News Release

FINRA Investment Tools Help Investors Opening New Accounts Get Started Off Right

Washington, DC — The Financial Industry Regulatory Authority (FINRA) today issued What to Expect When You Open a Brokerage Account, a step-by-step guide to help investors opening new investment accounts.

What to Expect gives investors the information they need to make appropriate choices about how to pay for securities, what to do with cash in their accounts and who should have control over their accounts by:

  • Explaining in plain language the difference between cash accounts and margin accounts, how margin loan accounts work and what happens when investors are subject to a "margin call."
  • Describing how "cash sweep" programs function and helping investors make choices about how to manage their uninvested cash.
  • Outlining what "discretionary authority" means and advising investors to think carefully through the risks involved in allowing someone else to make decisions about their money.

"It is vitally important that investors open accounts on terms that suit their needs," said Mary L. Schapiro, CEO of FINRA. "By explaining in clear, straight-forward language what decisions investors will be required to make when opening new accounts and how those decisions can impact their bottom line, FINRA is helping to ensure that investors make decisions that match their tolerance for risk and meet their investment objectives."

In addition to helping investors make decisions about how their brokerage accounts are structured, FINRA advises all investors, regardless of their level of investing experience, to ask questions of their broker in order to help themselves invest wisely and avoid problems. What to Expect provides a list of questions to get investors started and also lets investors know up-front the information they will be asked to provide when opening a new account and why that information is being requested.

In conjunction with the release of What to Expect, FINRA also unveiled to firms an investor-friendly template for forms used to open new brokerage accounts. The investor-tested template offers plain-English instructions and clear definitions designed to ensure investors understand their rights and responsibilities and how their money will be managed. Use of the template by firms is entirely optional.

FINRA, the Financial Industry Regulatory Authority, is the largest non-governmental regulator for all securities firms doing business in the United States. FINRA is dedicated to investor protection and market integrity through effective and efficient regulation and complementary compliance and technology-based services. FINRA touches virtually every aspect of the securities business-from registering and educating all industry participants to examining securities firms; writing and enforcing rules and the federal securities laws; informing and educating the investing public; providing trade reporting and other industry utilities; and administering the largest dispute resolution forum for investors and registered firms. For more information, please visit our Web site at