How to Change Financial Advisors and Transfer Accounts

Changing financial advisors involves a series of practical steps to ensure a smooth transition of investments and accounts. This process, while seemingly complex, can be managed effectively by understanding the necessary preparations and procedures. The goal is to move financial assets from one advisory firm to another with minimal disruption and maximum efficiency. This article outlines the practical considerations involved in transitioning your financial relationship, guiding you through the steps to successfully transfer accounts and establish your new advisory partnership.

Gathering Information for the Transfer

Before initiating any transfer, a thorough compilation of existing financial details is necessary. This preparatory phase involves identifying all accounts currently managed by your existing advisor. These may include various types such as brokerage accounts, individual retirement accounts (IRAs), Roth IRAs, and taxable investment accounts, alongside any retirement plan rollovers like those from a 401(k). For each account, it is important to note the specific account type and its unique account number.

Locating recent account statements for all identified accounts is a crucial step, as these documents provide current values, precise account numbers, and detailed listings of all holdings. Reviewing these statements helps confirm the exact assets held, ensuring no investments are overlooked during the transfer process. Understanding the specific types of assets within these accounts, such as individual stocks, bonds, mutual funds, exchange-traded funds (ETFs), or more complex alternative investments, is important for determining how they will transfer. Some assets might transfer “in-kind,” meaning they move without being sold, while others may need to be liquidated into cash before transfer if they are proprietary or illiquid.

Confirming beneficiary designations for all accounts is another important pre-transfer task. These designations specify who will receive the assets upon your passing and often supersede instructions in a will or trust. It is prudent to ensure primary and contingent beneficiaries are accurately named and updated, as these designations typically do not automatically transfer with the accounts themselves. Additionally, gathering personal identification information, including your Social Security number, current address, and date of birth, is necessary as this data will be required by the new advisory firm for account opening.

Finally, it is prudent to investigate any potential fees or penalties associated with transferring assets out of your current institution. While many firms do not charge for incoming transfers, outgoing transfer fees can range from approximately $50 to $125 per account, depending on the custodian. Some alternative investments or older mutual funds may also carry specific transfer restrictions, surrender charges, or early redemption fees that should be understood before proceeding, potentially impacting the net value of the transfer.

Beginning the Transfer with Your New Advisor

Once all necessary information has been gathered, the process of initiating the transfer typically begins with your new financial advisor. The new advisor generally takes the lead in facilitating this process, as they have the necessary forms and established procedures to streamline the transition. Their role involves assisting you with the paperwork required to open new accounts and authorize the transfer of assets from your previous institution.

Opening new accounts with the chosen advisor involves completing comprehensive new account applications that detail your investment objectives, risk tolerance, and personal information. Concurrently, you will sign transfer authorization forms, such as the Automated Customer Account Transfer Service (ACATS) form, which is widely used for transferring securities between brokerage firms. This standardized electronic system, developed by the National Securities Clearing Corporation (NSCC), simplifies the process of moving assets.

The ACATS form instructs your current custodian to move your assets to the new firm. Your new advisor will use the account numbers and holding details you previously gathered to complete these forms accurately, ensuring that the information matches what your old firm has on file. If the submitted data does not meet ACATS’s minimum requirements, the system may automatically reject the transfer instruction, causing delays.

The new advisor will then submit these completed forms to their custodian, who in turn communicates with your former institution to request the transfer. While your new advisor manages the logistical aspects, you may need to formally notify your previous advisor of your decision to move your accounts. This can often be a simple communication, as the transfer request from the new firm typically serves as the official notice. You will also provide instructions for how your assets should be transferred, whether as a full transfer of all holdings, a partial transfer of specific assets, or an in-kind transfer where securities move without being sold. In some cases, especially with illiquid or proprietary assets, liquidation into cash may be the only option before the cash is then transferred to the new accounts. Your new advisor will guide you on the most efficient and appropriate method for your specific holdings, particularly for assets that are not ACATS eligible and require manual transfer.

Monitoring and Confirming the Asset Movement

After initiating the transfer, monitoring the progress of your asset movement is an important step to ensure a successful transition. The timeframe for asset transfers can vary considerably, typically ranging from a few days for common securities transferred via ACATS to several weeks or even longer for complex assets like alternative investments or those requiring manual processing. Standard ACATS transfers usually complete within 5 to 7 business days from the time the request is submitted, but non-ACATS transfers or those involving mutual funds held directly with the fund company can take 30 to 60 days.

