Broker asking personal questions

Q – I have been dealing with an investment company for mutual funds since 1993. A few years ago the company merged with a larger company. A month ago, I received a 3 page questionnaire from their “compliance department” telling me that it was compulsory for all clients.

I am not comfortable with one of the questions – they want to know my net worth, my net liquid assets, fixed assets, and what amount is available for investment.

My financial planner already knows that I am investing with other firms and we have discussed my net worth.

I really don’t see why I have to put this information in writing. Am I obligated to do so? – L.N.

A – Yes, you have to answer the questions although I’m not sure the requirement would stand up to a legal test. At the insistence of securities regulators, investment firms have been tightening up on the enforcement of the “know your client” rule. There have been too many cases in which an advisor recommended securities that were not suitable for a client and this is seen as a way of reducing the occurrence of such abuses.

Even established clients who have nevechanged brokers are being asked to complete these forms. I’ve already had to do so twice in the past year. – G.P.