Account Approval, Documentation & Records
Series 7 account-opening questions test the required records, approvals, and special handling for different account registrations.
How to study the Series 7
Build product fluency first, then pair every recommendation with customer profile, cost, risk, tax, liquidity, and documentation facts.
Core concepts
Concept 1
Account documents support ownership, authority, suitability, tax reporting, and firm supervision.
Exam cue: Name the account type before naming the document.
Concept 2
Options, margin, discretionary, corporate, trust, retirement, and custodial accounts carry extra approval or documentation needs.
Exam cue: Ask who has trading authority and whether it is written.
Concept 3
Trading authority should be clear before a person enters orders for another customer.
Exam cue: Look for principal approval before special account activity begins.
Risk pitfalls and guardrails
Opening margin or options activity without approval.
Guardrail: Do not forget leverage, calls, and magnified loss exposure.
Letting an unauthorized person trade for the customer.
Guardrail: Eliminate shortcuts that skip customer fit, disclosure, approval, documentation, or escalation.
Missing entity documents for business or trust accounts.
Guardrail: Eliminate shortcuts that skip customer fit, disclosure, approval, documentation, or escalation.
Memory anchors
New Account Record
The firm records essential ownership, profile, and supervisory information when opening an account.
Principal Approval
Certain accounts or activities require approval by an appropriately qualified principal.
Discretionary Authority
Time, price, and quantity discretion is limited; broader discretion requires written authorization.
Margin Agreement
Margin trading requires a margin agreement and risk disclosure.
Options Agreement
Options approval depends on customer information, experience, objectives, and risk tolerance.
Entity Documents
Corporate, partnership, trust, or estate accounts need documents proving authority.
Custodial Account
A custodian controls the account for the benefit of a minor under applicable law.
Record Updates
Account records should be updated when material information changes.
Checkpoint rule
Do the check-up only after you can summarize each concept in one sentence and identify one dangerous pitfall from memory.
Knowledge Check (after reading)
Short check-up to confirm understanding of this module.
Check-up Questions
A new individual customer provides a name, address, date of birth, and taxpayer identification number. What must the firm still do under its CIP?
A customer presents inconsistent identity documents and cannot explain the differences. What is the most appropriate response?
Answer all questions to submit.
Next step personalized recommendations
Continue learning
Move forward only after this module is stable.
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