Your new financial advisor will usually provide updates on the transfer’s progress, and many custodians offer online portals where you can track the status of your incoming assets. During the transfer process, some assets may temporarily appear in a “transfer pending” status, indicating they are in transit between custodians. It is important to understand that during this period, these assets may not be available for trading.

If the transfer appears delayed beyond the expected timeframe or if you notice any discrepancies in the holdings being transferred, immediately contact your new advisor for clarification. Delays can occur for various reasons, such as mismatched account information, insufficient funds to cover transfer fees, or restrictions placed on the delivering account. Your advisor can investigate the cause of the delay and communicate directly with the sending institution to resolve any issues. Once the transfer is complete, you should meticulously verify that all assets have successfully arrived in your new accounts. This verification involves comparing the initial statements from your new advisor against the final statements from your previous firm to ensure all holdings, share quantities, and cash balances match. It is also important to confirm that the cost basis information for your investments has transferred accurately, as this is crucial for future tax reporting.

Finalizing Your New Advisory Relationship

Once all assets have successfully transferred to your new accounts, the final steps involve confirming the completeness of the transfer and fully establishing your relationship with the new advisor. Carefully review the first statements received from your new advisor to ensure that all assets, their quantities, and market values are correctly reflected. This reconciliation helps confirm that no discrepancies occurred during the transfer process and that all expected holdings have arrived.

Updating any beneficiary designations that may not have automatically transferred or require adjustment with the new accounts is a crucial administrative task. While some account types might carry over designations, it is a prudent practice to re-confirm these directly with your new custodian to ensure your estate planning wishes are accurately recorded and that assets will pass directly to your chosen beneficiaries, bypassing probate. Establishing clear communication protocols and meeting schedules with your new advisor helps set expectations for ongoing interaction and financial planning. This includes discussing how often you will meet, preferred communication methods, and how frequently you will receive performance updates.

Setting up online access to your new accounts and familiarizing yourself with the new platform’s features, such as transaction history, statements, and performance reporting, is also recommended. This ensures you have independent visibility into your investments and can monitor them as needed. Finally, once you have confirmed all assets are securely transferred and verified, safely dispose of old financial statements and documents from your previous advisor by shredding them to protect sensitive personal and financial information. Ensure any recurring deposits or withdrawals, such as those for retirement contributions or bill payments, are correctly re-established to your new accounts, as these do not automatically transfer.

Gathering Information for the Transfer

Before initiating any transfer, a thorough compilation of existing financial details is necessary. This preparatory phase involves identifying all accounts currently managed by your existing advisor. These may include various types such as brokerage accounts, individual retirement accounts (IRAs), Roth IRAs, and taxable investment accounts, alongside any retirement plan rollovers like those from a 401(k). For each account, it is important to note the specific account type and its unique account number.

Locating recent account statements for all identified accounts is a crucial step, as these documents provide current values, precise account numbers, and detailed listings of all holdings. Reviewing these statements helps confirm the exact assets held, ensuring no investments are overlooked during the transfer process. Understanding the specific types of assets within these accounts, such as individual stocks, bonds, mutual funds, exchange-traded funds (ETFs), or more complex alternative investments, is important for determining how they will transfer. Some assets might transfer “in-kind,” meaning they move without being sold, while others may need to be liquidated into cash before transfer if they are proprietary or illiquid.

Confirming beneficiary designations for all accounts is another important pre-transfer task. These designations specify who will receive the assets upon your passing and often supersede instructions in a will or trust. It is prudent to ensure primary and contingent beneficiaries are accurately named and updated, as these designations typically do not automatically transfer with the accounts themselves. Additionally, gathering personal identification information, including your Social Security number, current address, and date of birth, is necessary as this data will be required by the new advisory firm for account opening.

Finally, it is prudent to investigate any potential fees or penalties associated with transferring assets out of your current institution. While many firms do not charge for incoming transfers, outgoing transfer fees can range from approximately $50 to $125 per account, depending on the custodian. Some alternative investments or older mutual funds may also carry specific transfer restrictions, surrender charges, or early redemption fees that should be understood before proceeding, potentially impacting the net value of the transfer.

Beginning the Transfer with Your New Advisor

Once all necessary information has been gathered, the process of initiating the transfer typically begins with your new financial advisor. The new advisor generally takes the lead in facilitating this process, as they have the necessary forms and established procedures to streamline the transition. Their role involves assisting you with the paperwork required to open new accounts and authorize the transfer of assets from your previous institution.

