SEC requirements for customer info

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Topic Author
jkrm
Posts: 82
Joined: Wed Oct 08, 2008 8:20 am

SEC requirements for customer info

Post by jkrm » Thu Mar 14, 2019 11:36 am

My wife is set to receive a small inheritance from her mother. The funds are in an account at Merrill Lynch. To receive their money, she and each of her siblings must open an account at Merrill. The funds will be deposited into that account, after which they can keep it or cash it out. My wife intends to cash out immediately.

The paperwork to open the account asks for our incomes and our net worth. My wife told the agent that she was not providing that information as she did not see why they needed it. This is what Merrill sent in response:
Know Your Customer Rule 2090
Investment advisors and firms are responsible for knowing each customer's financial situation by exploring and gathering the client's age, other investments, tax status, financial needs, investment experience, investment time horizon, liquidity needs and risk tolerance. The SEC requires that a new customer provide detailed financial information that includes name, date of birth, address, employment status, annual income, net worth, investment objectives and identification numbers before opening an account.
Is it true that the SEC has this requirement? I can actually kind of understand it, as it would supposedly help keep an agent from recommending inappropriate investments. But my wife considers this to be a privacy issue and would rather not provide the information. If the requirement is real, is there a way around it?

Jack FFR1846
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Re: SEC requirements for customer info

Post by Jack FFR1846 » Thu Mar 14, 2019 11:41 am

I just opened a new TDAmeritrade account and was not asked net worth or my income. I expect that some of this stuff is "know your customer" stuff that IS required and the rest is marketing to see what hooks they can put in you.

Feel free to use $153 Billion as net worth and $18k per year as income. I've used numbers like this in other accounts that have asked this info.
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MichCPA
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Re: SEC requirements for customer info

Post by MichCPA » Thu Mar 14, 2019 11:42 am

That looks like a FINRA rule. Are you working with an adviser?

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Wiggums
Posts: 1964
Joined: Thu Jan 31, 2019 8:02 am

Re: SEC requirements for customer info

Post by Wiggums » Thu Mar 14, 2019 11:44 am

jkrm wrote:
Thu Mar 14, 2019 11:36 am
My wife is set to receive a small inheritance from her mother. The funds are in an account at Merrill Lynch. To receive their money, she and each of her siblings must open an account at Merrill. The funds will be deposited into that account, after which they can keep it or cash it out. My wife intends to cash out immediately.

The paperwork to open the account asks for our incomes and our net worth. My wife told the agent that she was not providing that information as she did not see why they needed it. This is what Merrill sent in response:
Know Your Customer Rule 2090
Investment advisors and firms are responsible for knowing each customer's financial situation by exploring and gathering the client's age, other investments, tax status, financial needs, investment experience, investment time horizon, liquidity needs and risk tolerance. The SEC requires that a new customer provide detailed financial information that includes name, date of birth, address, employment status, annual income, net worth, investment objectives and identification numbers before opening an account.
Is it true that the SEC has this requirement? I can actually kind of understand it, as it would supposedly help keep an agent from recommending inappropriate investments. But my wife considers this to be a privacy issue and would rather not provide the information. If the requirement is real, is there a way around it?
It’s a FINRA requirement, but since you’re immediately going to close the account, send Merrill documentation to that effect and your refusal to provide that information since no assets will be under their management. The account is being opened at their request when you, the customer, just wants a check for your share of the funds.

http://www.finra.org/investors/suitabi ... -need-know

Edit: fixed url link
Last edited by Wiggums on Thu Mar 14, 2019 12:00 pm, edited 3 times in total.

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ResearchMed
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Re: SEC requirements for customer info

Post by ResearchMed » Thu Mar 14, 2019 11:56 am

Or ask why it is required that ML force you to open an account there at all...

Why can they not give you a check OR wire the money directly to an account you already have?

Seems like this is a way to try to keep your money with them/grab a new customer, etc.

RM
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adamthesmythe
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Re: SEC requirements for customer info

Post by adamthesmythe » Thu Mar 14, 2019 12:12 pm

I have filled these out in the past, although I have liberally used the > sign. Sometimes the ~ sign. I have indicated a moderate amount of income and assets and I have been vague about objectives. Never had any push-back.

Topic Author
jkrm
Posts: 82
Joined: Wed Oct 08, 2008 8:20 am

Re: SEC requirements for customer info

Post by jkrm » Thu Mar 14, 2019 12:28 pm

Thanks to all for the very quick responses, and especially for the FINRA link. I looked at that page and saw that it clearly states that a customer does not need to provide that info, just that companies should seek it.

I will talk to my wife tonight about how much we want to push back. I guess if we want to discourage them from trying to force their services on us, we could always report a negative net worth and an income of $10K per year.

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Wiggums
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Re: SEC requirements for customer info

Post by Wiggums » Thu Mar 14, 2019 12:32 pm

jkrm wrote:
Thu Mar 14, 2019 12:28 pm
Thanks to all for the very quick responses, and especially for the FINRA link. I looked at that page and saw that it clearly states that a customer does not need to provide that info, just that companies should seek it.

I will talk to my wife tonight about how much we want to push back. I guess if we want to discourage them from trying to force their services on us, we could always report a negative net worth and an income of $10K per year.
I don’t think they will give you a hard time.

Good luck to you

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