subject: Switching Stock Brokers - How Do I Move Funds To A New Online Stock Brokerage? [print this page] A decade ago, you would cringe at the thought of transferring your funds from one brokerage at another. It was a slow process littered with paperwork and frantic phonecalls. These days transferring a broker has been made infinitely easier. With the number of discount online brokerages available transferring your funds is understandably less tedious. But, there are still a few pointers to keep in mind before you go shopping for a new broker:
1) Fees
Be aware of the costs incurred during transfer. A lot of brokers charge for transferring funds out of your account but not when you are moving funds into your account. In the former you are a new customer so they are encouraging you and in the latter they are obviously trying to discourage you from leaving. Often the new broker will reimburse you for any transfer fees incurred. With the number of options available the new broker will offer plenty of incentives for you to come over. Make sure you read the fine print.
2) Cash out or 'In Kind'
There are different ways of transferring the funds. One way is to cash out all your stock and bring over the cash. The other option is to transfer over the shares of stock as is. The decision on whether to cash out or not is important because it could affect the timing of the transfer. Consider the situation where you were holding a speculative position in a company that is about to declare its quarterly results in a week. You were betting on this company to surpass analyst expectations.
Now, depending on your risk tolerance and confidence levels you would be better off initiating the transfer after a week. This is because you would have more money in your account if the stock does indeed soar. In such a scenario you could choose to transfer the funds 'as is' so that you don't have to worry about timing. Confirm that both these options are available with the broker you are transferring from and the one you are transferring to.
3) Closing of the first account
Confirm that the broker has indeed closed your account and something has not slipped through the cracks. Get a statement from old broker to confirm that the account has been closed. You do not want to be liable for any inactivity fees or the like just because of such an oversight.
