Questions to Ask Before Opening a Brokerage Account

About the firm

1. What is the exact legal entity that will hold my account? It is in the account agreement, and it is not always the brand name.
2. Is that entity an active SEC-registered broker-dealer, and what is its CRD number? Check it on FINRA BrokerCheck rather than taking the website's word.
3. Is it a SIPC member, and does a different entity clear and carry my account? Both entities are worth knowing.
4. What is in its disclosure history? Read the substance of any regulatory matter, particularly anything involving retail customers or disclosure to them.

About the costs

1. What is the per-contract options fee, and is it charged per side? Per side doubles the cost of a round trip.
2. Is there an account service fee or an inactivity fee, and what waives it? Waivers are often trivial to satisfy if you know they exist.
3. What does it cost to transfer the account out? Published figures among the brokers we track reach $75.
4. Which trades fall outside the zero-commission headline? OTC equities, index options, overnight orders and recurring investments are the common exclusions.

About the account

1. Does this broker offer the account types I will want in three years? Joint, custodial, trust, SEP or solo 401(k), and HSA are the ones most often missing.
2. Where does uninvested cash go by default, what does it earn, and what protects it? SIPC's cash sublimit and FDIC sweep programmes are different things.
3. Can I hold the specific instruments I intend to buy? Non-US listings, mutual funds, bonds and futures are all absent from at least one popular US broker.
4. What happens if I need help? Check the published support channels and hours before you need them, not after.