Function 2: Opens Accounts After Evaluating Financial Profile (16% Exam Weight)

Series 6 — Function 2: Opens Accounts After Evaluating Financial Profile

Master the Series 6 — Function 2: Opens Accounts After Evaluating Financial Profile function of the Series 6 (Investment Company and Variable Contracts Products) exam with official regulatory rules, quantitative formulas, and targeted practice drills.

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Authoritative Series 6 Study Notes

Key Concepts & Regulatory Highlights

Focuses on Customer Identification Program (CIP) verification under the USA PATRIOT Act, FINRA Rule 2090 (Know Your Customer), FINRA Rule 2111 and SEC Regulation Best Interest (Reg BI) financial profile evaluation, account registrations (JTWROS, TIC, UTMA/UGMA), and tax-advantaged retirement plans.

📐 Essential Calculation Formulas

Indirect IRA Rollover Deadline

60 Calendar Days (Max 1 per Rolling 12 Months)

Failure to redeposit within 60 days treats the distribution as taxable income plus a 10% penalty if under age 59.5.

FinCEN Currency Transaction Report (CTR) Threshold

Physical Currency > $10,000 in a Single Business Day

Filed on FinCEN Form 112 within 15 calendar days; suspicious activity >= $5,000 requires a SAR within 30 calendar days.

📜 Core Regulatory Rules & Requirements

✓USA PATRIOT Act CIP Verification: Requires collecting and verifying 4 core elements: full legal name, date of birth, physical residential street address (P.O. Box not allowed alone), and taxpayer ID (SSN/EIN).

✓FINRA Rule 4512 Customer Account Information: Requires reasonable efforts to obtain the name and contact information for a Trusted Contact Person (age 18+) on all non-institutional retail accounts.

✓UGMA/UTMA Custodial Accounts: One custodian and one minor per account; gifts are irrevocable; minor's SSN is used for tax reporting; margin and uncovered options are strictly prohibited.

✓Regulation S-P Privacy Notices: Initial privacy notice must be provided at account opening (when customer relationship is established) and annually if policies change or non-affiliated sharing occurs.

✓IRA Contribution & Rollover Rules: Direct trustee-to-trustee transfers have no 20% withholding and no annual limit; indirect 60-day rollovers are limited to once per rolling 12-month period.

💡 High-Yield Exam Watchouts

•In a Tenants in Common (TIC) account, a deceased owner's fractional share passes to their estate via probate, whereas JTWROS passes directly to the surviving joint owner.
•Refusal by a customer to disclose annual income or net worth does not prohibit opening a cash account for unsolicited trades, but restricts suitability recommendations.

Why Study Series 6 — Function 2: Opens Accounts After Evaluating Financial Profile?

The Series 6 — Function 2: Opens Accounts After Evaluating Financial Profile portion of the Investment Company and Variable Contracts Products (Series 6) exam is critical for passing on your first attempt. Understanding these concepts builds both test-day precision and practical regulatory fluency.

Our practice questions and formulas are engineered to mirror the official Series 6 blueprint and statutory complexity you'll encounter at Prometric.

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