In the age of P2P transfers and tap to pay, transferring funds has become as simple as a few small gestures. Money jumps between accounts in a matter of seconds. However, not all transfers are hip to the changing times.
If an investor is unhappy with their current brokerage firms service or tools, they shouldn’t let the hassle of the transfer process keep them from switching to a broker they truly like.
Putting off a transfer won’t make the dissatisfaction of a brokerage firm go away, and it might actually be keeping investors from future portfolio growth if they don’t enjoy using the platform or tools.
But here’s the thing, transferring brokerage accounts is nowhere near as tough as many people think it is. While it’s not as fast as a Venmo request, the process only requires a few forms and a touch of patience to get it done.
Step One: Confirming Account Information
Before an investor starts the transfer process, they should take some time to review their existing account, taking note of the assets they hold, total amounts held, and basics like account number and information on file.
Having a snapshot of account totals can serve as a backup in the event that anything goes wrong in the transfer. Investors might want to have proof of their assets for confidence before getting started.
Step Two: Contacting the New Broker
To kick off the process, an investor would reach out to their new broker, also known as the “receiving firm” in the transfer. Each brokerage firm will have a slightly different transfer process, but most accounts will be transferred in an automated process through the help of the National Securities Clearing Corporation (NSCC).
NSCC runs Automated Customer Account Transfer Service (ACATS), a service that makes it possible for accounts to be transferred in a standard way from one brokerage firm to another. ACATS should work for the most transfers, including cash, stocks, and bonds.
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When an investor contacts the receiving firm, they’ll receive a set of instructions, and oftentimes a physical or digital copy of the Transfer Initiation Form. At this stage, it’s not necessary for an investor to reach out to their old brokerage firm.
During initial contact is also a good time for investors to ask any questions specific to the receiving firm’s transfer process. Some good questions to ask include:
• How long does the average account transfer take?
• What are some common issues that could delay a transfer?
• How does the brokerage firm stay in contact with an investor during the transfer? Will they reach out via phone or email?
• What documents does an investor need to start a transfer?
• What fees (if any) might an investor have to pay to complete an account transfer?
• How does the brokerage firm let investors know the process is complete?
In addition to these basic questions, the investor might also want to ask about the specific assets they’re transferring. In some cases, a brokerage firm might not be able to accept securities or assets because:
• The stocks or bonds are proprietary to a specific brokerage firm
• The firm doesn’t have an existing relationship with the mutual fund or money market that holds the investor’s funds
• Securities are bankrupt
• Shares are fractional
• The asset is a private stock holding
If the receiving firm deems any of the investor’s assets to be untransferable, there are a few options as to how they could proceed:
Sell the asset and transfer the cash. Investors should be aware that selling the asset may affect their taxes. They should consult with a financial advisor before proceeding.
Leave the asset in the account after the transfer. If the account will go inactive after the transfer, the investor could ask if keeping the asset there would incur a fee.
The investor can physically deliver the assets. This is a complicated and sometimes risky process that should only be done with the assistance of an advisor.
Connecting with a new broker can help clear up any potential issues that might come up during the actual transfer. Getting common issues out of the way before kicking things off could lead to fewer delays in the process down the road.
Step Three: Completing a Transfer Initiation Form (TIF)
Completing the standard TIF officially kicks off the process. Once the receiving firm has an investor’s TIF, they’ll start making arrangements with the person’s old brokerage firm, or “delivering firm,” to send the assets over.
Investors should take care to complete the TIF thoroughly and correctly. If information (such as Social Security number, name, or address) is not the same with both the delivering and receiving firms, the request could be flagged as fraud and rejected.
That means confirming an investor’s receiving and delivering firms have the correct personal information on file as well.
The most common hold-up in the transfer process is an investor error in the TIF.
TIFs typically include the following information:
• Numbers for both brokerage accounts
• The brokerage account type, such as joint, individual, Roth IRA, trust, estate, limited liability, 401(k), etc.
• Social Security number
• A co-owner’s SSN (if applicable)
• Investor phone number
• Investor email
• Delivering firm’s contact information (address, phone number)
• Specific assets to transfer, in the event of a partial transfer
Depending on the receiving firm, the investor might be able to complete the TIF online in a few minutes, or they might have to submit via mail, fax, or scan. In some instances, a brokerage firm might ask an investor to come into the office to complete a TIF.
