SIE customer Accounts

wrap account

A type of brokerage account where the customer is charged a single annual fee for all account services, regardless of activity in the account

Julia and Jim are the parents of twins who are just turning 4 years old. They want to open a custodial account for each under the Uniform Transfers to Minors Act to start saving for their school expenses. Who can be the custodian in this type of account?

Any adult, related or unrelated, as individual custodian

Under the Uniform Gifts To Minors Act, which of the following statements are TRUE?

Any gift donated into the account is irrevocable

Power of Attorney (POA)

Durable- if customer becomes incapacitated, discretionary authority continues. Non-Durable- if incapacitation, discretionary authority stops. All discretionary authority ends upon death of customer.

4 elements of an order

security quantity price time Anytime a broker is deciding on quantity or security, discretionary authority must be in place.

All of the following transactions are permitted in a custodial account EXCEPT the:

short sale of common stock

A custodial account is established under UTMA in a state with a transfer age of 21. Legal age in the state is 18. At age 19, the beneficiary leaves college to go into business setting up a software company. The beneficiary wishes to use the assets in the UTMA account as "seed money" for the business. Which statement is TRUE?

If this were an UGMA (Uniform Gifts to Minors Act) account, the beneficiary gets control over the assets at legal age in the state and the answer would be Choice A. Since this is a UTMA (Uniform Transfers to Minors Act) account, the custodian sets the transfer age, up to the maximum transfer age permitted in the state. This custodian set a transfer age of 21. The beneficiary, who is now 19, cannot get control of the funds unless the custodian resets the transfer age.

Which of the following is an acceptable registration for securities held in a custodial account?

John Smith as Custodian for.......... Only an individual can be a custodian. Joint custodians are not permitted, nor are partnerships or corporations allowed to be custodians.

Mr. Jones, a New York resident, is a widower with a 6 year old son. He opens an account for the son under the Uniform Gifts to Minors Act. Three years later, Mr. Jones remarries, and moves to California, a community property state. Under what conditions can Mrs. Jones enter orders into the UGMA account?

Mrs. Jones can not enter orders into the account under any circumstances. Custodial accounts are not permitted to have "third parties" that can trade the account. Only the custodian can enter orders. If the wife wishes, she can open a separate custodial account for the minor. The fact that California is a community property state is irrelevant to this question.

What is an acceptable way to open a brokerage account for an Investment Adviser?

Separate client accounts with a power of attorney given by each client to the broker dealer who will then oversee the investment adviser

UTMA

Uniform Transfer to Minors Act. Transfer at 21. Custodian account.

UGMA

Uniform gifts to minors Act. Account transfers at 18.

Discretionary account

customer assigns trading authority to a 3rd party. Power of attorney must be in writing before any reading is done. Customer must receives copies of all confirmations and monthly statements. Each order ticket must be marked "discretionary" and manager or principal must review and sign by end of day.