Customer Account Records and Required Notifications

Beyond the confirmation and statement, the firm maintains a customer account record that captures the customer's profile, agreements, and updates over time. When that profile changes, the rep and the firm must take specific steps: update the record, notify the customer (and sometimes third parties), and re-evaluate suitability.

What records are maintained for a customer account?

The customer account record is a living file. It includes:

• Account opening documents: customer account information collected under the FINRA customer account information rule and the MSRB municipal-records creation rule (name, address, date of birth (DOB), Social Security number (SSN) or Taxpayer Identification Number (TIN), employment, net worth, income, investment objective, risk tolerance, investment experience)
• Account agreements: new account application, margin agreement (not generally used for Series 6 products), option agreement (not applicable for Series 6), beneficiary designations for IRAs and variable annuities
• Supervisory approvals: principal approval of the account opening (under the FINRA supervision rule and the MSRB municipal supervision rule); principal approval of deferred-variable-annuity recommendations under the FINRA deferred-variable-annuity rule
• Correspondence and communications with the customer: emails, letters, internal memos
• Transaction records: order tickets, confirmations, statements
• Amendments and updates to the customer profile

What happens when a customer changes their address?

A change of address is a high-risk event for the account. The rep must:

• Update the customer account record (under the customer account information rule and the MSRB municipal-records creation rule) with the new address
• Send the required written notification to the customer's old address, or to each joint owner, and to the associated person responsible for the account, no later than 30 days after receiving notice of the change
• Consider whether a temporary hold under the senior-investor protection rule is warranted in senior-exploitation scenarios

Notifying the old address is the anti-fraud control. It prevents an imposter from redirecting the customer's statements and confirmations to an unauthorized location without the real customer ever hearing about it. The rule does not create a notice to both the old and the new address.

Additional considerations:

• A change of address to a new state may require the rep to be properly registered in the customer's new state to continue servicing the account
• For variable contracts, the issuing insurance carrier must also be notified

Exam Tip: Gotchas

• The required notice goes to the OLD address, not to both addresses. It also goes to each joint owner, where applicable, and to the associated person responsible for the account. Notifying the old address is what stops an imposter from quietly diverting a customer's statements. An answer choice saying the rule requires notice to both the old and the new address is naming a practice, not the rule.
• A sudden unexplained address change for a senior customer is a senior-investor red flag. The rep should escalate before processing the change, not just execute it administratively.

What notifications must the firm send after account changes?

Several events in the customer relationship trigger mandatory written notifications:

• New accounts: the firm must furnish the account record, or an alternate document, within 30 days after opening, then at intervals no greater than 36 months thereafter

• Account-information updates: the firm must furnish the customer with the updated customer account information within 30 days of receiving notice of the change (under the customer account information rule), so the customer can verify accuracy

• Do not generalize one 30-day clock to every event. The rule addresses the opening copy, the 36-month cycle, and a change notice separately

• Beneficiary changes on IRAs and variable annuities: written confirmation of the change

• Trusted Contact Person (TCP) addition or change (under the customer account information rule): confirmation sent

• Conflict-of-interest and control-relationship disclosures: on each transaction where applicable (under the trade-confirmation rule)

• Privacy notices under Regulation S-P (Reg S-P): initial delivery and annual delivery

Exam Tip: Gotchas

• Customer account records must be updated within a reasonable time after a change, and the customer must receive a written confirmation of the updated information (typically within 30 days under the customer account information rule). Failure to send that confirmation is its own violation of the rule, even if the underlying record is correct.
• The 30-day notification window runs from when the firm receives notice of the change, not from when the firm gets around to updating its record. A delay in processing the update does not buy extra time, because the clock never depended on the firm's internal update.

What triggers a suitability re-evaluation when investment objectives change?

Investment objective is one of the customer-profile elements most likely to change over a multi-year relationship (growth to income at retirement, speculation to capital preservation). A change of objective is a material event, not a clerical update.

When the objective changes, the rep must:

• Update the account record (under the customer account information rule and the MSRB municipal-records creation rule)
• Reassess whether existing positions remain suitable under the new profile
• Reassess whether ongoing recommendations match the new objective

The rep cannot rely on old suitability analysis to justify a new recommendation under a changed profile.

Think of it this way: An investment objective update is a trigger, not a stamp. The update tells the rep that the old map no longer fits, so every position and every forward recommendation has to be re-measured against the new objective before the next trade.

Exam Tip: Gotchas

• An investment objective update is not a clerical change. It triggers a suitability re-evaluation of existing positions and any prospective recommendations. A rep who updates the record to "income" and then recommends a growth-oriented variable annuity has created a documented suitability mismatch.
• The rep who failed to re-evaluate existing positions after an objective change is on the hook for any suitability gap, even if the original recommendation was suitable when made. The updated profile is the new benchmark as of the update date.

What Should You Check on Exam Day?

• Can you list what the customer account record includes: opening documents, agreements, supervisory approvals, and correspondence?
• Can you state that a change-of-address notice goes to the customer's OLD address, not to both the old and new address?
• Do you know the two 30-day clocks: notice to the old address after an address change, and written confirmation after an account-information update?
• Can you state that the new-account record must be furnished within 30 days of opening, then updated at intervals no greater than 36 months?
• Do you know that an investment objective change triggers a suitability re-evaluation of both existing positions and any ongoing recommendations?