Quick Answer
Confirmations reach the customer at or before completion of the transaction and disclose capacity (agent means commission, principal means markup or markdown). Account statements go out at least quarterly. Records live 6 years or 3 years, with customer account records held 6 years after closing. The Automated Customer Account Transfer Service runs on a 1-day validate, 3-day complete clock.
The whole unit on one sheet: what the firm sends the customer, what it keeps internally, and how accounts move between firms.
Core Concepts: The Four Documents
- Trade confirmation: written or electronic notice of a transaction, delivered at or before completion (generally settlement). Mutual funds and variable annuities go out within 1 to 3 business days as industry practice. Must show capacity, price, commission or markup, and remuneration source.
- Account statement: the periodic snapshot, delivered at least quarterly for any account with a position, balance, or activity. Monthly is common practice, not a requirement.
- Customer account record: the living file (opening documents, agreements, supervisory approvals, correspondence, updates). Changes trigger updates and written notification.
- Books and records: everything the firm creates, preserved on a fixed retention schedule.
The One-Liners That Win Points
- Agent equals commission. Principal equals markup or markdown. A net transaction must be labeled "net" on the confirmation.
- Confirmation capacity is mandatory: failing to disclose agent versus principal is a direct violation.
- Third-party mailings (confirmations or statements) need written customer authorization AND a simultaneous duplicate to the customer. Verbal is never enough.
- Realized gain is taxable; unrealized gain is not. A statement's "+gain" figure can be mostly unrealized and off the tax return.
- Customer account records run 6 years after account closing, not from opening. Closure starts a new clock.
- The books-and-records rule says make the record; the recordkeeping rule says keep it.
- Automated Customer Account Transfer Service (ACATS): the receiving firm initiates, but the carrying firm controls the clock.
- An investment objective change is a material event, not a clerical update: it triggers a suitability re-evaluation of existing positions and future recommendations.
- A tax-free-exchange annuity swap is not an ACATS transfer.
Numbers to Lock In
| Item | Value |
|---|---|
| Confirmation delivery | at or before completion of the transaction (mutual funds / variable annuities: 1 to 3 business days) |
| Account statement frequency | at least quarterly |
| Account-information update confirmation | within 30 days of notice of the change |
| Core records and customer account records | 6 years (first 2 easily accessible) |
| Order tickets, confirmations, communications | 3 years (first 2 easily accessible) |
| Customer complaint records | 4 years |
| Corporate records | life of the enterprise |
| Bank Secrecy Act records (Currency Transaction Reports, Suspicious Activity Reports) | 5 years |
| Customer account records after closing | 6 years from the close date |
| ACATS validation | 1 business day from receipt |
| ACATS completion | 3 business days after validation (4 business days total) |
| ACATS residual-position handling | at least 6 months |
| Recruiting educational communication window | 3 months after the rep joins the new firm |
| Oral-contact recruiting delivery | within 3 business days |
| Escheatment (dormancy) | state-specific, typically 3 to 5 years of no contact |
Memory Aid: The 6-3-2 Framework
- 6 years, first 2 easily accessible: core records and customer account records
- 3 years, first 2 easily accessible: order tickets, confirmations, communications
- Life of enterprise: corporate existence documents
- 5 years: Bank Secrecy Act records (Currency Transaction Reports, Suspicious Activity Reports, customer identification)
Top Gotchas
- Statement frequency is quarterly, not monthly. "Monthly" is the trap answer because candidates remember the convention. An account with no position, balance, or activity needs no statement at all.
- The 30-day notification window runs from when the firm receives notice of the change, not from when it gets around to updating the record. A processing delay buys no extra time.
- The 6-year clock starts at closing. A 20-year customer who closes an account triggers a fresh 6-year preservation clock from the close date. Escheatment and dormancy do not release the record either.
- The carrying firm may take exception to a transfer only for enumerated reasons (incomplete Transfer Initiation Form, mismatched title, inconsistent tax identification, already transferred, position discrepancies). "The rep is losing a client" is not one; foot-dragging violates the transfer rule.
- Variable annuities usually do not move through ACATS. The contract stays with the issuing insurer; the "transfer" is a change of broker-dealer of record. A tax-free-exchange swap is a separate surrender-and-reissue event.
- A change of address notifies both old and new address as an anti-fraud control, and a sudden unexplained change for a senior is a red flag to escalate before processing.
- The recruiting educational communication is FINRA-prepared; the firm only delivers it within the 3-month window. Drafting a home-made version does not satisfy the rule.
One-Breath Recap
The confirmation lands at or before completion and must disclose capacity, statements arrive at least quarterly, and every record has a clock: 6 years for core and customer account records, 3 years for order tickets and communications, with customer account records held 6 years after closing. Accounts move between firms on the 1-day-validate, 3-day-complete ACATS timeline, and an objective change is a suitability trigger, not a stamp.
Need more than the recap? This is a condensed summary. If it is not enough, read the full Customer Communications and Records unit for the complete lesson.