Types of brokerage accounts
Also known as: account registrations, trading account types
Brokerage account types are the registration categories investors choose when opening an account with a broker-dealer, such as cash, margin, individual, joint, retirement, and custodial accounts. The registration determines ownership, tax treatment, and what activities the account allows.
When an investor opens a brokerage account, two separate choices define it: how the account is funded and traded, and how it is registered (owned). The funding choice is between a cash account, where every purchase must be paid in full, and a margin account, where the investor can borrow part of the purchase price from the broker-dealer using the securities as collateral.
The registration choice covers who owns the account and under what legal arrangement. An individual account has one owner. Joint accounts have two or more owners, registered either as joint tenants with rights of survivorship (WROS), where a deceased owner's share passes to the survivors, or as tenants in common, where it passes to the deceased owner's estate. Other common registrations include custodial accounts (an adult manages assets for a minor under UGMA or UTMA rules), trust accounts, corporate and partnership accounts, and fiduciary accounts managed on someone else's behalf.
Retirement accounts such as traditional and Roth IRAs form another major category, with tax advantages and contribution rules layered on top of the basic registration. Discretionary authority is a further variation: the owner can grant a registered representative or adviser written power to place trades without pre-approving each one.
Account types and registrations are heavily tested on FINRA exams. The SIE and Series 6 both expect you to match a customer scenario — a married couple, a parent saving for a child, a small business — to the correct account type, and to know the documentation each registration requires.
Key takeaways
- Cash accounts require full payment for every purchase; margin accounts let investors borrow against their securities.
- Registration determines ownership: individual, joint (WROS or tenants in common), custodial, trust, corporate, and fiduciary are the core types.
- In a joint WROS account a deceased owner's interest passes to the surviving owners; in tenants in common it passes to the estate.
- Custodial accounts under UGMA/UTMA let an adult manage securities for a minor, who takes control at the age of majority.
- The SIE and Series 6 exams test matching customer scenarios to the right account type and registration.