Compliance Alert - Account Opening Confirmation, Update and/or 36 Month Letter
Nearly four (4) years ago, we instituted for brokerage accounts the Account Opening Confirmation form which satisfies SEC Books and Records Rule 17a-3(17)(a). This Rule requires an account record be sent to a client for verification of the client's information within thirty (30) days of an account being opened. The Rule also requires that this information be sent to the client every three (3) years after the account has been opened.
Some firms required their advisors to copy all pages of the new account form and provide it to the client after it was signed to satisfy the Rule requirement. Most firms today use a one page form like we developed to send to clients as a negative consent letter with this information. The clients do not have to respond/return or sign this document. If changes are needed to the information, the client may make the changes on the form and return it to their advisor or call their advisor to discuss the changes. Once a change is made to any of this information (it should be changed in ClientSource on RBC/changed with fund company, if needed and documentation of the change put in Docupace), the form then gets resent to the client within thirty (30) days with the corrected information. I know, and I agree, this is a waste of paper, time, etc. but for brokerage accounts, we must meet the Rule requirements.
As mentioned above, the Rule also requires this information to be sent to clients every 36 months (3 years). This letter is known as a 36 month letter. Previously, IPI required updated new account forms every 3 years on accounts. We want to ease your burden and have now combined the Account Opening Confirmation with the 36 Month Letter in the attached form. If your new account forms are due to be refreshed for clients, sending them this one page form and then uploading it to Docupace will simplify your life and paper usage.
For 36 month letters, you will need to place the date the letter was sent to the client on the blank line at the top right (this will show when it was sent to the client), complete the fillable information (we made it so you can pick multiple account types), put a copy in Docupace as we need to see the proof that it was sent (it does not need to be set for a Document Review Status) as a copy for books and records and then send it to the client. Clients will return it and/or contact you, only if changes are needed.
What is the form used for?
* To meet regulatory requirements for brokerage accounts when they are initially opened and then every 3 years.
*Update client's information, if they call you and/or return the form to you with corrections for - Name/ Address/ Phone#/ Employment/ Annual Income/ Net Worth/ Investment Objective/ Risk Tolerance.
What is my responsibility in using this form?
* Include it completed with your brokerage new account forms (upload to Docupace/send to Ops if you do not use Docupace) when you open a new account or update a new account form for a client. Operations will send it out to the client after the account is principally approved.
* Every 3 years that an account has been opened, complete the client's information on the form, upload it to Docupace/send a copy to Operations (if you do not have Docupace) and then mail it to your clients. For Docupace users, you do not need to set this for a Document Review Status.
* If your client makes changes to the form, correct any applicable changes with RBC and/or a fund company and then send them out an updated Account Opening form with the corrected info and follow same steps as above in uploading to Docupace/sending to Operations if you do not have Docupace.
We are hoping to make your life easier with this process change. It should assist you in lessening the administrative costs of updating new account forms every 3 years for clients to meet the regulatory requirement as well as lower your paper costs in sending these to clients (going from 10 pages to 1 page). If you have any questions on this process, please let me know. Thanks, Renee