What do you need to open a brokerage account?
Editorial staff, J.P. Morgan Wealth Management
- A brokerage account is a flexible investment account that lets you buy and sell assets like stocks, bonds and mutual funds.
- You can open a brokerage account through an online investing platform, a full-service investment firm, certain banks and credit unions.
- To open a U.S. brokerage account, you’ll need to provide personal and financial information, a government-issued ID and bank details.
- Many financial firms allow you to set up a brokerage account online, which can be a quick process and makes these accounts highly accessible, even for new investors.
Having a brokerage account is one option that allows you to invest in the stock market. Brokerage accounts provide access to a wide range of investment options and in some cases fewer restrictions on when you can buy and sell investments compared with other types of investment accounts.
For those wondering what exactly a brokerage account is and the steps necessary to open one, keep reading.
What is a brokerage account?
A brokerage account is an investment account you can use to buy and sell securities like stocks, bonds and mutual funds. You deposit money into the account and use it to execute trades through your chosen brokerage.
Taxable brokerage accounts generally offer more flexibility than retirement accounts. You can contribute as much money as you want, withdraw the funds at any time and use the account to access many types of investments.
With these types of accounts, earnings from dividends and capital gains are taxed in the year they are received.
There are two main types of taxable brokerage accounts:
- Individual brokerage accounts: This has the name of only one account holder attached to it.
- Joint brokerage accounts: This account can be shared by two or more individuals. These types of accounts may be opened by spouses, other family members and individuals with mutual financial goals, like business partners.
Get up to $1,000
When you open a J.P. Morgan Self-Directed Investing account, you get a trading experience that puts you in control and up to $1,000 in cash bonus.
Where can you open a taxable brokerage account?
Various financial institutions offer taxable brokerage accounts, and each has its own advantages and drawbacks.
- Online brokerages: Online brokerages are an option for individual investors to open a brokerage account. These accounts may come with relatively low fees and user-friendly platforms. You can typically open an online brokerage account within minutes.
- Full-service brokerages: Full-service brokers might be an option to consider for those seeking a range of options – from access to a do-it-yourself investing platform to those seeking personalized investment advice and wealth management services. These firms may charge higher fees and may require a larger minimum amount to open some accounts.
- Banks and credit unions: Some banks and credit unions offer brokerage services alongside traditional banking services. This option may be more convenient for some as it allows you to manage all your financial accounts in one place. However, these investment accounts may be more limited.
What do you need to open a taxable brokerage account?
The process of opening a taxable brokerage account in the U.S. is usually relatively straightforward. You often begin by selecting the type of account you wish to open. From there, you’ll likely need to provide the following basic information:
Personal information
In the U.S., you’ll need to provide some basic personal information, like your full legal name, date of birth, Social Security number, home address, phone number and email address. Any financial institution you use is required to verify your identity to comply with federal regulations.
Employment and financial details
Most brokerage firms will ask for your employment status, annual income and estimated net worth when you sign up for a brokerage account. These questions help the brokerage assess your personal risk tolerance and the account features that will best suit your needs and financial goals.
The Financial Industry Regulatory Authority (FINRA) requires brokerages to collect information to ensure investments are suitable for your financial situation. This information is usually self-reported, and you can update this information later if your situation changes.
Government-issued ID
You’ll need to provide a government-issued photo ID, like a driver’s license or passport, in order to verify your identity. If you’re enrolling online, some brokerages allow you to upload a photo of your ID. Some brokerages may require additional documentation.
Information to fund the account
To fund the account, you’ll need to link it to a bank account for an electronic transfer, provide a check deposit, execute a wire transfer or transfer the funds from another brokerage. You may also be required to connect the brokerage account to a checking or savings account to allow you to transfer money in and out of your brokerage account for trades, withdrawals or both.
Investment objectives
When you open an account, most brokerages will ask about your investment goals, timeline and personal risk tolerance. This information allows the brokerage to make account and investing recommendations that best fit your needs.
Additional details
Some brokerages may ask whether you want margin trading capabilities, which would enable you to borrow money from the brokerage to trade. This may require that you provide additional information to see if you’re eligible. You also will likely be asked whether you want to provide beneficiary information. Depending on the brokerage, additional questions or asks may also be required.
Other considerations if you want to open a brokerage account
- Minimum age: You must be 18 years old or older to open a brokerage account.
- Deposit requirements: Some brokerages offer $0 minimums to open an account, but some may require a minimum deposit.
- International applicants: If you are not a U.S. citizen and you want to open a U.S. brokerage account, you may be required to supply additional information.
The bottom line
While the process of opening a brokerage account may initially seem intimidating, many accounts allow for online setup that can be completed relatively quickly.
It’s important to research and ultimately select a brokerage firm that aligns with your financial needs and to come to the process as well-informed as possible. Once you’ve opened your account, take some time to outline your investment goals, risk tolerance and timeline before you make your first trade.
Frequently asked questions about what you need to open a brokerage account
Most brokerage firms require specific information to comply with legal and regulatory requirements. If you're missing key documents, like a Social Security number or a government-issued ID, you probably won’t be able to complete the application until you provide that information.
Some brokerage accounts can be opened online in less than 15 minutes. However, it may take a few business days or longer for your account to be fully verified and funded before you can start trading.
Yes, some brokerage firms charge fees for account maintenance, trading commissions or other specific investment services. Other firms may require a minimum initial deposit or charge for inactivity. Many online brokers now offer commission-free trading and no minimum balance requirements, so it’s important to compare account features before opening one to find an option that best meets your needs.
Yes, you can open different types of brokerage accounts for others depending on your needs. For example, you can open a custodial account for a minor or a joint account with a spouse or partner. However, each account type has specific rules around ownership and taxation, so it's important to first review all your options.
Invest your way
Not working with us yet? Find a J.P. Morgan Advisor or explore ways to invest online.
Editorial staff, J.P. Morgan Wealth Management
