How to Switch Brokers and Transfer Your Account

Switching brokerage firms can offer investors improved services, lower fees, or broader investment options. While the process may seem complicated, transferring an investment account is manageable with careful planning. This guide demystifies the steps involved, from initial preparation to final asset verification, helping investors navigate the transition smoothly. It outlines the necessary actions and considerations to successfully transfer a brokerage account.

Preparing for the Brokerage Transfer

Before initiating any transfer, review existing accounts and assets. Identify all account types held at your current brokerage, as each may have specific transfer implications. Common account types include taxable brokerage accounts (such as individual or joint accounts), various Individual Retirement Accounts (IRAs) like Traditional, Roth, or SEP IRAs, and specialized accounts such as 401(k)s or 529 plans. Ensure the new brokerage can accommodate these structures, as transfers typically occur between accounts of the same type.

List all assets within the current account for a smooth transfer. This includes common holdings like stocks, bonds, mutual funds, Exchange Traded Funds (ETFs), and cash. Other investments, such as options, annuities, or alternative investments, may also be part of a portfolio and require specific attention. Identifying these assets helps determine their transferability and any potential requirements or limitations.

Decide between a full or partial transfer during this preparatory phase. A full transfer involves moving all assets from one account to another, often leading to the closure of the original account. Conversely, a partial transfer allows an investor to move only specific assets, leaving others behind.

Assets can be transferred “in-kind,” meaning they move as they are without being sold, or they can be liquidated. In-kind transfers are often preferred because they avoid immediate tax consequences. However, if assets are liquidated before transfer, any capital gains realized are taxable in the year of the sale.

Certain assets may not be transferable in-kind due to their nature or the new brokerage’s offerings. Proprietary mutual funds, exclusive to a particular firm, or illiquid investments like limited partnerships, often fall into this category. If the new firm does not support a specific investment, it may need to be sold, which could result in a taxable event. Confirm with the new brokerage which assets it can accept in-kind.

Transferring accounts can involve various fees. The outgoing brokerage firm may charge a transfer fee, commonly ranging from $50 to $100 for a full account transfer. Some brokers may also levy account closing fees. Inquire about these potential charges from both brokerages, as the new firm may sometimes offer to reimburse transfer fees.

Collect specific information from your current brokerage account. This includes the exact account number and title, as they appear on official statements. Having a recent account statement available provides a snapshot of current holdings and ensures accuracy when completing transfer forms.

Initiating the Transfer Process

Once preparatory steps are complete, initiate the transfer process with the new brokerage firm. First, open a new account with the receiving broker if one does not already exist. This new account must be the same type as the one being transferred to ensure a direct and compatible transfer. Most brokerages offer an online application process, requiring personal details such as name, address, date of birth, Social Security number, and driver’s license information.

The new broker initiates the transfer through the Automated Customer Account Transfer Service (ACATS). This standardized electronic system, developed by the National Securities Clearing Corporation (NSCC), automates the transfer of eligible securities between firms. Your role is to complete and submit a Transfer Initiation Form (TIF) to the new firm. This form contains information allowing the new broker to request the assets from the old firm.

Accuracy in providing information on the new broker’s transfer forms is important. The old account number, the exact account title, and the type of transfer (full or partial) must precisely match what is on record with the current brokerage. Any discrepancies, even minor ones, can lead to delays or rejection of the transfer request. The new firm electronically enters this data into the ACATS system, which then communicates with the delivering firm.

Required documentation generally includes a signed transfer authorization form (the TIF) and often a recent statement from the old brokerage account. These documents provide the necessary authorization and verification for the transfer to proceed. The new broker will review the submitted forms for completeness before formally initiating the request through ACATS.

Sign and date all necessary authorization forms to confirm your consent for the asset movement. Once the forms are accurately completed and submitted, the new broker takes on the responsibility of coordinating with the old broker. While it is not typically necessary for the investor to directly notify their old brokerage, the new firm handles the primary communication and transfer requests.

Tracking and Finalizing the Transfer

After the transfer request has been submitted, monitor its progress. Most Automated Customer Account Transfer Service (ACATS) transfers typically complete within three to six business days. However, some transfers may take slightly longer, sometimes up to five to seven business days, especially if fractional shares need to be liquidated or if there are other complexities. Transfers that cannot be processed through ACATS, often referred to as manual transfers, may take considerably longer, ranging from two to four weeks or even 30 to 60 days.

Investors can usually track the status of their transfer through the new brokerage firm’s online portal or by contacting their customer service department. Checking the old account for the removal of assets can also indicate progress. During this period, it is generally advisable to avoid making trades within the account being transferred to prevent potential complications or delays.

If assets are missing, incorrect, or if the transfer experiences an unexpected delay, address these discrepancies promptly. Investors should contact both the new and old firms to inquire about the status and resolve any issues. In cases where the delivering firm does not respond or a problem is not resolved efficiently, the transfer request might be purged from the ACATS system, requiring the new firm to re-initiate the process. The Financial Industry Regulatory Authority (FINRA) oversees this process and can be notified if significant issues arise.

Upon completion of the transfer, verify that all transferred assets appear correctly in the new account. This includes confirming the accurate transfer of cost basis information for each security, which is important for future tax reporting. Comparing the first statement from the new firm with the last statement from the old firm helps ensure everything has been accounted for.

For full transfers, the final steps involve closing the old account once all assets and cash have been successfully moved. Confirming a zero balance in the old account and receiving a final statement from the previous brokerage ensures that the transition is complete. If any assets were sold during the transfer process, capital gains or losses would be realized and should be accounted for in tax calculations. Consulting with a tax professional can provide tailored advice regarding tax implications.