Chapter 2: Opening Accounts
This chapter covers 16% of the Series 6 exam (approximately 8 questions) and focuses on opening accounts, gathering customer information, applying suitability rules, and obtaining supervisory approvals.
What You'll Learn
| Unit | Topic | Key Concepts |
|---|---|---|
| 3 | Account Types and Registration | Individual, joint (JTWROS, TIC, TBE), corporate, trust, custodial (UGMA/UTMA), retirement accounts (IRA, SEP, SIMPLE, 401(k), 403(b), 457(b)), ERISA, inheritance, rollovers |
| 4 | Customer Screening and Documentation | CIP and KYC (Rule 2090), Reg S-P, power of attorney, trusts and entities, discretionary accounts (Rule 3260), citizenship and insider screening, AML/SAR escalation |
| 5 | Customer Investment Profiles and Suitability | Suitability framework (Rule 2111), reasonable-basis / customer-specific / quantitative, hold and strategy recommendations, Regulation Best Interest (Reg BI), Form CRS, MSRB G-19 |
| 6 | Supervisory Approvals for Accounts | Supervisory system (Rule 3110), required reviews and approvals, safeguarding customer funds, refusing/restricting/closing accounts, supervisory control system (Rule 3120), MSRB G-27 |
Why This Chapter Matters
Every mutual fund purchase, every variable annuity sale, and every 529 plan contribution starts with an open account, a suitability analysis, and a principal approval. This chapter covers the entire account-opening lifecycle, from identifying the customer and verifying their identity, through understanding their investment profile, to the supervisory review that every recommendation must pass. It also covers the privacy, AML, and authorization rules that protect both the customer and the firm.
The exam tests whether you can distinguish account registration types, apply CIP and KYC correctly, identify which suitability standard applies to a given recommendation, and know when principal approval is required.
Exam Strategy
At 16% of the exam (8 questions), focus on:
- Account registrations: JTWROS vs. TIC vs. TBE, UGMA vs. UTMA, trust requirements, corporate resolutions
- Retirement plans: Contribution limits, early-withdrawal penalties, RMD ages, rollover rules, Roth vs. Traditional mechanics
- CIP vs. KYC: Four identifying pieces under CIP, "essential facts" under KYC, ongoing obligation throughout the relationship
- Reg BI vs. FINRA 2111: When each applies; Reg BI requires acting in the retail customer's best interest and is broader than suitability
- Form CRS: Required for broker-dealers and investment advisers; delivery at account opening and within 30 days on request
- Discretionary accounts: Written authorization, principal approval of each order, "time and price" exception
- SAR confidentiality: Tipping-off is a federal violation; the rep escalates, the AML officer decides