Why does Vanguard need my SSN

Why Does Vanguard Need SSN (Social Security Number)?


2022: why are Vanguard and Vanguard asking for SSN (Social Security Number), address, personal and employment info when opening a brokerage investing account? Is it safe to give Vanguard my SSN?


Why Does Vanguard Need SSN?


So you’ve heard about Vanguard’s free trading and you’ve finally decided to open an account to see it for yourself (yes, it’s true, trades really are commission-free, but unlike competitors they give away FREE stocks for opening an account). However, you’re not sure why they’re asking for your social security number (SSN) during the account setup process. This is very personal, why do they need this?

The short answer is that all brokers (not just Vanguard) are required by the U.S. government to collect this, among other personal information, for anyone looking to open an account. Even aside from the government, collecting this information is also the recommended practice of self-regulating organizations in Financial Services, like the Financial Industry Regulatory Association (FINRA). There are two primary reasons for this requirement, which we discuss below.


Vanguard and Competitors


Broker Review Broker
Rating
Stock/ETF
Fee
Mutual Fund
Fee
Option Promotion Offer
TD Ameritrade
TD Ameritrade rating

$0 $49.99 ($0 to sell) $0 commissions + transfer fee reimbursement.
WeBull
4.5-star brokerage rating

$0 na $0 12 FREE stocks valued $34-$30,600 give-away at Webull.
Ally Invest
Ally Invest rating

$0 $9.95 $0.50 Up to $3,000 cash bonus + $0 commission trades.
Vanguard
Vanguard rating

$0 $20 $1.00 None


Record-Keeping Requirements


The Securities and Exchange Commission (SEC) requires brokers to collect personal identification information for anyone looking to open an account, which includes your name, address, date of birth, government ID, net worth, and SSN, among others. While technically it’s not legally required that the broker records your SSN if you refuse to provide it, the broker must make a good faith effort to collect it. As a result, and given the automation in the account opening process today, it would be virtually impossible for you to complete the account setup process without providing this. Even if you wanted to call Vanguard directly to have a debate on the merits of this request, you would have a tough time as their customer support framework is as bare bones as it gets.


Anti-Money Laundering Preventative Measures


The SEC and the U.S. Department of the Treasury jointly implemented the customer identification rule, which effectively requires financial institutions to collect your SSN before allowing you to open an account. This rule requires brokers to have procedures to verify the identity of anyone opening a new account and to also determine if the person appears on a government list of known or suspected terrorists. This rule was implemented to help combat money laundering, which is one of the primary funding methods for terrorist organizations. So even though in theory, from a record-keeping perspective it is not legally required for you to provide your SSN, it is legally required by the customer identification rule. Therefore, brokers are not going to allow you to bypass this requirement, as it would mean they are breaking the law and could be subject to punitive measures from the government.


Vanguard Needs SSN


Personal Information to Determine Investment Suitability


Even besides the legal requirements, brokers are advised by industry organizations like FINRA to collect your personal information because in theory this puts the broker in a better position to help, or at least not to hinder you, in reaching your financial goals. These organizations recommend brokers collect personal details, like net worth, salary, and career history, so that they don’t inadvertently recommend an investment to you that doesn’t fit the risk profile suggested by your personal situation (or at least by what they derive your personal situation to be based on these details).


All U.S. Brokers Ask For SSN


As a result of the above mentioned government regulations, every United States brokerage company will be asking you for your Social Security Number. There is no way around it. Is it safe? If history is any guidance brokers actually do a pretty good job in keeping your personal information and money safe.


About the Author
Chad Morris is a financial writer with more than 20 years experience as both an English teacher and an avid trader. When he isn’t writing expert content for Brokerage-Review.com, Chad can usually be found managing his portfolio or building a new home computer.
Updated on 6/14/2022.