How to transfer a brokerage account
Brokerage account transfer fees
Many brokers charge a fee when you transfer brokerage account assets. Typical fees range from around $50 to $100, but not all brokers have account transfer fees. The only way to find out how much your old broker is charging is to check their fee schedule or contact customer service.
You can, however, avoid these fees, as your new broker can cover them. Brokers often do this as an incentive to attract new customers. If your old broker has transfer fees, ask your new broker to foot the bill.
Even if your new broker doesn’t offer it, it might still be worth transferring a brokerage account. The potential benefits of switching brokers, such as free trades or new account bonuses, often far outweigh the one-time switch fee.
What to do before transferring a brokerage account
There are a few things you should do to prepare and protect yourself before transferring an account:
- Make a list of your investments: It’s a good idea to record all of your investments, including the number of shares and your cost base (the price you paid for each investment, which is important for calculating earnings or capital losses). This should all be transferred, but it’s nice to have just in case.
- Upload tax documents: Your former broker should always send you the appropriate brokerage tax documents. For added security, download the tax forms yourself.
- Be prepared to lose access to your assets during the transfer: As mentioned above, the transfer process typically takes six business days. During this period, you will not be able to sell any of the investments you transfer.
When it makes sense to transfer a brokerage account
Investors don’t switch brokerages very often, but there are times when it’s for the best. Here are the most common reasons to consider moving to a new brokerage firm:
- You pay unnecessary fees: major brokers now offer commission-free transactions. If your broker is still charging you trading fees, it’s time to switch to a broker that won’t, in order to save money on each investment.
- You want to benefit from a special offer: Investors with large balances are coveted customers. Some brokers have special offers, most often cash bonuses, for new investors who bring in enough assets.
- You change jobs: A 401(k) isn’t exactly a brokerage account, but if you change jobs, you’ll probably want to renew (transfer) your 401(k). You can transfer it to your new company’s 401(k) or to an IRA with an online broker.
Once you have found a new broker and created an account, transferring your assets is quite simple. You have just completed the form to transfer the brokerage account. Brokers take care of the rest. They’ll let you know if there are any issues that need your attention, but in most cases transfers are common and happen quickly.