Opening Your First Brokerage Account: Did I Ask the Right Questions?

By Geoff Hafer, Spring 2017 Student Intern

In our last edition of the five-part series “Opening Your First Brokerage Account” we addressed the question “Am I Picking the Right Account Type for My Needs?”  In this final edition, we will consider the question “Did I ask the right questions?”   Asking the right questions will help you to invest wisely and avoid potential pitfalls.  No matter what your level of investing experience, don’t be too quick to sign, after all it’s your money!

In the prior editions, we discussed several important topics that relate directly to our question today.  For instance, consider the following questions:

  • Is this a margin account or a cash account?
  • Who will control decision-making in my account?
  • What are all the fees relating to this account? How much are commissions?  Are there fees for not maintaining a minimum balance?
  • What services am I getting with this account?

Hopefully you have been with me from the first edition and can now confidently ask these and similar questions with a better understanding of their significance and how they should impact your final decision.  When you finally make your decision be certain to review the new account application form thoroughly before signing.  This application form will require you to provide some information about yourself, as well as ask you to make certain decisions about your account.  While it may take some time to fill out the application, it is important to understand the questions and answer them accurately.  Your broker will use this information to understand your financial needs and to meet certain regulatory obligations.  Should you have any questions as you read the application, don’t be afraid to ask your broker for clarification before you agree with the terms and conditions they impose on you.