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

[km4hr]

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?

Maybe the question is required but an answer is not. Try leaving it blank.

 

[indiajust]

Decades ago, I used to push my numbers up so that I could get into the playgrounds restricted to higher wealth limits. Documentation is tighter now, as are the rules. These kinds of regulatory pushes are part of the scenery now. I expect them to accelerate.

Imagine what the million dollar accredited investor rule looks like after 10 years of currency depreciation.

 

[EarlyandLate]

Vanguard pesters me every couple of weeks to let them "help" me. It gets tiresome but I guess they gotta try. Maybe it makes my fees lower when others participate.

I think I found a polite, but effective way to shut them down. They have pestered me from time to time. Recently, one guy was fairly persistent. I finally called him back and after he made his pitch, I replied "I neither desire nor need your advice". He sounded totally deflated and replied "OK, I'll take you off our call list". I thanked him and wished him a good day. Hopefully that will be the end of it.

 

[Gumby]

A fundamental rule of life is that if you don't ask, you don't get. So, I don't hold it against people for asking. Plenty of people have tried to sell me stuff over the years. I've never had a problem saying "No, thank you. But thanks for calling and have a nice day." If they keep at it after I have told them no, then my manner may not be so polite.

 

[stephenson]

Interesting answers - lots of opinions.

I'm thinking it is a statutory requirement, for a variety of reasons, but didn't dig very deeply.

Why Brokers Ask for Your Personal Information

There are three legally mandated reasons why a broker needs your personal information: suitability, record-keeping, and AML regulation.

www.investopedia.com

 

[kcowan]

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

Yes I just make up numbers. In this case my IRA would be 3x the inherited amount. And a net worth of 3x the total IRA amount.

It is standard KYC bumf and I give them what will motivate them to do what I want!

 

[Taxman59]

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."

My Father always answered the "Sex" questions with anytime he can get it! He was challenged by a nurse aide, and he said if they wanted to know his gender, they should ask!

 

[Koolau]

As interesting as you may believe your financial life to be, most people really don't care (and that includes Morgan Stanley).

Yeah, I'm not too worried about the millions of people who don't care about my data. I am concerned about the few hundred that would love to have the data.

Why do I get a new "data breach" letter every 6 months or so? Not because millions of people are not interested. It's because a few hundred are interested. YMMV

 

[indiajust]

just opened another direct index account (EAFE) for my international allocation in equity. I made sure to explain all my accounts and large transfers to the consultant of the moment. i hope to avoid issues with transparency. since they could see I am above the independent investor limit, there were no questions.