Series 82: 2.1.2.7. Discretionary Accounts

2.1.2.7. Discretionary Accounts

A discretionary account is one in which the representative or financial adviser has written authority to place trades in the customer’s account without permission before each order is placed. Before the account can be opened, the customer will need to provide written permission granting discretionary authority to the representative. This authority will need to be given prior to the representative placing any trades.

Recall that without discretionary authority, a representative needs three pieces of information from the customer to make a transaction in the account. These can be remembered using the letters AAA.

1. Asset—the name of the security

2. Action—whether to buy or sell

3. Amoun