Authorizers

How Authorizers Works

Adding an authorizer requires formal documentation. Account owners complete authorization forms specifying who is being authorized, what actions they can take, and any limitations. The authorizer typically must accept the authorization in writing and provide identification, including Social Security number for tax reporting purposes. Brokerage firms verify identities and maintain authorization records. Authorization levels vary by firm and purpose. Trading authorization permits buying and selling securities but typically not withdrawals - this is the most common type for investment advisers. Full authorization may include withdrawal capability, which is appropriate for trusted family members managing accounts. View-only access allows monitoring account activity without transaction ability. Limited power of attorney provides specific, defined capabilities. Changes to authorization require account owner action. Owners can revoke or modify authorizations at any time by submitting updated forms to the brokerage. Death of the account owner typically terminates standard authorizations immediately - the account becomes part of the estate. Power of attorney may continue depending on whether it's durable and includes post-death provisions. Firms monitor authorized activity for customer protection. Unusual transactions, particularly withdrawals to new destinations or large trades outside normal patterns, may trigger verification procedures and direct contact with the account owner. This oversight helps protect account owners from unauthorized or inappropriate actions.

Types of Authorization

Common authorization levels and their capabilities:

Important Considerations

Authorizers have fiduciary-like responsibilities even without formal fiduciary status. They should act in the account owner's interest, not their own. Breaching this responsibility can result in civil liability and criminal charges in cases of theft or fraud. Courts take a dim view of authorizers who use their access for personal benefit. Documentation should be specific about authorization scope. Vague language creates disputes about what actions are permitted. Good authorization documents clearly state what the authorizer can and cannot do, and may include dollar limits on transactions. Many brokerages provide standardized forms that cover common authorization scenarios. Tax reporting remains the account owner's responsibility regardless of who conducts transactions. If an authorizer trades actively, the owner still receives 1099s and must report gains/losses on their tax returns. The authorizer has no tax liability for trading in someone else's account. Consider the permanence of different authorization types. Standard authorization can be revoked anytime but terminates on death. Durable power of attorney survives incapacity and may survive death depending on jurisdiction and document language. Match authorization type to intended purpose. Regular communication between account owners and authorizers prevents misunderstandings. Clear expectations about trading strategy, risk tolerance, and reporting frequency help maintain trust and alignment of interests in the authorization relationship.