How To Transfer Brokerage Accounts Without The Grief

When you open an account with a broker, it often seems easier to just stick with that discount stock broker — even you are dissatisfied with fees, and with customer service. Many investors believe that transferring brokers is difficult. Besides, in some cases, stock brokers charge transfer fees when you decide to leave them behind.

Don’t let that fee stop you, though. The truth is that you might be better off paying that one-time fee if the result is that you end up with a brokerage that better suits your needs (and costs less over time).

What To Do Before Transferring

Before you initiate a transfer between brokers, it’s a good idea to contact the new broker to discuss your situation – especially if there are potentially complicating factors. Find out what the process is, and discuss the assets you plan to move. A few minutes on the phone with the new broker can help you ensure that everything goes as smoothly as possible.

Make sure you also retrieve/record the transaction history from your old broker. Record all securities you own before the transfer occurs. In many cases this the history will not be passed onto the new broker, and will be lost. This then makes selling of any security a much more complicated process at tax time. It also becomes harder to know the profit/loss of an individual security.

Broker Reimbursement Fee

Some stock brokers charge a fee when you leave the brokerage. If this is the case, your new discount stock broker might reimburse you for that fee. Here’s a list of some stock brokers that will reimburse you for this fee:

• TradeKing –
• tradeMONSTER – Get up to $250 back when moving your account
• optionsXpress – Get reimbursed up to $100 when transferring your account

How are Customer Accounts Transferred?

For most investors, the transfer process moves smoothly, and can be done automatically, with the help of a special clearing house. The Automated Customer Account Transfer Service is operated by the National Securities Clearing Corporation, and it’s normally possible for your cash, stocks, and bonds, as well as certain listed options, to transfer easily (at least from an investor standpoint).

In order to transfer your account from one broker to another, you first need to fill out a Transfer Initiation Form. This form is then sent to your new broker. In many cases, it’s possible to fill out one of these forms, online, with the new broker. This makes the process a little easier on you. Once you have submitted your Transfer Initiation Form, your new broker (“receiving firm”) contacts the old broker (“delivering firm”) through the Automated Customer Account Transfer Service and begins the process.

It’s important to fill out your form carefully and accurately. If information on your form doesn’t match the information that your old broker has on the account, the request to transfer the account can be denied. However, if everything is in order (and you might be required to validate the form before it is approved), your old broker will send a list of assets that you have to the new broker. Your new broker then decides if it wants the account. It’s possible that the new broker will reject your account. Before trying to initiate the transfer, it’s a good idea to check with the policies of the new broker. In some cases, the quality of securities in question (especially if they are supporting a margin loan), or there is an issue with minimum requirements.

Normally, it takes about six business days to transfer an account: About three business days for the old broker to validate the request, and another three business days to transfer your assets to the new broker. Realize, though, that it can take longer in some cases. If you are transferring an account with a custodian, such as an IRA or an account on behalf of a minor child, it can take longer because the whole process includes another party.