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What does the account executive need to know?
The need of a good understanding between the client and the account executive brings up the question of how much does he have to know about a person of its financial situation and of its objectives. The most common questions a professional will make are the following:
- What is your annual income?
- Do you have savings?
- Do you have debts?
- Have you ever purchased a share or debenture?
These are questions that are not done to us everyday. They are considered very personal matters and giving away this type of information may result uncomfortable or embarrassing to most people, but one has to know that the account executive will ask many other questions related to personal issues.
Does he need all this information? Of course he does! To give a fundamental and valuable advise about investments, the account executive needs to be completely informed about one?s situation and of ones objectives. Without a clear vision about ones financial situation (income, savings, other investments, debts, etc), he will only be able to guess about the investments that are more appropriate to ones goals and of the capacity one has to bear a possible loss. In the worst of cases, clients who pretend to give a more wealthier image of themselves than they really are, could get trapped in an investing situation in which it would be necessary for him to contribute with an even larger amount of money than he can support. And, in the best of cases, the account executive could recommend an investment that is not in consonance with ones objectives, so the most sensible thing to do is to give all the financial information one is asked for: this is called transparency.
According to disposition 405 of the NYSE that has for title “know your client”, the responsibility for a total transparency of information is of both parts. This disposition requires for the account executive to obtain all the necessary information to offer an appropriate service. Transparency in information is so important that if the client would refuse to give all or part of the asked information. The stock exchange agency would have the right to deny the opening of an account.
The relation that one establishes with an account executive is as professional as it is with a doctor, a lawyer or an accountant.
The total transparency rule gives the account executive the right to know if one has other accounts with other stock exchange agencies. Legally not, but one as the account executive may benefit if one answers this question. If one feels that there are other account executives that are better prepared to assume ones investment program, do not be afraid to say so. Being totally honest will help these professionals to have a better idea of ones financial situation, and then, they can make recommendations more adjusted to one?s objectives, without losing any time. Also, if one does not inform them about other existing accounts, it could neutralize the results of other operations without one knowing it, so the best is to be honest to everybody. Do not be afraid to hurt their feelings because one is working with professionals.
Even at the discount agencies one will have to fill some formats asking for these type of information, and Disposition 405 also rules their account executives. If one gives them information that does not agree with that registered in the formats, the agent would be forced to prove that one did not fake the data related to his financial situation.
Now, then, because a discount agency account executive acts more as an agent than an advisor, the usual is for one to have the main obligation of acting prudently and with the necessary intelligence.