What is required for trust accounts to earn interest?

For trust accounts to earn interest, it is essential to obtain the written consent of the client alongside a specific agreement detailing how the interest will be handled. This requirement ensures that both the broker and the client are on the same page regarding the management of funds, including any accrual of interest. It protects the interests of all parties involved by formalizing the arrangement and making it clear how the funds are treated, particularly regarding distribution of the interest earned.

In the context of trust accounts, it's not sufficient to rely on verbal agreements or informal understandings, as these can lead to misunderstandings or disputes later on. Licensee approval alone also does not suffice, as it does not involve the client's consent or a detailed understanding of how their funds are being managed. The absence of special requirements would be contrary to best practices in managing trust accounts, as proper authorization protects both the client’s and the broker's interests. Thus, written consent paired with a specific agreement is the appropriate approach to ensure transparency and accountability.