This past Sunday I opened a Scottrade account online. It took about 10 minutes and the process was very easy. This account is for an SEP IRA, although the process is pretty much the same regardless of the type of brokerage account you open. In this article, we’ll walk through what you need to open a Scottrade account and describe the process. Let’s start, however, with why I chose Scottrade.
While there are many good online discount brokers to choose from, Scottrade had several advantages. First, Scottrade offers an SEP IRA account. While most brokers today offer traditional, Roth and rollover IRAs, not all of the brokers offer an SEP IRA. So that narrowed my selection. Second, Scottrade doesn’t charge any fees for an IRA account, which is a plus. Scottrade isn’t alone in this regard, and you can check out our review of some of the best brokers for IRA accounts.
Third, Scottrade has offices just about everywhere. While the vast majority of my trades will be online, it’s nice to know I can visit an office and talk to a real person if needed. And finally, Scottrade is known for its fast execution of trades at the best price. So now let’s turn to my experience opening a Scottrade account. If you want more information on Scottrade, visit our detailed Scottrade review.
First, the one negative experience with Scottrade
Let me begin with the one problem I encountered with Scottrade. At several times during the application process, I clicked the next button to move to the next step in the process, but nothing happened. It was if the next page wouldn’t load. Now the problem very well could have been my Internet connection, but I suspect not. In each case I clicked the button again and eventually the application proceeded on without any problem. Still, it was an annoying glitch.
What you’ll need to open a Scottrade broker account
The information you will need to open a Scottrade account is the same as any other broker account. But some of the information may surprise you.
- About 10 minutes to open your new account
- Social Security Number or Individual Taxpayer Identification Number
- Employer’s name, address and phone number
- Beneficiary’s Social Security Number, address and date of birth (IRAs Only)
I initially thought it was a little strange that Scottrade needed information on my employer. It turns out there are several reasons for this, including whether you happen to work for a stock exchange, FINRA, or some other regulator in the securities industry.
One of the helpful features of the Scottrade application process is the ability to chat online with a Scottrade representative. I took advantage of this feature for several reasons, including asking why they needed information on my employer. Here was their response:
That is a good question! Under current regulations we are required to “know our customer” and obtaining your employment status is one part of us fulfilling that requirement. Please note that we take the privacy and security of your personal information very seriously. Our Web site is secure. We do not sell or share your information that is entered and we will not contact your employer. Please complete the fields to the best of your knowledge and click “Continue” to move forward.
In addition, you will need to know the type of account you will be opening. Scottrade offers the following brokerage account types:
- Individual Brokerage Account: Manage your finances with our Individual brokerage account. Includes online trading, instant funding and cash management features.
- Joint Brokerage Account: Up to three individuals may manage their finances with our Joint brokerage account. Includes online trading, instant funding and cash management features.
- Individual Retirement Account (IRA): Save and grow assets for your retirement with our IRA accounts. Provides for tax-deferred growth and potential tax-deferred contributions.
If you select the IRA account, you’ll then have an opportunity to select the type of IRA you want to open.
Select the Closest Scottrade Office
As part of the application process, Scottrade gives you a list of its closest offices to your home. You select from the list the office you want your account associated with. About two days after I submitted my application, the manager of the Scottrade office called to see if I had any questions. He didn’t try to sell me anything. He just introduced himself, asked if I had any questions, and encouraged me to call him should any questions arise. This was a nice touch.
Once I had entered the required information, Scottrade had me verify a couple of items on my credit report. The idea here is to verify my identity, much like myFICO does when you request your credit score. There were only two questions, one asking me who my mortgage was with and the second asking me the amount of my monthly payment.
Options Trading Privileges
Because I plan to buy and sell options, there were a few more steps required. This included an options trading agreement, selecting the types of options I planned to trade, and information about my income and net worth. These are all required under federal law. Of course, if you don’t plan to trade options, you’ll be able to skip most of these steps.
The entire process took about 10 minutes. I need to print, sign and mail in an acknowledgment that I accept Scottrade’s brokerage agreement. I’ll fund my account via bank transfer and be trading stocks and options in no time.