Broker-Dealers: Why They Ask for Personal Information
Brokers generally request personal information from their customers, including financial and tax identification information, to comply with U.S. government laws and rules, as well as rules imposed by self-regulatory organizations (SROs). Brokers request personal information from new customers as well as from customers who have had long-standing relationships with their firms.
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Definition and explanation
Brokers generally request personal information from their customers, including financial and tax identification information, to comply with U.S. government laws and rules, as well as rules imposed by self-regulatory organizations (SROs). Brokers request personal information from new customers as well as from customers who have had long-standing relationships with their firms. [1]
Here are some of the reasons why brokers need to gather this information: [1]
Under SRO rules, when a broker recommends that a customer buy or sell a particular security, the broker must have a reasonable basis for believing that the recommendation is suitable for that customer. In making this assessment, the broker must consider the customer’s risk tolerance, other security holdings, financial situation (income and net worth), financial needs, and investment objectives. [1]
Information on FINRA’s suitability rule, along with links to other materials concerning suitability, may be found in the FINRA Rules. [1]
SEC Rule 17a-3(17) requires that brokerage firms create a record for each account with an individual customer that includes the following information: [1]
Brokers must make a good faith effort to obtain this information. However, if the customer neglects or refuses to provide the information, or is unable to provide it, then the rule excuses the broker from obtaining it. [1]
The SEC’s rule also requires a brokerage firm to periodically send this information (excluding the customer’s tax identification number and date of birth) to its customers to verify whether the information is accurate. Brokerage firms have some flexibility as to how they send this to the customer and may incorporate it into a customer’s account statement. These recordkeeping requirements also help ensure that brokerage firms have an up-to-date understanding of their customers’ financial situation and investment objectives. [1]
In addition, brokers must comply with a customer identification rule the SEC issued jointly with the Department of the Treasury to implement a provision of the USA Patriot Act of 2001 . This rule requires brokers to put procedures in place to verify the identity of any person seeking to open an account to maintain records of the information used to verify the person's identity; and to determine whether the person appears on any lists of known or suspected terrorists or terrorist organizations provided to broker-dealers by any government agency. Under this rule, brokers are required to collect certain identifying information from customers opening new accounts including, at least, the following information: [1]
This requirement sets the minimum information brokers must obtain from their customers. Brokers may require customers to provide them with information beyond this minimum requirement. [1]
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Frequently asked questions
What does Broker-Dealers: Why They Ask for Personal Information mean in the cited reference?
Brokers generally request personal information from their customers, including financial and tax identification information, to comply with U.S. government laws and rules, as well as rules imposed by self-regulatory organizations (SROs). Brokers request personal information from new customers as well as from customers who have had long-standing relationships with their firms. [1]
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Sources and review dates
Reviewed 23 October 2026. Historical dates and award-time affiliations retain their original context. A review date is not an event date. Background sources are identified separately from official records.