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 | Account registration types, individual and entity accounts, retirement and employer-sponsored plans, transfers and rollovers, account changes, inheritance and wealth events |
| 4 | Customer Screening and Documentation | Customer identification program (CIP) and know-your-customer screening, citizenship and insider checks, trusts and entities, power of attorney, privacy safeguards, suspicious activity escalation |
| 5 | Customer Investment Profiles and Suitability | Customer investment profiles, suitability and Regulation Best Interest, Form CRS, hold and strategy recommendations, institutional customer exemption |
| 6 | Supervisory Approvals for Accounts | Supervisory system and control framework, required account reviews and approvals, refusing or restricting accounts, safeguarding customer funds, municipal securities supervision |
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:
- Identifying the customer and verifying their identity
- Understanding their investment profile
- Passing the supervisory review that every recommendation must pass
It also covers the privacy, anti-money laundering (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, Uniform Gifts to Minors Act (UGMA) vs. Uniform Transfers to Minors Act (UTMA), trust requirements, corporate resolutions
- Retirement plans: Contribution limits, early-withdrawal penalties, required minimum distribution (RMD) ages, rollover rules, Roth vs. Traditional mechanics
- CIP vs. KYC: Four identifying pieces under CIP, "essential facts" under the KYC rule, ongoing obligation throughout the relationship
- Reg BI vs. the suitability rule: 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