Full Trading Authorization
What is Full Trading Authorization?
Full trading authorization grants an agent or broker the power to place orders, withdraw funds, or make inquiries concerning a client’s account. Written documentation must be completed by the client before an agent or broker can be given power of attorney.
Key Takeaways
– Full trading authorization allows an agent the power to place orders, withdraw funds, or make inquiries concerning a client’s account.
– It is often used by investors who lack sufficient knowledge or confidence to engage in trading.
– It can be suitable for investors who find researching and monitoring trading activity stressful or time-consuming.
How Full Trading Authorization Works
Trading authorization is discussed when an investor enlists the services of a new broker or agent. The desired level of authorization will be established and agreed upon.
Full trading authorization allows brokers to buy or sell securities on behalf of their clients and extract funds for disbursement. It empowers an agent to conduct all activities on behalf of the client.
This level of authorization is often used by investors who may not have sufficient knowledge or confidence to make trading decisions. It is also preferred by busy investors who find researching and monitoring trading activity stressful or time-consuming.
Full Trading Authorization Considerations
Investors who approve full trading authorization must have confidence and trust in their agent or broker. It is a preferred option for investors comfortable relinquishing control over their financial accounts and activities.
For investors who do not want to allow a broker to transfer funds, limited trading authorization may be considered. It limits the broker to purchasing and selling securities or account inquiries, and restricts them from accessing funds. The goal is to allow the agent to initiate profitable transactions.
Limited trading authorization provides flexibility to the agent and allows them to react quickly to market changes while still giving the investor peace of mind. It does not require the investor to relinquish complete control of their accounts.