Schwab is asking for my "net worth" on an application to open an inherited IRA account... huh?

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BarbWire

Recycles dryer sheets
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I decided to move an inherited IRA (opened in 2016) from Vanguard to Schwab. I've had a conversation with a recommended CSR there (after interviewing a couple), and they've sent me the Schwab application to open an inherited IRA account; once that is open, then they will initiate the move from Vanguard.

That all sounds fine but I am utterly gob-smacked at the inherited IRA application they've sent. Yes, it has all the usual questions for opening an account but then there is a section they preface with "Securities industry regulations require that we collect this information:" Investment experience (none, limited, good or extensive), annual income and liquid net worth.

Huh? My annual income is irrelevant to opening this account. And I have absolutely no intention of telling Schwab my net worth.

I've had a look at the forms from Vanguard, Fidelity and TRowePrice for opening an inherited IRA account, and none of them are so intrusive. If Securities industry regulations required it, then surely they would ask ...

I am more than a little irked at this. Has anyone else encountered something like this with Schwab or elsewhere? Are they overstepping boundaries -- badly? Am I over-reacting?
 
This is normal "know your customer" compliance requirement. Many people provide little or no information. I think brokers, banks and other financial services providers have specific requirements to do this. No big deal. Tell them what you are comfortable with and the app will go through unless your name shows up on a SARS report or terrorist watch list.

edit to add: depending on the level of net worth, they may be limited in what investments they can offer you. "They" meaning a financial services provider in general. It may be that Schwab doesn't offer any restricted assets.
 
I will provide no information and see where it goes. I'm just struck that these "required" questions are not on the account application forms for the other firms. It feels like they are prying and, well, shopping/trolling for more of my business...

"I have more than 100K invested and I have extensive experience" good answer. Succinct. :)

I had a look at the signature section; the only thing I am swearing under penalty of perjury is that I've given them the right SSN....

Guess this is a litmus test for my relationship with Schwab and this CSR (and her assistant.)


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It's very common to ask your net worth or your income. The main reason AFAIK is to decide how much of a credit limit to put on the credit card they will offer you.
 
jebmke said:
This is normal "know your customer" compliance requirement. Many people provide little or no information. I think brokers, banks and other financial services providers have specific requirements to do this. No big deal. Tell them what you are comfortable with and the app will go through unless your name shows up on a SARS report or terrorist watch list.

edit to add: depending on the level of net worth, they may be limited in what investments they can offer you. "They" meaning a financial services provider in general. It may be that Schwab doesn't offer any restricted assets.
Click to expand...
I wonder what my BFF would have answered if they'd asked him such questions.

"Uh, yeah, I'm half a million in debt and I'm 79 years old." Cha-Ching! No sale. :fingerwag:
 
MC Rider said:
What if you tell them income = 0? :LOL:
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it will get logged in the system and the process will continue. I do this all the time. Sometimes there is an "x" to close the prompt or if you hit escape key it moves the process along. These are usually system generated questions.
 
Patriot Act. I'm pretty sure they ask that on every brokerage application? Nothing nefarious.
 
I don't guess a Suspicious Activity Report is generated by saying 0. The ones I ignore are from my CC companies to update my income. Maybe next time I will try and input MYOB. :>)
 
I remember the Merrill Lynch FA filled out our profile on our behalf without asking us. He put down household income $150K with net worth of $1M. Whatever worked for him. LOL
 
You can say whatever you want unless you sign under penalty of perjury. In that case just tell them a number that comes to your head and it is your best guess.
 
BarbWire said:
I decided to move an inherited IRA (opened in 2016) from Vanguard to Schwab. I've had a conversation with a recommended CSR there (after interviewing a couple), and they've sent me the Schwab application to open an inherited IRA account; once that is open, then they will initiate the move from Vanguard.

That all sounds fine but I am utterly gob-smacked at the inherited IRA application they've sent. Yes, it has all the usual questions for opening an account but then there is a section they preface with "Securities industry regulations require that we collect this information:" Investment experience (none, limited, good or extensive), annual income and liquid net worth.

Huh? My annual income is irrelevant to opening this account. And I have absolutely no intention of telling Schwab my net worth.

I've had a look at the forms from Vanguard, Fidelity and TRowePrice for opening an inherited IRA account, and none of them are so intrusive. If Securities industry regulations required it, then surely they would ask ...

I am more than a little irked at this. Has anyone else encountered something like this with Schwab or elsewhere? Are they overstepping boundaries -- badly? Am I over-reacting?
Click to expand...

It is required, and Fidelity also will ask the question if this is a new account (you are a new client) with them.

It is part of KYC requirements. It's a brokerage account and they are required to collect the information. They are not overstepping any boundaries.

The minimum requirements for customer identification include the following information:
  • Name.
  • Date of birth.
  • Address.
  • Identification number.
  • Tax Number.
  • Investment Experience.
  • Investment Preferences.
  • Income and Assets.
Click to expand...
 
I was asked the same question years ago when opening an account at Vanguard too. I presume it's a regulatory requirement since they all ask it. Doesn't mean you have to answer or answer honestly though.
 
OK, I am over-reacting. It has been years since I opened an account anywhere except a CC account -- and of course they ask income on that. It's the net worth question that flipped my switch.....

Coincidentally my net worth will be exactly the value of the inherited IRA ....

Cheers, everyone! Thanks for the calming perspective!
 
My opinion...they're waaay overstepping. If you want to mess with them a bit ask them to quote chapter and verse of the relevent 'regulation'. Me, I'd just take my business elsewhere.
 
rk911 said:
My opinion...they're waaay overstepping. If you want to mess with them a bit ask them to quote chapter and verse of the relevent 'regulation'. Me, I'd just take my business elsewhere.
Click to expand...

It wouldn't mess with them at all. They'd simply tell you to go review FINRA Rule 2090.

Take your business elsewhere. You'll be asked the same on that firms new account application.
 
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