Account Designations – Series 7 Exam

Account Designations – Series 7 Exam
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🔐 Why Account Designations Matter on the Series 7
Understanding how brokerage accounts are titled — and who controls or owns them — is a key topic on the Series 7 exam. Questions often test your ability to identify the correct account type, rights of ownership, and documentation requirements for various client situations.

📂 Core Account Designations to Know

👤 1. Individual Account

• Owned by one person only
• Only the named individual can place trades or make withdrawals
• May name a beneficiary (Transfer on Death)

👥 2. Joint Accounts

There are two main types:

a) Joint Tenants with Rights of Survivorship (JTWROS)

• Equal ownership
• Upon death of one party, full ownership transfers to survivor
• Common among spouses
• Requires both parties to sign when opening

b) Tenants in Common (TIC)

• Unequal ownership allowed
• Upon death, the deceased’s share passes to heirs, not the co-owner
• More common in business or estate planning contexts

📘 Series 7 Tip: Know which joint accounts bypass probate (JTWROS) and which *do not (TIC).

👨‍👩‍👧‍👦 3. Custodial Accounts (UGMA/UTMA)

• For minors (Uniform Gifts/Transfers to Minors Act)
• Managed by a custodian until the child reaches age of majority
• All gifts are irrevocable
• Assets belong to the minor and taxed at their rate

🏦 4. Corporate Accounts

• Must provide a corporate resolution authorizing account opening
• May need a charter to trade on margin
• Series 7 may test authorization rules and document requirements

⚖️ 5. Partnership Accounts

• Must submit a partnership agreement
• Agreement outlines who has trading authority
• Often tested in suitability and authority scenarios

📑 6. Fiduciary Accounts

Includes:

• Trust accounts
• Guardian accounts
• Estate accounts

📘 Must act in the best interest of the beneficiary.
Often require documentation like a trust agreement or court appointment.

🛡️ 7. Discretionary vs. Non-Discretionary Accounts

• Discretionary: RR can place trades without prior approval
  • Requires a written power of attorney
• Non-Discretionary: Client must approve every transaction
  📘 Series 7 will test whether a given action qualifies as discretion.

🎓 Tips for the Exam

✅ Memorize which documents are required for each account type
✅ Know the differences in ownership rights (JTWROS vs. TIC)
✅ Be ready for suitability questions based on account type
✅ Understand tax implications and control limitations for minors and fiduciaries

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🎯 Know the names. Get the forms. Pass the Series 7.