Asset Allocation Program and Breakpoint Sales
Recall that FINRA prohibits breakpoint sales when selling mutual fund shares. When determining whether a firm has conducted breakpoint sales, FINRA will consider whether the firm offers its customers a bona fide asset allocation program that is designed to meet their diversification needs and investment goals. As part of this program, members must disclose to customers whether or not they may qualify for the available breakpoint reductions. Asset allocation is an investment strategy that balances risk and reward by apportioning a portfolio’s equity and fixed-income assets according to a customer’s goals, risk tolerance, and investment horizon.
FINRA Rule 2342
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SUMMARY: New Client Account New Form |
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Required Information for New Account |
Minimum Required Information |
Customer ID Verification Information |
Customer Suitability Information |
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Name |
x |
x |
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Residential address |
x |
x |
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Social Security number or tax ID |
x |
x |
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Date of birth |
x |
x |
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Registered rep responsible for account |
x |
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Principal’s signature |
x |
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Occupation and employer |
x |
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Employed by bank or broker-dealer |
x |
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