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

As others have said, this is a regulatory requirement. All firms and representatives must "know their customers" and comply with rules and regulations. The rules have become more restrictive over the years because of insider trading, money laundering, organized crime and terrorist activities.
 
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.

Those last three are ridiculous. If it's the law, it's an asinine law. I am glad to know it isn't just Morgan Stanley (who suck) that plays this BS though. When they asked me those questions, I lied. Good luck proving it. IIRC they asked me some other questions which were irrelevant and I lied on those too. It's not limited to brokerages, though. I've experienced this elsewhere, like when a Dr's office asked me my marital status and (get this) sexual preferences. I left the first one blank and the second one "Often."
 
If I remember right, it was to determine suitability of investments as required by FINRA...but it has been awhile.
+1. I would think this is the main reason. It seems likely a CYA in case any recommendations they make are suitable for the client. Whether they should hard sell an AUM relationship or not might be a side benefit of them knowing this too.
 
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.
They don't care if you're honest or not, they just want your signature protecting them from litigation if you partake of investment strategies inappropriate for whatever level of expertise, income, net worth, etc., you actually have and you lose your butt. For example, you're a total know-nothing novice about investing, have little income and a low net worth. You claim on the application you're an experienced investment expert making big bux and with a net worth in the millions. Fine. You're granted full privileges: a margin account, options trading privileges, etc. You quickly lose your butt making silly options trades, leveraged trades, etc. You sue claiming they should not have granted those risky trading privileges to a total novice with a low income and low net worth. But, ahaaaaa......! They have in writing your claims to be a wealthy, high income, very experienced investing expert. Sorry, no compensation for you or discipline for the brokerage house.

At least that's how I understand it.
 
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.
So requiring disclosure of net worth is now considered an "essential fact in order to effectively service the customer's account"?

Looks like that "rule" dates back to 2012. We've opened new tIRA and Roth IRA's since then (rollover) and were not asked that question.
 
Basic rule - don't be foolish; if you don't want to deal with the FINRA rules, keep your money in a savings account at your local bank.
 
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To paraphrase Montesquieu, useless questions weaken the important questions.
 
When they asked me those questions, I lied. Good luck proving it.

What did you gain from lying?

The brokerage house doesn't have to prove anything, they have your written statement. If you claim you are an experienced, expert investor with a nice income and net worth, and you aren't, and you later claim risky strategies mentioned to you as possibilities by the brokerage house caused you to have huge losses, too bad. You're a documented expert, per yourself, and have no reason to claim you were offered the opportunity to make inappropriate investments. To them, you are who you say you are.

OTOH, if you lie and claim you're an investment dummy when you're not, you'll wind up with an account with limitations on the types of investments you can make. You might not even qualify for a margin account.

It's all CYA for the brokerage house. They don't want to be caught with lots of folks making investments inappropriate to their investment background and general life situation and then litigating after they occur losses.
 
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What did you gain from lying?
Protection of information that isn't any of their business. I'm not about to do any of the things you mentioned, so if that's all true, no worries. I couldn't care less about limitations on what is IMO a POS company. I'm going to move my inheritance out of this account and into my main retirement account and when this inheritance thing is over, bye forever MS.
 
Protection of information that isn't any of their business. I'm not about to do any of the things you mentioned, so if that's all true, no worries. I couldn't care less about limitations on what is IMO a POS company. I'm going to move my inheritance out of this account and into my main retirement account and when this inheritance thing is over, bye forever MS.
As interesting as you may believe your financial life to be, most people really don't care (and that includes Morgan Stanley).
 
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I don't claim it's interesting per se, but thanks for the snarky reply. I also don't care about "most people." I do care about companies asking for personal information that they don't have a need to know. If you're happy dishing that out generously, bully for you, enjoy.
 
I don't claim it's interesting per se, but thanks for the snarky reply. I also don't care about "most people." I do care about companies asking for personal information that they don't have a need to know. If you're happy dishing that out generously, bully for you, enjoy.
As others have mentioned, they are required by FINRA to ask those questions. They don't really care how you answer. So, yeah, you could lie, but what's the point? You and I are just small fish in a small pond.
 
I don't claim it's interesting per se, but thanks for the snarky reply. I also don't care about "most people." I do care about companies asking for personal information that they don't have a need to know. If you're happy dishing that out generously, bully for you, enjoy.
No "snark" in that reply ;)

If one is looking for constructive information/feedback on different aspects of FI/RE and managing money through that cycle, it's better to have more friends than fewer.
 
Then the bank is overstepping asking my occupation, etc. I didn't fill it out. I can't remember the other odd question. I mean does it matter if I make widgets or not? For checking at least they didn't ask my net worth!

They already have ssn address etc as I've had the account 20+ years. None of the basic info has changed I figured they finally noticed I don't have direct deposit of a pay check now.
 
So requiring disclosure of net worth is now considered an "essential fact in order to effectively service the customer's account"?

Looks like that "rule" dates back to 2012. We've opened new tIRA and Roth IRA's since then (rollover) and were not asked that question.
I think the requirement is older that 2012.....
 
+1. I would think this is the main reason. It seems likely a CYA in case any recommendations they make are suitable for the client. Whether they should hard sell an AUM relationship or not might be a side benefit of them knowing this too.
Yeah, keep in mind that FINRA is NOT a gummint agency. In theory they help protect investors, but more likely they protect brokers (hey, at least they asked the questions, right?)

You "have" to answer the questions to get an account, but the gummint isn't involved so you can lie as much as you want to (I assume.)
 
+1. I would think this is the main reason. It seems likely a CYA in case any recommendations they make are suitable for the client. Whether they should hard sell an AUM relationship or not might be a side benefit of them knowing this too.
Yup, suitability as well as KYC. It’s unfortunate that they don’t explain why they are asking.
 
As interesting as you may believe your financial life to be, most people really don't care (and that includes Morgan Stanley).
Anyone who has a product they'd like to sell you is interested in your financial life. There probably wouldn't be an internet (as we know it - with all the "free" stuff and "free" apps) if someone didn't want financial (and other) info on us.
 
Yup, suitability as well as KYC. It’s unfortunate that they don’t explain why they are asking.
Worse, they don't tell you that's it's non-gummint and only required because FIRNRA was established as a "Self Regulatory" agency for brokers. IOW, the brokers more or less set it up for themselves.

For a better explanation, see:

 
I do not know why you would care... if they wanted to find out in general what you have they can without you giving them that info..

But as someone else mentioned... you are small fish... and they could not care that you plan to leave...
 
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!
I'm 100% with you. It is intrusive, since you are not coming to them asking them to be your broker. You just have to have an account to get inherited money. Here's what I would do. Since they know the amount of the IRA, simply put that as the net worth amount and put in the exact same number as your income. They have absolutely no need to know any of your other business.
 
I did the opposite. I put $20M as my net worth. :)
 
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