Using the TIF is the most common way to transfer funds, but there are some brokerage firms s that choose not to use ACATS, and therefore don’t accept TIFs.
If this is the case for either the receiving or delivering firm, then the brokerage firm will exchange custom forms between themselves and the investor. This is an acceptable way to perform a transfer, but investors should be warned—a transfer outside of ACATS will take longer, up to 30 days in some cases .
Step Four: Submitting the TIF, and Sitting Tight
When everything looks complete, the investor will submit the TIF to their receiving firm. Then comes waiting.
While the investor can’t do much more than sit on their hands and wait, the receiving firm is entering the TIF into ACATS. This information becomes a digital request submitted to the delivering firm, requesting a transfer of assets from one brokerage to another.
The delivering firm has one day to review the form and accept it, or reject it if the TIF is incomplete or incorrect.
When the TIF is being reviewed, investors might want to pay close attention to their email and phone. If there’s any mismatched information on the TIF or between the two firms, the receiving firm will likely reach out to the investor to amend the issue.
Missing outreach could mean an even longer transfer period. That’s why investors might want to double (or even triple) check that all the information on the TIF and between the two brokerages, is consistent.
Even a single-digit mistake in an address or phone number could spell a multi-day delay in the process. Depending on the process, the receiving firm might try to correct a perceived error or might reach out to the investor directly to have them provide the correct information.
If a problem is not resolved within two business days , the transfer request is deleted from ACATS. If the form is correct and approved by the delivering firm within the appropriate window, then they will send a list of assets to the receiving firm. Now, it’s the receiving firm’s time to accept or reject.
The receiving firm gets to decide if they want to accept or reject those assets. While uncommon, it is possible for a brokerage to reject the assets. This is why it helps that investors speak to the receiving firm before the transfer, to confirm their assets will be accepted.
In the event that the assets are accepted, the delivering firm will digitally move the holdings over to the receiving firm.
Step Five: Contacting Your Old Broker (Optional)
In the world of texting, a phone call might be the last thing a person wants to do. But, a simple call could save a few bucks in the transfer process. One hiccup that can come from the process is the account transfer fee. In some instances, the delivering firm will charge an “exit fee” when an investor makes a full transfer, partial transfer, or decides to close an account entirely.
If the delivering firm charges a fee at all, it’s typically $75 or less . To avoid the surprise of a fee, an investor might choose to reach out to their old brokerage firm and ask if they’ll be charged a fee for leaving or transferring funds.
If the delivering firm charges a fee, investors could reach out to the receiving firm to ask if they have any promotion for new clients that would cover the cost of transfer fees.
Step Six: Watching the New Account, and Waiting
After the delivering and receiving firms approve the transfer request, it will still take a few days for the investments to move accounts.
Investors shouldn’t be alarmed when assets disappear from both accounts for a day or two—but the whole process typically takes no more than six business days.
The process may take longer if the delivering firm is not a broker-dealer. If the delivering firm is a bank, mutual fund, or credit union, the transfer often takes longer than six business days.
Investors can also expect the transfer to take longer if it requires a custodian. Telling the receiving firm of this upfront could give investors a better idea of the time table for these circumstances.
No matter the length of the transfer, it’s common for one or both of the brokerage accounts involved to be frozen. That means no trades are allowed until the process is complete.
Investors might choose to plan ahead and avoid trading during this period. So, if there are a stock or fund investors are looking to sell in the near future, they might want to sell it before starting a transfer.
This process might look long and complicated, but oftentimes, steps will happen at the same time. However, communication between the two brokerages will still take time, no matter how efficient the two are.
Switching to SoFi Invest®️
People might put off transferring their brokerage account because they believe it’s involved and complicated. While it’s not instant, the process typically takes just six business days from start to finish.
That means investors are only a few days and a simple form away from a new brokerage service.
As long as an investor is careful and asks their receiving firm the right questions before getting started, they shouldn’t run into any major roadblocks during the transfer.
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