Web Wealth: Help switching brokers
Finding a broker to assist or guide your investing is hard. Switching brokers can be even harder. There are ways to ease the process, and here's how to become familiar with some of them.
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Finding a broker to assist or guide your investing is hard. Switching brokers can be even harder. There are ways to ease the process, and here's how to become familiar with some of them.
"Transferring a brokerage account seems a little intimidating," observes this post at informational site LearningMarkets.com. But, it continues, "if you are in an unhappy brokerage relationship don't let the paper-work scare you. Dump your broker and educate yourself on how easy the transfer process can be and what you should ask for to make it as inexpensive as possible." Reasons to leave a broker may include getting access to more financial products or services, or a better deal on commissions.
FINRA - the Financial Industry Regulatory Authority - a self-policing arm of the securities industry, explains the semi-automated transfer process. "Transfers involving the most common assets, for example, cash, stocks and bonds of domestic companies, and listed options, are readily transferable" via something called the Automated Customer Account Transfer service, or ACATS, this page at FINRA's site explains. Essentially, if you want to move an account, filing the proper form with a new broker or institution starts the process, which can take a few weeks to complete.
Glitches do happen. For example, "Be aware that delays may occur when you transfer a retirement account," notes this article about tips on transfers that is posted on the website of the U.S. Securities and Exchange Commission. A delay may be caused by factors that include not having the right sort of account set up at your new institution, or owing a fee to your old institution. And then, the SEC says, there are some securities that simply aren't transferrable, such as annuities, bankrupt securities, or mutual funds not sold by the new firm. Your choices on these, say the SEC: "either sell the non-transferable security and transfer the cash, or leave the security with your old firm."
Fees? Yes, there are often fees involved in moving money between broker accounts. Fees for some institutions are listed at Online Broker Review, though the list does not appear to have been updated since last year. The chart, which shows fees ranging to about $100 to transfer an entire account out of a brokerage, also notes some reimbursements and perks offered to new customers transferring in.
Finding a broker for the first, second, or 10th time is no easy task. A post at Investopedia.com by financial writer Jonas Elmerraji gives guidelines for making the right choice among full-service and discount brokers, and how to understand their procedures and fee structures.