Opening new accounts with the chosen advisor involves completing comprehensive new account applications that detail your investment objectives, risk tolerance, and personal information. Concurrently, you will sign transfer authorization forms, such as the Automated Customer Account Transfer Service (ACATS) form, which is widely used for transferring securities between brokerage firms. This standardized electronic system, developed by the National Securities Clearing Corporation (NSCC), simplifies the process of moving assets.

The ACATS form instructs your current custodian to move your assets to the new firm. Your new advisor will use the account numbers and holding details you previously gathered to complete these forms accurately, ensuring that the information matches what your old firm has on file. If the submitted data does not meet ACATS’s minimum requirements, the system may automatically reject the transfer instruction, causing delays.

The new advisor will then submit these completed forms to their custodian, who in turn communicates with your former institution to request the transfer. While your new advisor manages the logistical aspects, you may need to formally notify your previous advisor of your decision to move your accounts. This can often be a simple communication, as the transfer request from the new firm typically serves as the official notice. You will also provide instructions for how your assets should be transferred, whether as a full transfer of all holdings, a partial transfer of specific assets, or an in-kind transfer where securities move without being sold. In some cases, especially with illiquid or proprietary assets, liquidation into cash may be the only option before the cash is then transferred to the new accounts. Your new advisor will guide you on the most efficient and appropriate method for your specific holdings, particularly for assets that are not ACATS eligible and require manual transfer.

Monitoring and Confirming the Asset Movement

After initiating the transfer, monitoring the progress of your asset movement is an important step to ensure a successful transition. The timeframe for asset transfers can vary considerably, typically ranging from a few days for common securities transferred via ACATS to several weeks or even longer for complex assets like alternative investments or those requiring manual processing. Standard ACATS transfers usually complete within 5 to 7 business days from the time the request is submitted, but non-ACATS transfers or those involving mutual funds held directly with the fund company can take 30 to 60 days.

Your new financial advisor will usually provide updates on the transfer’s progress, and many custodians offer online portals where you can track the status of your incoming assets. During the transfer process, some assets may temporarily appear in a “transfer pending” status, indicating they are in transit between custodians. It is important to understand that during this period, these assets may not be available for trading.

If the transfer appears delayed beyond the expected timeframe or if you notice any discrepancies in the holdings being transferred, immediately contact your new advisor for clarification. Delays can occur for various reasons, such as mismatched account information, insufficient funds to cover transfer fees, or restrictions placed on the delivering account. Your advisor can investigate the cause of the delay and communicate directly with the sending institution to resolve any issues. Once the transfer is complete, you should meticulously verify that all assets have successfully arrived in your new accounts. This verification involves comparing the initial statements from your new advisor against the final statements from your previous firm to ensure all holdings, share quantities, and cash balances match. It is also important to confirm that the cost basis information for your investments has transferred accurately, as this is crucial for future tax reporting.

Finalizing Your New Advisory Relationship

Once all assets have successfully transferred to your new accounts, the final steps involve confirming the completeness of the transfer and fully establishing your relationship with the new advisor. Carefully review the first statements received from your new advisor to ensure that all assets, their quantities, and market values are correctly reflected. This reconciliation helps confirm that no discrepancies occurred during the transfer process and that all expected holdings have arrived.

Updating any beneficiary designations that may not have automatically transferred or require adjustment with the new accounts is a crucial administrative task. While some account types might carry over designations, it is a prudent practice to re-confirm these directly with your new custodian to ensure your estate planning wishes are accurately recorded and that assets will pass directly to your chosen beneficiaries, bypassing probate. Establishing clear communication protocols and meeting schedules with your new advisor helps set expectations for ongoing interaction and financial planning. This includes discussing how often you will meet, preferred communication methods, and how frequently you will receive performance updates.

Setting up online access to your new accounts and familiarizing yourself with the new platform’s features, such as transaction history, statements, and performance reporting, is also recommended. This ensures you have independent visibility into your investments and can monitor them as needed. Finally, once you have confirmed all assets are securely transferred and verified, safely dispose of old financial statements and documents from your previous advisor by shredding them to protect sensitive personal and financial information. Ensure any recurring deposits or withdrawals, such as those for retirement contributions or bill payments, are correctly re-established to your new accounts, as these do not automatically transfer.