Brokerage Requirements
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Brokerage Requirements I'm in the process of helping a new investment club get started. We've started to investigate brokerage account requirements (TDA and Scottrade, so far) and some of the answers I'm getting from brokers are not what I anticipated. In particular I have the following questions and was wondering what the experience of other clubs has been. 1) Do brokers require the SSNs of all partners or only the SSNs of the authorized agents? Scottrade seems to want the SSNs of all partners but TDA seems only to need the SSNs of the authorized agents. Shouldn't the requirement be the same for all brokers? 2) Do brokers need a signed copy of the Club's Partnership Agreement? Scottrade seems to require this but TDA does not 3) I thought I'd heard in this forum that partners could perform an electronic transfer of funds from their individual bank account directly to the investment club brokerage account but both Scottrade and TDA have stated that this is not possible. Electronic transfers would only be possible if we had a bank account in the investment club's name (we're trying to avoid using a bank account.). Any other clubs have experience with this? 4) When members leave the club or new members join, do we need to update our documentation with the broker with removal or addition of the members name? Scottrade said yes on this while TDA indicated that it was good practice but not required. We're interested on how other clubs have dealt with these matters. Thanks in advance for your help! Len Delmolino We have a brokerage account with Scottrade and have not been able to transfer funds electronically. We were able to do it few years' ago but can't do it any more because of a policy change at Scottrade. They do have a partnership agreement on file but have never asked for an updated agreement and we have not sent them one as new members have joined the club. Deep Shikha
On Fri, Jun 6, 2014 at 10:57 AM, Leonard J Delmolino <ldelmolino@comcast.net> wrote: I'm in the process of helping a new investment club get My club has been with TDA since 2008. When I talked to TDA they told me the same thing. That we can not do electronic transfers unless it comes from a bank account with the same name. After 2 years of sending in checks one of the members decided to do it electronically and it worked. Since then all 18 members of my club send in their payments electronically and have had no problems. TDA only has the SSNs of those who have the authority to make transactions. We also don't send in an updated list of members regularly. It was very frustrating getting my club going because everyone I dealt with (besides BIVIO) had no idea how to handle investment clubs. My city wanted me to have a business licence and told me that I needed to
be a broker to have an investment club. John Rice ABODI Investment Club On Friday, June 6, 2014 8:57 AM, Leonard J Delmolino <ldelmolino@comcast.net> wrote: I'm in the process of helping a new investment club get started. We've started to investigate brokerage account requirements (TDA and Scottrade, so far) and some of the answers I'm getting from brokers are not what I anticipated. In particular I have the following questions and was wondering what the experience of other clubs has been. 1) Do brokers require the SSNs of all partners or only the SSNs of the authorized agents? Scottrade seems to want the SSNs of all partners but TDA seems only to need the SSNs of the authorized agents. Shouldn't the requirement be the same for all brokers? 2) Do brokers need a signed copy of the Club's Partnership Agreement? Scottrade seems to require this but TDA does not 3) I thought I'd heard in this forum that partners could perform an electronic transfer of funds from their individual bank account directly to the investment club brokerage account but both Scottrade and TDA have stated that this is not possible. Electronic transfers would only be possible if we had a bank account in the investment club's name (we're trying to avoid using a bank account.). Any other clubs have experience with this? 4) When members leave the club or new members join, do we need to update our documentation with the broker with removal or addition of the members name? Scottrade said yes on this while TDA indicated that it was good practice but not required. We're interested on how other clubs have dealt with these matters. Thanks in advance for your help! Len Delmolino Len, 1. Yes we filed a partnership agreement with them. We give them an updated copy as we update it with member changes
2. We only have one account (the Fidelity Brokerage), no separate checking account. 3. We only had to provide SSNs for agents not all members. 4. We did have to have all partners sign a form saying they agree on who the authorized agents for the account are. This form needs to be updated when the authorized agents change.
5. Our members do automatic deposits into the accounts with no problem. The bivio "penny system" allows the treasurer to easily identify each deposit when it comes in. The "penny system" means each member is assigned a penny (.01, or .02, or .03, etc) and they include this penny on their deposit such as $25.01 would be for the member assigned to .01.
6. I have been with Fidelity on a personal basis for a very long time and I feel like their fees are very reasonable. Standard trading fee is $7.95. Options (if you are interested) are also $7.95 and $.75 per contract. Exercised options are also $7.95 ....just a normal stock sale or buy.
