Many investors transfer their accounts from one brokerage firm to another without a hitch. If your transfer goes smoothly, count on the whole process taking two to three weeks. But this time frame may vary depending upon such factors as the assets involved, the types of accounts, and the institutions between which the transfer occurs.
-the wrong transfer form is used;
-the transfer form has been incorrectly completed;
-the transfer involves a request to liquidate some or all of your assets;
-the transfer includes a margin account;
-the transfer is from one type of account into a different type of account;
-a change in the account owner is made; or
-the transfer involves a retirement account.
-This document walks you through the transfer process and provides tips on how to avoid problems.
Use the Right Form
Use the correct form to ensure your transfer goes smoothly. Some firms allow you to use one form for all account transfers while others have different forms depending on the type of account you are transferring (for example, an IRA account or a margin account). To get the right form, call the new firm where you want to transfer your account or visit its Web site.
Review the Form Carefully
As you start filling in the transfer form, review the account statement from your old firm where your account is held. All firms require you to attach a copy of your most recent account statement to the transfer form.
The form usually asks for the name on your account, the type of account you want to transfer, account number, the firm where the account is held, and your social security or tax identification number. Be sure you provide this information exactly as it appears on your old account. For instance, if your middle name or initial appears on your old account, you may run into delays if you forget to include it. When transferring only some of the securities in your account, carefully list the securities you want to transfer on the form.
The easiest way to transfer your account is to keep the type of accounts the same (joint account transfers to joint account; IRA to IRA) and account owner the same. You can change account type or ownership at the time of the transfer, but this may delay the transfer. You may need to provide documents proving changes to ownership, such as a marriage certificate, divorce decree, or death certificate.
If you have questions about how to complete the form, contact the new firm for help. Once completed, keep a copy of the form for your records.
Understand the Transfer Process
All transfers start and end with your new firm, but your old firm needs to take action too.
Most account transfers between brokerage firms are made using the Automated Customer Account Transfer Service (or "ACATS") system. The National Securities Clearing Corporation operates ACATS, and both the New York Stock Exchange and the National Association of Securities Dealers, Inc. require their member firms to use ACATS.
These rules require firms to complete various stages of the transfer process within a limited period of time. If the transfer is made through ACATS, and there are no problems, the transfer should take no more than six business days to complete from the time your new firm enters your form into ACATS.
During this time, your old firm compares the information you provided on the transfer form with its information. If the information matches, your old and new firms review the transferable assets. If the transfer includes a margin account, the new firm also examines the account to see whether the account meets the firm's margin standards. Firms may have different margin standards about how much they will lend you to trade. While the transfer is in progress, your account may be "frozen" for part of the time. If this occurs, you may be unable to trade. Check with both your old and new firms if you want to trade during the transfer process.
Under the "ACATS for Banks" program initiated by DTCC in February 1999, banks may voluntarily participate in ACATS. If a bank participates in the program, then a transfer from the participating bank to a brokerage firm or vice a versa should occur in the standard ACATS time frame of six business days. If you are transferring your account to or from a bank you should ask whether the bank participates in the "ACATS for Banks" program.
Be aware that delays may occur when you transfer a retirement account. Because retirement accounts require a financial institution, such as a bank, to act as the custodian or holder of the account, you must have a custodial arrangement in place at your new financial institution before the transfer can occur. A delay may happen if you have not paid the maintenance fee to the old custodian or the new custodian does not allow a security in the retirement account to be transferred. Once everything is in place, the transfer can be made through ACATS.
Sometimes, a transfer is made manually. This occurs when your assets are with a bank, mutual fund, credit union, insurance company, or limited partnership that does not participate in ACATS. This also may occur if you request a liquidation of assets other than the standard money market fund in your account. There are no set time frames for completing a manual transfer with these financial institutions. For that reason - and the potential risk of market volatility should there be any delay - you may not want to liquidate any assets via instructions on the transfer form.
A manual transfer may also occur when you request a partial transfer of your account between brokerage firms. The rules of the NYSE and FINRA require firms to expedite or complete these requests in a reasonable amount of time, but firms have the option to make these transfers electronically through ACATS. If you are making a partial transfer, tell the new firm you would like the transfer to go through ACATS.
Monitor Your Transfer
Since both the old and new firms must act to complete the transfer, stay in touch with both of them. Make sure the new firm has received your transfer form. If you sent the form to a branch office, it may take a few days before it is received at the firm's headquarters for processing.
You may also want to ask the old firm whether it has received the transfer request. If the transfer goes through ACATS, the old firm has three business days from the time it receives the transfer form to decide if it is going to complete or reject the transfer. If the assets in an account can be transferred through ACATS, a firm can reject a transfer request only if the form has been completed incorrectly or there is a question about the ownership of the account or the number of shares. Ask the firm whether it will transfer your account or if there is a problem with your instructions. If there is a problem, ask for an explanation and how to correct it.
If the old firm takes no action on the request or a problem is not resolved within six business days, the transfer request is purged (or deleted) from ACATS. If that happens, the new firm must start over by again inputting the transfer request into ACATS.
Know Which Securities May Not Transfer
Some types of securities may not be transferred. These securities include:
-securities sold exclusively by your old firm;
-mutual funds or money market funds not available at the new firm;
-limited partnerships that are private placements;
If your request includes some of these non-transferable securities, it may take longer to complete a transfer. Your old firm is required to transfer whatever securities or assets it can through ACATS and ask you what you want to do with the others. You generally have two choices: either sell the non-transferable security and transfer the cash, or leave the security with your old firm. Sometimes, you may be able to take possession of the security itself. Taking possession of a security may pose risks, such as the security could be stolen. Also, it may not be advisable for retirement plans.
Keep These Final Thoughts in Mind
Your old firm may charge you a fee for the transfer to cover administrative costs. Sometimes, the new firm will also charge a fee. These fees are typically spelled out in your account agreements with the firms.
Expect delays in receiving dividends, interest, and proceeds from sales of securities. They often arrive at your old firm after the transfer has taken place. Your old firm is required to transfer them to you at your new firm — within ten business days of receipts — for at least six months after the account transfer is completed.
If you feel like your account has not been transferred in a timely fashion, ask to speak to the compliance director at your old or new firm. If you are not satisfied, contact the New York Stock Exchange or the FINRA, depending on where your brokerage firm is a member.
Finally, Ask Questions! A simple error could significantly delay the transfer. Be certain your old and new firms have the information they need to make the transfer happen in a timely fashion.