A house account is most commonly an account set up by a brokerage to handle its own investments. The term can also be used to refer to a brokerage account handled at the firm’s main office by a senior executive, or in non-financial markets to refer to the way an account is managed. A brokerage is a firm which acts as an intermediary between buyers and sellers. In finance, this usually involves buying and selling securities on behalf of a client. In most cases a brokerage merely carries out a client’s instructions rather than providing advice or deciding how to invest their money.
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.