How to Set Up a Brokerage Account

by Melly Parker ; Updated July 27, 2017
A brokerage account gives you control of your investments.

According to Investopedia, a brokerage account is an "arrangement between an investor and a licensed brokerage firm that allows the investor to deposit funds with the firm and place investment orders through the brokerage, which then carries out the transactions on the investor's behalf." A brokerage account gives you more control over your investments and helps you avoid dealing with a traditional broker. There are many kinds of brokerage accounts available, but setting one up is a simple process.

Step 1

Decide whether you need a full-service brokerage account or an account that offers a secure method of purchasing stocks. If you want a full-service brokerage, you may want to choose a company that has an office in your area, because they'll offer you individualized financial advice. If you simply want a company that will facilitate your stock transactions, consider using an online brokerage that will let you trade from anywhere. Costs vary; full-service firms generally charge more than online firms, for example.

Step 2

Select a firm once you know the services they offer and their rates. Make an appointment with a representative for a meeting if they're a local firm. Log on to the website and go through the sign-up process if you've decided to use an online brokerage.

Step 3

Provide any brokerage you choose with as much information as you can about your financial goals and expectations. It also helps to give them an idea of your income. Explain how much money you can invest initially and how much you want to put in each week, month or year. You should be able to explain how much risk you want to take so they can help guide you to the appropriate stocks.

Step 4

Give the brokerage your personal information, including your social security number, your telephone numbers, your address and your birth date. You will also have to give them your employment information and information about your marital status, tax bracket and risk tolerance. This helps them complete a profile that aids them in guiding you to investments.

Step 5

Decide whether you want to keep your stock certificates in the hands of your brokerage or if you'd rather they were shipped to you. If you decide to have them shipped to you, consider placing them in a safe deposit box so that they are not stolen or damaged.

Step 6

Fill out a W-9 form so that any income you make is reported to the IRS. Sign the firm's arbitration clause. This says that you agree to go through arbitration instead of a courtroom trial if you have a problem with the firm.

Step 7

Select your stocks and exercise the transactions with your initial investment.

About the Author

Melly Parker has been writing since 2007, focusing on health, business, technology and home improvement. She has also worked as a teacher and a bioassay laboratory technician. Parker now serves as a marketing specialist at one of the largest mobile app developers in the world. She holds a Master of Science in English.

Photo Credits

  • Investment image by Svitlana Boldyryeva from Fotolia.com