Outside Accounts - 407 Letters
A 407 letter is a well known term in our industry that relates to accounts held outside a broker/dealer or RIA from an advisor’s current firm. Rule 407 relates to NYSE Rule 407; NASD (FINRA) Conduct Rule 3050 also applies in this respect. As part of IPI’s supervisory responsibilities of its advisors, reviewing outside account confirmations and our advisor’s statements against the trading in an advisors’ clients’ account is a daunting task. Most firms require that personal accounts be held with the member firm to ease this burden.
With limited exceptions, IPI will require all outside accounts be transferred to RBC, RBC Wealth, Schwab Institutional or TD Ameritrade Institutional on or before March 1, 2014. An advisor will be charged $250 per quarter if outside accounts are not transferred to one of these entities. Please be aware that there are limited exceptions found on page 2 of the Outside Account Acknowledgement form to avoid the $250 quarterly fee.
Below is a link to IPI’s Outside Account Acknowledgement and 407 Letter. Additionally, a link for a portion of our new Written Supervisory Procedure (WSP) section on Outside Accounts is also included. The Outside Account form may also be found on the Advisor Site under Broker/Dealer Documents as well as RIA Documents.
All registered representatives and investment advisor representatives are required to review, complete and return the applicable sections of the Outside Account form (Page 1 must be completed and Page 4 is completed only if you have accounts outside of RBC or outside of advisory accounts at Schwab or TDA) on or before February 14, 2014.
Please note that both Schwab Institutional and TD Ameritrade Institutional require a 407 letter to be signed by IPI prior to an advisor opening a personal account at Schwab or TDA. We will complete the form and send it along with the Schwab or TDA paperwork automatically.
If you have any questions, please contact Renee Emrick.
Outside Account 407 Letter: https://ipi.egnyte.com/h-s/20140129/81cb4ad29e0b4705
Outside Accounts New WSP Section: https://ipi.egnyte.com/hs/20140129/0187dc6da3924f49