1. Know Thyself. Before opening a brokerage account, be sure to understand why you want one. Reasons can be anything from the need to open a rollover IRA to buying shares of Disney so you can frame the certificate for a new grandchild. The purpose of the account will help you decide if you want a full-service account where you can get help and advice, a regular brokerage account with access to research and other investment resources, or a discount brokerage focused on trading.
2. Rules of the Road. With any brokerage account, be sure to read the rules and guides. The rules for a regular account and an IRA will vary. You will want to know if you have a cash only account, or if you have margin (borrowing) privileges. Some accounts even allow check writing privileges and debit card access. Read your customer agreement so you will know how to purchase stocks, bonds, mutual funds and ETFs through a broker or online. For more experienced investors, you will want to understand if you can trade options and futures. You never want to be in a situation where you need a cashier's check for your mortgage closing in two days, but you have to wait three days for your sell transaction to settle and then another five days to receive a check. Can't tell you how many times I have seen that happen. Knowing the rules will help prevent those type of snafus.
3. Safety First. Brokerage accounts are protected by SIPC, the Securities Investor Protection Corporation. Similar to banking's FDIC insurance, it protects your assets up to certain limits in case the brokerage firm fails. It does not, however, protect you when you lose $10K because you bought shares of an ostrich farm in South Dakota when your unemployed brother-in-law gave you a hot stock tip. You are responsible for trading losses, so it's a good idea to research and get advice prior to investing.
4. How Much? Investigate the opening amounts and fees for the account. Some will offer lower trading fees based on your balance. Other brokerages will offer discounted fees for trading more. Mutual fund purchases often require a specific minimum, so you will want to know those amounts. Within a firm, the fees for trading with a live person are often more expensive than making trades online, and there are additional fees for borrowing on margin, wire transfers, mailing a certificate and account closure fees. Depending on the type of trading activity you have in the account, it can be very expensive or very inexpensive.
With a little investigation and know-how, you can set up a brokerage account and start investing as a step in your wealth building process.