How to Transfer a Brokerage Account?

It’s not rare to find unsatisfied clients switching between brokers and opting for account transfers, sometimes they reach this decision for a better deal, cheap rates, or simply better treatment from customer care department. Whatever may be the reason to make the switch, brokerage account transfer process isn’t something simple and quick. The main ideas behind writing this post are to educate investors about the brokerage account transfer process, answer some commonly asked questions and above all provide some helpful tips so that those willing to opt for this process can get it done with ease.

Brokerage industry witnesses thousands of account transfers each year and many investors face delays, which is the most annoying problem. So, let’s dig into the matter in detail and see what can be done to avoid transfer delays. But, first let’s understand how is a brokerage account transferred?

What’s the role of National Securities Clearing Corporation (NSCC) in account transfer process?

It’s the responsibility of National Securities Clearing Corporation (NSCC) to ensure that customer accounts are transferred from one broker to another without hassle. For this they have setup Automated Customer Account Transfer Service (ACATS) which takes care that all the assets on a brokerage account such as bonds, stocks, derivative positions and cash holdings are transferred to destined broker or dealer.

Initiating Account Transfer Process

Any individual willing to shift assets from one broker to another, needs to complete a Transfer Initiation form (TIF) and submit the same with the broker they want to switch to. This document can be obtained from the broker where you want to shift all your holdings. They will then initiate the transfer by communicating with your existing broker through ACATS.

How much time does it take for a brokerage account transfer process to complete?

Once all the necessary formalities are taken care of, which includes matching customer account information to avoid unauthorized transfers, your existing broker will transfer all your assets to the new broker within three days. It might take another three days on part of your new broker to validate your account. So, in all it’s a six days process before you can completely transfer all your assets to a new account and start making trades. However, it’s not as smooth as it appears above; often it takes much more time for different reasons. Lets dig into details:

In case your existing account is with an entity which is not a broker ( it could be a mutual fund, a credit union, or even a bank), in such cases the transfer process may take some more time. In other cases where a custodian is required for the transfer it may take additional time, this normally happens in case of retirement accounts and in account transfer of a minor child.

Let’s get realistic; though it’s possible to transfer an account within six business days, normally the process takes around 10 days.

What can you do to ensure a successful Brokerage Account Transfer?

First of all, it’s important that you check if there are any constraints or policy clauses that might come in way of a successful transfer. Usually some issues arise while transferring margin accounts, so you should ensure that your new broker has that facility and is willing to approve you for a margin account. Margin requirements differ among brokers so you need to ensure that you meet margin requirements of the new broker.

It’s always better to clear any doubts with the new broker, they will surely help you fix issues that might void successful transfer. You need to ask them right question to get proper information, so inquire about the type of account you will be entitled, your holdings, cash, margin requirements and so on. You may put up a straight question if there is anything that might delay your account transfer.

What you must know before initiating an account transfer?

Make sure that you do not trade while the transfer is in process as doing so might complicate the process further. If any trades have to be made, then ensure all is done before submitting the TIF form with your new broker. Some brokers freeze accounts under transfer so that nothing comes in way of the transfer.

Do not stick to risky positions during the transfer process is on as you may not be allowed to trade while the transfer is underway or in another case your transfer may be interrupted or delayed due to such trades.

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