How to Switch Brokers and Move Your Investments

Moving your investments from one brokerage firm to another doesn’t have to disrupt your investment strategy. With a plan in mind, the transition can be manageable. Most firms also use the Automated Customer Account Transfer Service (ACATS) system to simplify and speed up the transfer of assets. Here’s how to switch brokers and move your investments.

Have questions about choosing a new broker? Consider reaching out to a financial advisor.

How to Switch Brokers: The First Steps

When switching brokers, the initial step is selecting a new broker, followed by opening an account and making sure that your necessary documentation is in order. Here’s a closer look at each step:

Select a new broker: Research and select a new brokerage that aligns with your investment goals and preferences. You’ll likely want to evaluate factors such as trading fees, customer service, available investment options and the platform’s accessibility. Reading reviews and comparing different brokers can help you make the decision that’s best for you.
Open a new account: Once you’ve selected a new broker, you can typically open an account by completing an online application, providing personal information (such as your Social Security number) and verifying your identity (often using your driver’s license).
Gather documentation: Before initiating the transfer, gather all of the necessary documentation you can from your current broker. This likely includes your account statements, lists of your holdings and any relevant tax documents. Having this information in order can help streamline the transfer process and prevent any delays or other potential issues.

How to Switch Brokers: Moving Your Investments

Next, you’ll need to initiate and monitor the transfer to complete the process, as outlined below:

Initiate the transfer: To initiate the transfer, simply inform your new broker of your intention to move your assets. They can provide you with the necessary transfer forms, which you’ll need to complete and sign. These forms typically require details about your current brokerage account, including the account number and the types of assets being transferred. Most brokerages then use the ACATS system to facilitate the transfer of assets between firms.
Avoid trading and check for discrepancies: Once you submit the completed transfer forms to your new broker, they will then coordinate with your current broker to initiate the transfer. The new broker will handle the bulk of the transfer process. However, as the transfer process can take between a few days and up to a week, it’s important to refrain from trading during this time to prevent any complications or delays. After the transfer is complete, review your accounts to make sure that all assets were transferred correctly. If you notice any discrepancies, contact both brokers immediately.
Close the old account: Once all of your assets have been successfully transferred, you can contact your old broker to close your account. It’s a good idea to obtain confirmation of the account closure so that no residual fees or assets remain.

Things to Consider When Switching Brokers

Switching brokers can be a strategic move that enhances your investment experience and offers better alignment with your financial goals. But before you make the switch, it’s important to take several things into account when it comes to how to transfer your assets.

For one, make sure you understand the transfer process and any associated costs. While many brokers cover transfer fees, some might charge a fee for moving your assets. You should also consider the time it takes to complete the transfer, especially if you’re an active trader or day trader, as your investments may be inaccessible for a short period of time.

Before making the switch, assess the new broker’s reputation and reviews to confirm that they are reliable and trustworthy. Verify that an investment broker is registered with regulatory bodies, like the SEC or FINRA, and also confirm that your new broker offers robust security measures to protect your personal and financial information.

Understanding Transfer Types

When learning how to switch brokers, it helps to understand the two main types of asset transfers: in-kind transfers and cash transfers. The method you choose can affect how quickly your assets move and whether taxes come into play.

In-kind transfers: With an in-kind transfer, your investments move “as is” from one brokerage to another. This means your stocks, exchange-traded funds (ETFs) and mutual funds remain intact. Because no sales occur, there are no immediate tax consequences. This method is ideal if you want to maintain your current investment positions or avoid realizing capital gains.
Cash transfers: In a cash transfer, your old broker sells your investments, and the proceeds are then sent to your new brokerage account. While this can simplify the process, especially if your new broker doesn’t support certain securities, it may trigger capital gains taxes if you sell at a profit. However, a cash transfer may make sense if you plan to rebalance your portfolio or start a new investment strategy once the funds arrive.

Before deciding which transfer type to use, review whether your new brokerage accepts all of your current holdings and compare the potential tax impact of each method.

Costs and Fees to Watch For

Switching brokers can save money in the long term, but there may be short-term costs to account for. Here are a few common fees to watch out for during the transfer process:

Transfer or account closure fees: Some brokers charge between $50 and $125 to move or close your account. These fees typically apply per account, so multiple accounts could mean higher costs.
Trading commissions or advisory fees: Your new broker may have different fee structures for trades, managed portfolios or advisory services. Review the new platform’s pricing before making the move.
Hidden costs: Mutual fund transaction fees, margin interest or inactivity fees can add up. Review the fee disclosure documents from both brokers to compare any differences and avoid surprises.

Note that many brokerages offer fee reimbursement programs to attract new clients. If you’re moving a significant portfolio, ask your new broker whether they’ll cover transfer or closure costs as part of an account-opening incentive.

Bottom Line

If you’re considering how to switch brokers, it doesn’t have to be hard. Most brokers use the Automated Customer Account Transfer Service system to streamline the process. Just be sure to do your research so that you understand the transfer process and to ensure that you choose a new broker aligned with your financial needs and goals.

Tips for Switching Brokers

Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
Knowing how your investments will grow over time is an important part of planning your financial future. SmartAsset’s investment calculator can help see what your investments might look like in 10, 20 or 50 years.