John Jagerson

5 Tips for Moving Your Brokerage Account

by John Jagerson   08/20/09

This article is brought to you by LearningMarkets.com.

Transferring a brokerage account seems a little intimidating to many investors. But if you are in an unhappy brokerage relationship, don't let the paperwork scare you. Dump your broker and educate yourself on how easy the transfer process can be and what you should ask for to make it as inexpensive as possible.

There are a lot of reasons to leave one broker for another. You may be able to get a much better deal somewhere else with commissions. Perhaps you are unhappy with the services or tools your broker offers, or you may want access to a broader product line of options, bonds, futures and forex.

Get 4 Tips for Picking the Right Options Broker.

Whatever your reasons for leaving, it's easy to get it done if you know the right questions to ask.

There are two general ways to transfer one account to another broker. If your current account is all in cash, you will probably have an easier time with a check or wire transfer. However, if you have open positions and don't want to close them it gets a little (but not much) more complicated.

Securities brokers have a process called ACATS (Automated Customer Account Transfer Service) that is managed by the National Securities Clearing Corporation (NSCC) for moving open positions and cash from one broker to another. An ACATS transfer essentially takes your account from one broker and replicates it, including your open positions, with another broker.

Here are a few tips to make this process as pain-free as possible:

1. Let your new broker handle it.

The ACATS process can be initiated by your new broker. They want your business and are motivated to make sure the transfer is done quickly and smoothly.

Typically, your new broker will ask you to fill out a transfer form with the details about your old account. That form may be online or one they will ask you to it fax back to them. It authorizes them to initiate the transfer without you having to talk to anyone at the old firm.

2. The new account must be a mirror image of the old one.

It is important to make sure your new account looks exactly like the old one. That means that if it is a joint account your old account must be a joint account. If you used your middle initial in the title of your old account you will need to use that middle initial again. If you had an IRA in the new account you must use the same type of IRA in the new account.

Essentially you are trying to create a mirror image of your old account with your new broker.