7. There are no maintenance fees. Hope this helps, Paul Madison On Fri, Jun 6, 2014 at 11:57 AM, Leonard J Delmolino <ldelmolino@comcast.net> wrote: I'm in the process of helping a new investment club get The Yankee Chapter Model Club uses Scottrade. We only needed the EIN number not each SSN. We all have our individual bank accounts send money using Bill Pay. This works fine. They have a copy of the partnership agreement on file. Addition or removal of members has not been a concern either. The Scottrade account is titled "Yankee Chapter Model Club, a partnership." Ira Haas President -----Original Message----- From: club_cafe@bivio.com [mailto:club_cafe@bivio.com] On Behalf Of Leonard J Delmolino Sent: Friday, June 06, 2014 11:57 AM To: club_cafe@bivio.com Subject: [club_cafe] Brokerage Requirements I'm in the process of helping a new investment club get started. We've started to investigate brokerage account requirements (TDA and Scottrade, so far) and some of the answers I'm getting from brokers are not what I anticipated. In particular I have the following questions and was wondering what the experience of other clubs has been. 1) Do brokers require the SSNs of all partners or only the SSNs of the authorized agents? Scottrade seems to want the SSNs of all partners but TDA seems only to need the SSNs of the authorized agents. Shouldn't the requirement be the same for all brokers? 2) Do brokers need a signed copy of the Club's Partnership Agreement? Scottrade seems to require this but TDA does not 3) I thought I'd heard in this forum that partners could perform an electronic transfer of funds from their individual bank account directly to the investment club brokerage account but both Scottrade and TDA have stated that this is not possible. Electronic transfers would only be possible if we had a bank account in the investment club's name (we're trying to avoid using a bank account.). Any other clubs have experience with this? 4) When members leave the club or new members join, do we need to update our documentation with the broker with removal or addition of the members name? Scottrade said yes on this while TDA indicated that it was good practice but not required. We're interested on how other clubs have dealt with these matters. Thanks in advance for your help! Len Delmolino Ira, Our club also uses Scottrade, but the local office has told me that they want all checks sent in together with one of their deposit forms. Where do your members send their checks? To your local office or somewhere else? I would love to be able to have my members send checks in directly. Thanks, Rich Hill Book Readers Investment Group -----Original Message----- From: club_cafe@bivio.com [mailto:club_cafe@bivio.com] On Behalf Of Ira Haas Sent: Friday, June 06, 2014 12:43 PM To: club_cafe@bivio.com Subject: RE: [club_cafe] Brokerage Requirements The Yankee Chapter Model Club uses Scottrade. We only needed the EIN number not each SSN. We all have our individual bank accounts send money using Bill Pay. This works fine. They have a copy of the partnership agreement on file. Addition or removal of members has not been a concern either. The Scottrade account is titled "Yankee Chapter Model Club, a partnership." Ira Haas President -----Original Message----- From: club_cafe@bivio.com [mailto:club_cafe@bivio.com] On Behalf Of Leonard J Delmolino Sent: Friday, June 06, 2014 11:57 AM To: club_cafe@bivio.com Subject: [club_cafe] Brokerage Requirements I'm in the process of helping a new investment club get started. We've started to investigate brokerage account requirements (TDA and Scottrade, so far) and some of the answers I'm getting from brokers are not what I anticipated. In particular I have the following questions and was wondering what the experience of other clubs has been. 1) Do brokers require the SSNs of all partners or only the SSNs of the authorized agents? Scottrade seems to want the SSNs of all partners but TDA seems only to need the SSNs of the authorized agents. Shouldn't the requirement be the same for all brokers? 2) Do brokers need a signed copy of the Club's Partnership Agreement? Scottrade seems to require this but TDA does not 3) I thought I'd heard in this forum that partners could perform an electronic transfer of funds from their individual bank account directly to the investment club brokerage account but both Scottrade and TDA have stated that this is not possible. Electronic transfers would only be possible if we had a bank account in the investment club's name (we're trying to avoid using a bank account.). Any other clubs have experience with this? 4) When members leave the club or new members join, do we need to update our documentation with the broker with removal or addition of the members name? Scottrade said yes on this while TDA indicated that it was good practice but not required. We're interested on how other clubs have dealt with these matters. Thanks in advance for your help! Len Delmolino Rich, I don't think my credit union sends an actual physical check. I use their bill pay service and I never actually asked how they do it. In any case it works. We all use a similar process and send to my local branch office. No need for any deposit form we just gave the bank the account number. Ira -----Original Message----- From: club_cafe@bivio.com [mailto:club_cafe@bivio.com] On Behalf Of Rich Hill Sent: Friday, June 06, 2014 1:18 PM To: club_cafe@bivio.com Subject: RE: [club_cafe] Brokerage Requirements Ira, Our club also uses Scottrade, but the local office has told me that they want all checks sent in together with one of their deposit forms. Where do your members send their checks? To your local office or somewhere