Opening an account with Stash has been one of the simplest things I’ve ever done online. However, one major downside to opening a brokerage account with Stash was that they required my Social Security Number. I wondered if it was safe to give my SSN to Stash.
Stash is a legitimate company that uses your social security number for identity verification purposes, in fact, they are required by law to do so. While Stash vouches to safeguard your personal information, they are prone to data leaks and hacks just like any other private company is.
In this article, I’ll go over the reasons Stash wants your social security number and whether it’s safe for you to comply with that request. I’ll also cover how to open a Stash account with an SSN and whether you should be giving out your SSN to stock brokers in general.
Why does Stash ask for your SSN?
While there are several reasons that a company may want to know your social security number, Stash mainly uses it for verifying your identity, at least that’s what they say they do. Once your SSN is in their hands you have no control over how Stash uses your personal information.
Here are some of the reasons why Stash may want to collect user’s social security numbers:
- Identity Verification: As mentioned before the most common reason for checking users’ social security numbers is to verify their identity. Needless to say that a different form of ID such as your driver’s license or passport should be sufficient to open a brokerage account.
- Credit Checks: While Stash claims not to use your SSN for credit checks, it seems likely that they would conduct some form of background check on their potential clients. After all, Stash is a for-profit company that has no legitimate interest in taking on clients who do not meet their requirements.
- Downside Protection: Should your account be overdrawn or liquidated due to a margin call, your SSN gives Stash more legal leeway to recover any lost funds. Typically, this option is never used as accounts are liquidated before Stash incurs any losses.
- Fraud Alert: Scammers who may have stolen some other form of ID can sometimes be sorted out by verifying the social security number. However, this argument falls apart if you consider that a scammer could just as well have stolen your SSN.
These are just some of the reasons why Stash asks for your SSN. Potentially, there may be others that I am not aware of and that Stash is not telling you about. However, verifying customers’ SSNs has, unfortunately, become a very common practice among stock brokers and financial services companies in general.
Before moving on, let’s look at how safe it actually is to give your SSN to Stash!
FYI: The best way I've found to invest in ETFs is through M1 Finance. It's free and you even get an instant line of credit! Have a look here (link to M1 Finance).
How safe is it to give your SSN to Stash?
As mentioned earlier, Stash is a legitimate company that is registered with the SEC as a broker/dealer. However, all of that legal mambo-jumbo does not do much for you if their security systems fail or your social security number gets into the hands of the wrong employees.
Let’s look at some of the risks you face when giving your SSN to Stash:
- Data Leaks: Data leaks of any kind occur regularly with large companies. Most of them are covered up quickly so for customers do not worry about their data. These leaks can occur due to technical difficulties or simply due to human error. Leaked data frequently becomes available on the dark web.
- Hacks: Revealing customer data has become a popular pastime of hackers. Larger companies that deal with financial transactions have become especially prone to such attacks. Customer data – including the SSNs – are often sold to the highest bidder and used for nefarious purposes.
- Malevolent Employees: While technical risks may be one category, the other significant risk of giving your SSN to Stash is that you may encounter employees who collect and sell customer information as this can be a lucrative source of revenue for them.
All of the above reasons could present a case for not giving your SSN to Stash. However, truth be told, you face the same risks with any major financial company and they are not particular to Stash.
In fact, the only way to avoid giving out your SSN to financial services is to not use them at all! But, can you actually open a Stash account without your SSN?
NOTE: The easiest way to add diversification to your portfolio is to invest in real estate through Fundrise. You can become private real estate investor without the burden of property management! Check it out here (link to Fundrise).
How to open a Stash account without SSN
It is not possible to open a Stash account without giving them your social security number. Your application will be stuck in the verification process and Stash will not accept any other verification documents except your SSN.
FYI: Another great way to get exposure to the real estate sector is by investing in real estate debt. Groundfloor offers fantastic short-term, high-yield bonds that can add diversification to your portfolio!
While giving out your SSN online should always be handled with the utmost care, it has become common practice for brokers to ask for clients’ SSNs. In fact, opening a brokerage account in the United States without revealing your social security number has become nearly impossible. The only way to avoid this is to open a brokerage account abroad, for instance in the United Kingdom.
While it can generally be considered safe to give your SSN to major financial organisations, always make sure that the site you’re providing the number on is SSL-encrypted. Open as few accounts as needed to minimize exposure.
ALSO: Small-cap equities can add a lot of upside to a portfolio while mitigating risks. Recently, I've discovered Mainvest's investment platform which makes it easy to invest in small and local businesses with returns of 10-25%. Take a look here (link to Mainvest).
Stash asks for your SSN just as any other US-based stock broker. Generally, it is safe to give your SSN to Stash, however, it is important to be aware of the risks involved, such as data leaks, hacks, and fraud.
Over the past years, I have discovered several tools and products that have helped me tremendously on my path to financial freedom:
P.S.: The links below are affiliate links, which means I receive a small commission at no extra cost to you when you sign up for one of the services. Thank you for your support!
1)Personal Capital is simply the best tool out there to track your net worth and plan for financial freedom. Just their retirement planner alone has become an invaluable tool to keep myself on track financially. Try it out, it's free!
2) Take a look at M1 Finance, my favorite broker. I love how easy it is to invest and maintain my portfolio with them. I can set up automatic transfers, rebalance my portfolio with one click and even borrow up to 35% of my assets at super low interest rates!
3) Fundrise is by far the best way I've found to invest in Real Estate. You can diversify your portfolio by investing in their eREITs or even allocate capital to individual properties (without the hassle of managing tenants!).
4) Groundfloor is another great way to get exposure to the real estate sector by investing in short-term, high-yield real estate debt. Current returns are >10% and you can get started with just $10.
5) If you are interested in startup investing, check out Mainvest. I've started allocating a small amount of assets to invest in and support small businesses. Return targets are between 10-25% and you can start with just $100!
To see all of my most up-to-date recommendations, check out the Recommended Tools section.