Types of Accounts Offered by a Broker-Dealer
Quick Answer
Broker-dealers offer four main account types on the Series 6 outline: cash accounts (pay-in-full), advisory fee-based accounts, wrap fee programs, and prime brokerage accounts. A Series 6 rep may sell mutual funds, variable annuities, UITs, closed-end IPO shares, and municipal fund securities for commissions, but cannot charge advisory fees without an Investment Adviser Representative registration (Series 65 or 66).
Before classifying registrations or collecting customer data, you need to know which account types a broker-dealer (BD) offers and which ones a Series 6 representative is actually allowed to open. The type of account drives how the customer pays (commission vs. fee) and what registration the representative must hold.
What are the main broker-dealer account types?
Broker-dealers offer four main account types on the Series 6 outline:
| Account Type | Description | Series 6 Relevance |
|---|---|---|
| Cash account | Customer pays in full for every purchase; no credit extended by the firm | Default account type for mutual fund and variable annuity purchases |
| Advisory (fee-based) account | Customer pays an asset-based or fixed fee for advice and portfolio management instead of per-trade commissions | Series 6 rep cannot charge advisory fees without a Series 65/66 and Investment Adviser Representative (IAR) registration; firm must be dual-registered as a BD and investment adviser (IA) |
| Wrap fee program | A fee-based program that bundles advice, brokerage, custody, and administrative services into a single asset-based fee | Disclosed in Form ADV Part 2A Appendix 1; offered only by investment advisers |
| Prime brokerage account | A single BD (the prime broker) clears and holds in custody a customer's trades that are executed through multiple executing brokers | Listed in the outline as a type of account the rep must be able to describe; mechanics are outside Series 6 scope |
Which products can a Series 6 representative sell?
A Series 6 representative may sell the following investment company products and municipal fund securities for commissions:
- Mutual funds (open-end investment companies)
- Variable annuities and variable life insurance
- Unit Investment Trusts (UITs)
- Closed-end fund shares purchased at the initial public offering (IPO)
- 529 plans and other municipal fund securities (LGIPs, ABLE accounts)
What a Series 6 rep cannot do:
- Charge an ongoing advisory fee without also being registered as an IAR (via Series 65 or 66)
- Sell individual stocks, individual bonds, options, or other Series 7 products
- Recommend direct participation programs (DPPs), REITs, or hedge funds
If the firm is a dual registrant (both BD and IA), the advisory fee is charged in the IA capacity and disclosed on the wrap fee brochure. The rep personally must still hold the IAR registration to provide the advice.
Exam Tip: Gotchas
- A Series 6 rep can open a fee-based account only if the firm is dual-registered as a BD and an IA AND the rep personally holds the IAR registration. Charging an advisory fee without the IAR credential is a violation even when the underlying products are within Series 6 scope.
Think of it this way: The Series 6 license is a ticket to sell packaged products for commissions. Adding a fee-based account is like adding a second ticket (the IAR registration). Without both tickets, the rep cannot charge for ongoing advice.