else? I would love to be able to have my members send checks in directly. Thanks, Rich Hill Book Readers Investment Group -----Original Message----- From: club_cafe@bivio.com [mailto:club_cafe@bivio.com] On Behalf Of Ira Haas Sent: Friday, June 06, 2014 12:43 PM To: club_cafe@bivio.com Subject: RE: [club_cafe] Brokerage Requirements The Yankee Chapter Model Club uses Scottrade. We only needed the EIN number not each SSN. We all have our individual bank accounts send money using Bill Pay. This works fine. They have a copy of the partnership agreement on file. Addition or removal of members has not been a concern either. The Scottrade account is titled "Yankee Chapter Model Club, a partnership." Ira Haas President Dear Leonard, We have had an account with TD Ameritrade since it was TD Waterhouse. Back then, I had to drive over to the nearest office, then 40 minutes away, with every membship change. Now: Some members use electronic transfers set up automatically on the same day of the month. We use penny difference so I know whose money it is, although the end of the month brokerage statement has this info. We do NOT have to file our SSNs with them. I have mine on file as the person authorized to do trades. We do not have to send in membership additions or withdrawals. This is a most welcome change. I have been able to get answers from their tax department about several cost basis problems. I find them most willing to spend time to get things corrected. You can get 1099s and monthly statements online, saving time waiting for the mail. Also, if you travel a lot, this saves wondering when those papers will catch up to you. Good luck with your new club. "Keep green on your screen." as one of my favorite gurus says. Peg Wentworth, Lancaster WIN -----Original Message----- From: Leonard J Delmolino Sent: Friday, June 06, 2014 11:57 AM To: club_cafe@bivio.com Subject: [club_cafe] Brokerage Requirements I'm in the process of helping a new investment club get started. We've started to investigate brokerage account requirements (TDA and Scottrade, so far) and some of the answers I'm getting from brokers are not what I anticipated. In particular I have the following questions and was wondering what the experience of other clubs has been. 1) Do brokers require the SSNs of all partners or only the SSNs of the authorized agents? Scottrade seems to want the SSNs of all partners but TDA seems only to need the SSNs of the authorized agents. Shouldn't the requirement be the same for all brokers? 2) Do brokers need a signed copy of the Club's Partnership Agreement? Scottrade seems to require this but TDA does not 3) I thought I'd heard in this forum that partners could perform an electronic transfer of funds from their individual bank account directly to the investment club brokerage account but both Scottrade and TDA have stated that this is not possible. Electronic transfers would only be possible if we had a bank account in the investment club's name (we're trying to avoid using a bank account.). Any other clubs have experience with this? 4) When members leave the club or new members join, do we need to update our documentation with the broker with removal or addition of the members name? Scottrade said yes on this while TDA indicated that it was good practice but not required. We're interested on how other clubs have dealt with these matters. Thanks in advance for your help! Len Delmolino Hi Len, 1. This is simply a difference of opinion of what is needed between the lawyers at the two brokerages. Don't worry about it. My experience with TD Ameritrade - it is a simple way to operate. Give yourself at least 2 months when changing agents with TDA.
2. TDA will accept money from anyone, anytime. You just need the information. I put together a simple instruction sheet for new members that works with TDA, they just choose their option. This information is available at all brokerages, (Brokerages are in the business of collecting money and they will make it easy for you to give them money!!!) Here's our instruction form:
How to Send funds to the Nationwide Investment Club Account at TD Ameritrade Bill Pay through your bank: (Our preferred method) 1. Make your deposit in dollars plus the amount of cents to identify you. Each partner has been assigned a specific number of cents to identify the deposit. 2. Set your bill pay service to send the deposit to: TD Ameritrade PO Box 2229 Omaha NE 68103-2717 Account XXX-XXXXXX ACH or Wire Transfer through your bank: 1. Make your deposit in dollars plus the amount of cents to identify you. Each partner has been assigned a specific number of cents to identify the deposit. 2. Set the ACH details to: First National Bank of Omaha 1620 Dodge Street Omaha, NE 68197 ABA # 104 000 016 For credit to the Account of TD AMERITRADE, Inc. Account # 16424641 For Further Credit to: Nationwide Investment Club, Account #XXX-XXXXXX Mail Deposit: 1. Make your deposit in dollars plus the amount of cents to identify you. Each partner has been assigned a specific number of cents to identify the deposit. 2. Mail your deposit to: TD Ameritrade PO Box 2229 Omaha NE 68103-2717 In the memo field of your check write Account # XXX-XXXXXX One last thing, Len. Some people may advocate you must use bill pay or check must arrive by a certain date. Ignore them. How you get the money doesn't matter as long as you follow your valuation rules. Mark Eckman On Fri, Jun 6, 2014 at 10:57 AM, Leonard J Delmolino <ldelmolino@comcast.net> wrote: I'm in the process of helping a new investment club get Thanks to everyone for your feedback. Its been very helpful and much appreciated! Len Delmolino |
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