Customer Accounts & Suitability Flashcards

When opening a new customer account, which document is the representative primarily responsible for completing?

Answer: The new account form (customer profile)

The new account form captures essential customer information including identity, financial status, investment objectives, and risk tolerance required by FINRA rules.

In a Joint Tenants with Right of Survivorship (JTWROS) account, what happens to the account assets when one owner dies?

Answer: Assets pass entirely to the surviving joint owner(s) without going through probate

In a JTWROS account, the right of survivorship means the deceased owner's share automatically transfers to the surviving owner(s), bypassing probate.

Which type of joint account allows each owner to hold unequal shares that can be passed to heirs through their estate?

Answer: Tenants in Common (TIC)

Tenants in Common allows owners to hold specified, unequal shares, and each owner's share is passed to their designated heirs rather than automatically to the surviving co-owner.

A Uniform Gifts to Minors Act (UGMA) account is best described as:

Answer: A custodial account where an adult manages assets for a minor until the minor reaches majority

An UGMA account is a custodial account where a custodian manages the assets on behalf of the minor, and the assets irrevocably belong to the minor upon reaching the age of majority.

When a corporation opens a brokerage account, which document authorizes specific individuals to trade on behalf of the corporation?

Answer: Corporate Resolution

A Corporate Resolution is a formal document passed by the board of directors that identifies who is authorized to act on the corporation's behalf in financial matters.

Under FINRA rules, how frequently must a broker-dealer send account statements to customers with activity or positions?

Answer: Quarterly

FINRA rules require that customers with positions or activity in their accounts receive account statements at least quarterly, though monthly statements are sent when there is activity.

Which of the following is NOT required information on a new account form for a Series 6 registered representative?

Answer: Customer's employer's annual revenue

The employer's annual revenue is not required on a new account form; the form requires the customer's own financial situation, investment objectives, tax ID, and other personal financial information.