How to Switch Stock Brokers

Опубликовал Admin

16-07-2021, 23:10

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If you're dissatisfied with your current broker, you might have thought about opening an account with another broker who has lower fees or better customer service. At the same time, it might seem like a hassle to transfer your investments from your old stockbroker to your new one. However, with most investments, you can do a simple in-kind transfer and move all of your assets at once. Most brokers in the US use the electronic transfer system. However, some financial institutions can only transfer investments manually.

Finding a New Broker

Get a breakdown of what your investments are costing you. If you've had your brokerage account for a while, you may not be paying attention to the fees that you're being charged. Pull up your account and look at the transactional history for the past year to see what you're being charged.
- For example, if you're not making active trades on your account, you might be charged a fee for having an "inactive account."
- If you opened your account under an introductory deal, the fees may have changed. For example, your broker may have offered commission-free trades for a brief period after you opened your account.
Compare fees with other brokers. Even if you're relatively satisfied with your broker, it's still a good idea to comparison shop every so often and see if you couldn't be getting a better deal somewhere else. Brokers frequently change their fees and commissions as an incentive to new clients.
- Your priorities might have changed as well. For example, if you didn't have a lot of money to invest when you started, you may have needed a broker that had no minimum account balance requirement. If you have more money in your account now, you might be able to find a broker with lower fees.
- If you're a more active trader, check commissions with other brokers on trades you make the most.
Find out what transfer fees your old broker will charge. Brokers typically charge a fee for you to transfer your investments to a new broker. While this fee is usually less than $100, it's worth checking to find out how much it will be.
- If you'll end up saving more in fees and commissions with your new broker than you would pay your old broker in transfer fees, it's probably a good idea to switch.
Make sure all of your investments will transfer to the new broker. Some types of investments can't be transferred to a new broker. These include securities sold exclusively by your old broker and mutual funds that aren't available at your new broker.
- If you provide a list of the securities you have in your old account to your new broker, they typically can tell you if some of them can't be transferred. You can also search on the broker's website to confirm the securities you have in your old account are available from the new broker.
- If all of your investments cannot be transferred to your new broker, you can typically still do a partial transfer. However, keep in mind that partial transfers typically have to be done manually and will take longer to complete than electronic transfers.

Completing an Electronic Transfer

Gather information about your old account. For the smoothest transfer, everything about your account with your new broker should match the information on your account with your old broker. This includes your name as well as the type of account. Information that doesn't match could cause delays.
- For example, if your name is listed on your old account with your middle initial, include your middle initial on your new account to minimize delays.
- Some brokers reject the transfer if you've set up a different type of account with your new broker. For example, if you have an IRA account with your old broker, you would need to set up an IRA with your new broker to transfer those investments.
- While you might be able to change information during the transfer process, it will typically result in delays. For example, if your name changed due to marriage or divorce, you would typically need to produce a marriage certificate or divorce decree to justify the change.
Fill out an ACATS transfer form with your new broker online. In the US, brokers use the Automated Customer Account Transfer Service (ACATS) to transfer securities from one broker to another. Initiate the transfer through your new broker. Typically, you can find the electronic transfer form on your new broker's website.
- Read the information about transfers on your new broker's website carefully before submitting your transfer request form. If you have any questions, call your new broker's customer service number.
- Generally, the form requires you to provide information about your account with the new broker as well as information about the old account that currently holds your investments. Provide your account number, name, and Social Security number exactly as they appear on your old account.
Wait for your old broker to validate the transfer request. Once the new broker enters the information about your transfer into the ACATS system, that information is automatically sent to your old broker. Your old broker checks the information in the transfer request against its own records and has 3 days to either validate or reject the request.
- As long as all the information on your transfer form matches the information on your old account, the old broker should verify your request relatively quickly.
- If anything doesn't match and your old broker rejects the request, your new broker can send any corrections that are necessary for your old broker to verify the request. However, this can cause delays.
Confirm with your new broker that the transfer is complete. It typically takes about a week to transfer a brokerage account to a new broker using the ACATS system. Your new broker can give you a better idea of when to expect your investments to arrive in your new account after your old broker validates your transfer request.
- Most online brokers will send you an email or text message when the transfer is complete. You may be able to set up another method of notification when you initiate the transfer.
- If your investment account is frozen while the transfer is in progress, find out when you can start ordering new trades.

Making a Manual Transfer

Confirm that you can't transfer your investments electronically. Most brokers and some other financial institutions, such as banks and credit unions, transfer investments electronically. However, some don't use the electronic system. There are also some types of investments that can't be transferred electronically.
- Banks, mutual funds, credit unions, and insurance companies aren't required to use the electronic system. However, they might use it voluntarily.
- Some types of mutual funds and annuities cannot be transferred electronically and must be transferred manually instead.
Complete a Transfer Initiation Form (TIF) with your new broker. The TIF form requires you to provide information about your account with your new broker as well as information about the account you want to transfer your investments from. Make sure the type of account and ownership information are the same for both accounts to prevent delays.
- For example, if you had an IRA account with your old broker, you wouldn't want to set up a regular brokerage account with your new broker. Your old broker may not be willing to transfer your investments.
- Your new broker may have a single form that they use or they may have a different form for different types of accounts. If your old broker has several different forms, make sure you have the right form for the type of account you have.
Have your new broker send the TIF to your old broker. When you've completed your TIF, your new broker will typically mail the form to your old broker. Ask what day the form will be sent and whether you're able to track it.
- Some brokers may be able to transmit the paper request using email or fax, which will typically be faster. However, manual transfer is still going to take more time than electronic transfer.
Ask your old broker if they've received the transfer request. Allow a week or so to elapse before contacting your old broker. Make sure they've received the form you submitted to your new broker and find out if they need any additional information from you.
- If your old broker needs additional information or documentation before they can approve the transfer, try to get that to them as quickly as possible. For example, if your name has changed, your old broker may want to see a marriage certificate or divorce decree as proof of the name change.
Stay in touch with both brokers until the transfer is complete. Because manual transfers essentially amount to you and both brokers swapping paper forms amongst each other, it can take 30 days or longer to complete a manual transfer. Check in with both brokers and make sure you know where they are in the transfer process.
- Each time you talk to either your old broker or your new one, try to get an estimate from them of how much longer they think the transfer will take. Let them know when you plan on following up again. For example, you might say, "I understand it might take another 2 weeks for my investments to transfer. I will follow up in 10 days and see where we are in the process."

Tips

During the transfer process, your investment account will likely be frozen. You won't be able to trade any securities until the transfer is complete.
Try to time your transfer so that dividends, interest, and any other proceeds from your investments are not deposited into your account until after the transfer is complete.

Warnings

While the general process of switching stockbrokers is similar throughout the world, this article focuses on investment laws and regulations in the US. If you live in another country, talk to your broker or an independent investment advisor.

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