Thankfully, you do not need to order stock certificates or break the bad news to your current brokerage firm that you plan to move your stocks to another company. Instead, once you have an account at the new brokerage company that matches your current account, you can direct the new firm to transfer all of your assets from the old firm, and they will do all of the work.
Open a new brokerage account at your preferred brokerage company (also known as the "destination" firm) whose title exactly matches the title on your current account. For example, if you have a Rollover IRA, you must open a Rollover IRA at the destination firm. You cannot open a Roth IRA or a taxable account. If you used a shortened version of your name, for instance, you should use the same name on the new account.
Contact a representative at your new brokerage firm and ask whether it can accept all of your assets. Brokerage firms can accept all publicly-traded stocks and exchange-traded funds (ETFs), but you might own other assets that the destination firm cannot accept. You can either sell the assets if you still want the new brokerage firm to hold all of your investments, or you can choose to leave unacceptable assets at your current firm. If you choose to liquidate assets held in a taxable account, you will need to pay taxes on any capital gains resulting from the sale.
Ask the representative for a Transfer of Account form. The representative will either direct you to a place on the company web site where you can download the proper form, or she might direct you to a web page where you can enter your transfer information online.
Finally, ask the representative if your account transfer qualifies for any incentives. Brokerage firms often offer incentives to investors transferring in assets above a certain limit. Even if your new company provides no transfer incentives, you can still ask if it will rebate your transfer fee as an incentive for moving your account, particularly if your assets are worth six figures or more. Transfer fees, charged by the "delivering" firm to cover administrative costs, typically range from $50 to $100, depending on the company and the type of assets transferred. This fee will be transferred to your new account as a debit balance which you will need to cover, either with uninvested cash in your account, or by selling enough shares of an investment to cover the debit balance.
Complete the TOA form based on the information in your most recent account statement. Most TOA forms will also ask you to attach a copy of your most recent statement to the completed TOA form.
A few days after you have mailed in your completed form, call your new brokerage firm and ask if it has received your paperwork. If so, ask if there is a way for you to track the progress of your transfer online. Many companies provide this, and a representative can show you where to find your transfer status updates. These updates will notify you if there is a problem which requires your attention. You can also simply review your account; as soon as your new firm receives your assets, it will post them to your account.
- Keep in mind that stock and mutual fund transfers are more complex than cash transfers, and you might be unable to place trades while the transfer is in process. Although stock transfers can generally be completed electronically in under a week, mutual fund transfers can sometimes take several weeks to complete. Check with your new brokerage firm if you need to sell an asset before your transfer is complete.
- Brokerage firms must follow many rules when executing asset transfers. Any incorrect information on your TOA form will delay your transfer. Follow up with your new brokerage firm to make sure that it has all of the information it needs from you to complete the transfer of your assets.
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