So I opened an account today with Robinhood. The application asked for my name, address, phone, marital status and if I was associated with FINRA. On the next page it said it needed to verify my identity so it asked my SS# and DOB. That was it. I clicked an agreed. So my questions are: 1.) Are they using a smart "out of wallet" verification to know I am who I say I am. 2.) They did not ask me any financial information. I have to think FINRA has a "know your customer" requirement and "suitability" requirement. If they did not ask me any financial info, how do they know I am suitable to trade stocks? I really liked the ease in which you could open an account. So either these guys have figured out a way to verify this stuff without asking or they are going to get slapped up side the head by FINRA. Which is it?
if you are a US citizen, they will do a background and credit check on you. I guess you haven't gotten your account setup yet. And they'll follow up from there and contact you if they require further information. My thoughts.
Just got my account approval and my transfer from my bank has been initiated. I get they do a credit check but a credit check and suitability are two different things. I am not complaining, and this was very easy, but even if I have a score of 750 on my credit, that does not mean I am suitable to trade stocks. So doing a quick Google search I found this - http://www.finra.org/Investors/ProtectYourself/BeforeYouInvest/P197434 Maybe they have their ducks in a row and I am happy my account is open but I can see it now. Grandma loses $10k trading stocks and her attorney is gong to say, hey these guys did not know my client, she should have never been trading stocks.
Perhaps that's how you break it down in your head, but in practice they've linked high credit with high suitability. I read recently that the auto insurance industry has been making the same correlation for years now, meaning that those with high credit scores are historically the ones with the lowest accident rates, which correlates to low risks for those customers, hence their low insurances rates.
Good point. I again, glad to have my Robinhood account open. This will be interesting to follow and see in the future if the new account application changes due to regulatory pressure. What is funny, is look at a futures application. They do everything but draw blood for a DNA test. Just one of the reasons the futures industry is lagging in growth.
So I got the account open and funded. Once you download the app and try to trade it takes you through all the standard suitability questions, experience, income, available funds, etc. Pretty slick.
Yeah, there is certainly some quirkiness with RobinHood. It is a cash only account, which probably explains part of the reason the new account app is so basic (i.e. no-margin). Also, they pass-though the fees. I don't mind this but I wish they would been a bit more transparent about it. Nothing is worse than a bunch of hidden fees (i.e. like most futures brokers *fee for static DOM, * fee for Rithmic, *fee for this, *fee for that)