When opening a new investing account, it often seems easier just to stick with your existing online broker — even if you’re dissatisfied with the fees or customer service. Many investors believe that transferring brokers is difficult. But it doesn’t have to be. Here’s how to transfer your account without tearing your hair out in the process.
In some cases, stock brokers charge transfer fees when you decide to leave them behind. But don’t let this stop you. The truth is, you might be better off paying that one-time fee if, as a result, you end up with a brokerage that better suits your needs (and costs less over time).
As you transfer, though, there are some things to keep in mind. After all, you’re transferring your (hopefully) valuable securities.
In most cases, you’ll have to pay an exit fee before leaving. However, as you’ll see, most brokers will reimburse that fee as a bonus for transferring to their service.
What to Do Before Transferring
Before you initiate a transfer between brokers, it’s a good idea to contact the new broker to discuss your situation — especially if there are potentially complicated factors.
Find out what the individual broker’s process is, and discuss the assets that you plan to move. A few minutes on the phone with the new broker can help ensure that everything goes as smoothly as possible.
Retrieve/record the transaction history from your old broker. Make a record of all the securities you own before the transfer occurs.
Per a ruling implemented in 2011, the history will be passed onto the new broker and will not be lost. However, you should have your copy just in case. If you don’t have this information and end up selling any securities, you’ll likely have a bit of a headache at tax time. It also becomes harder to know the profit/loss of individual security.