What is a House Account?

A house account is typically established by a brokerage firm to manage its own investments, a practice that underscores the firm's commitment to aligning its interests with market performance. Nasdaq describes it as a A high-priority account at a brokerage firm that is handled by the main office or an executive rather than a salesperson.

The U.S. Securities and Exchange Commission (SEC) highlights that brokerages, which facilitate transactions for over 51 million U.S. households, may also designate house accounts to be overseen by top executives at their headquarters, ensuring seasoned oversight of critical investments. Beyond the financial sector, the term adapts to describe the strategic management of accounts in various markets. 

This introduction to house accounts aims to demystify their function and significance, offering readers a clear, expert-backed understanding of how these accounts shape investment strategies within brokerage firms.

A brokerage firm may decide to invest its own profits in a financial market. When this happens, it will usually seem foolish to do this through another broker and pay those fees. Instead, the firm will use its own staff and technology to buy and sell securities held in its own name. For administration purposes, these transactions will be carried out in a separate account known as the house account.

In a wider context, a house account can exist in any industry with sales representatives and clients. Used this way, the term indicates that an account is judged important enough to be handled by the central office management team rather than by the sales representative. This will often be the case with long-term clients or those personally known to management staff. Sales reps tend not to like house accounts as they do not earn commission on them.

It's also possible for this type of house account to exist with a brokerage. In this setting the distinction is not between management and sales representative because the sales rep of a brokerage rarely has any involvement after attracting a client. Instead the distinction is between an ordinary account where the transactions may be carried out by relatively junior staff at a branch office, and a house account which is carried out in the main office and usually overseen by senior staff or even a company executive.

The term house account is also used by some banks to indicate a money market account set up specifically for homeowners to use for household expenditures. The idea is to be able to earn interest while still being able to make enough withdrawals to pay household bills. This is useful in countries where standard checking accounts do not pay interest. Using the term house account in this way is usually a purely marketing activity with no legal meaning.