code of ethics". It's standard in the industry and has been for years, that all firms have such a document.
bling
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Re: Employer asking me to move my brokerage account

Post by bling »

this is standard for the industry. they are heavily regulated and don't doubt for a second that they won't throw you behind bars if you are caught doing stuff like insider trading. so follow the rules or get another job.

also, most are pretty lenient when it comes to outside brokerage accounts, so long as you're only trading mutual funds and/or white-listed ETFs, and you provide them with copies of statements.

since you're mentioning $7 trading fees at the new broker, implies you're not taking advantage of the free index ETFs/funds that all major brokers are offering. you can kiss your trading of single stocks good bye once you start your new job.
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henryz
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Re: Employer asking me to move my brokerage account

Post by henryz »

123 wrote: Sat Dec 22, 2018 10:28 pm The kinds of situations I have seen accepted as exceptions have been things like a "Managed Account" elsewhere where the employee is paying an AUM fee and doesn't exercise any trading authority over the account. If it's a joint account with someone else and the other person already has to have the account somewhere else for compliance with THEIR employer that can be a reasonable exception. There can be murky situations where household member, like a girlfriend/boyfriend/roommate living in the same household has an account that the employee doesn't have authority over but that the compliance people really should monitor,

If it's basically your own individual self-directed (tax-deferred or taxable) account they're going to require that it be moved.
Great answer, thanks for the explanation!
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henryz
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Re: Employer asking me to move my brokerage account

Post by henryz »

London wrote: Sun Dec 23, 2018 7:35 am
jainn wrote: Sat Dec 22, 2018 11:06 pm Just curious...how would they have access to your personal financial transactions or knowledge of accounts you are in possession? They do not have access to your 1040 do they, as a mortgage company would when applying for a loan, etc?
I’ve always wondered about this when I’ve seen the topic come up but haven’t seen this answered.
I don’t see why you wouldn’t just continue to keep your funds wherever they are as long as you aren’t violating any federal or state laws.
You are also giving them access to your trading records. They will use a provider (sometimes PTCC), who will look across all brokers for someone with your name/SSN.

If you work in the industry, there are only two ways not to comply. You can have an account that is fully directed by a financial advisor. Or you have a spouse who also works in the industry that has an account that is mandated to be at a different broker by their firm. You can then keep that account but your firm will get the statements.
Thank you for the answer to the original question. It's funny how the actual question almost gets drowned out in a sea of tangential comments and suggestions!
toofache32
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Re: Employer asking me to move my brokerage account

Post by toofache32 »

FitnessNYC wrote: Sun Dec 23, 2018 9:43 am
toofache32 wrote: Sun Dec 23, 2018 1:06 am Fascinating this was presented to you in a "code of ethics" document. It's as if they are testing you. So you want to charge your company's clients at rates that you yourself balk at?? On the other hand, it's interesting that the company wants to take advantage of you by requiring you to pay their higher fees. Sounds like a "contract of adhesion".
It's not a contract of adhesion; he is at will to leave the employer. It's perfectly reasonable for the employer to require employees to use their brokerage services because the collection and review of numerous employees' brokerage account information can be difficult to manage unless the process is simplified by the use of a single brokerage by all employees. One reason for such review is that employees with knowledge of customer trading activity can exploit such knowledge at the expense of customers e.g. front running. Profiting at the expense of customers by using their confidential information is "unethical"--this is a correct use of the term "ethics". Moreover, it's not "fascinating" that the document is called a code of ethics. SEC Rule204a1 requires investment adviser firms to have a "code of ethics". It's standard in the industry and has been for years, that all firms have such a document.
Fascinating!
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Re: Employer asking me to move my brokerage account

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