Many investors transfer their accounts from one brokeragefirm to another without a hitch. If your transfer goes smoothly, count on thewhole process taking two to three weeks. But this time frame may vary dependingupon such factors as the assets involved, the types of accounts, and theinstitutions 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 ofyour assets;
-the transfer includes a margin account;
-the transfer is from one type of account into a differenttype 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 andprovides tips on how to avoid problems.
Use the correct form to ensure your transfer goes smoothly.Some firms allow you to use one form for all account transfers while othershave different forms depending on the type of account you are transferring (forexample, an IRA account or a margin account). To get the right form, call thenew firm where you want to transfer your account or visit its Web site.
As you start filling in the transfer form, review theaccount statement from your old firm where your account is held. All firmsrequire you to attach a copy of your most recent account statement to thetransfer form.
The form usually asks for the name on your account, the typeof account you want to transfer, account number, the firm where the account isheld, and your social security or tax identification number. Be sure youprovide this information exactly as it appears on your old account. Forinstance, if your middle name or initial appears on your old account, you mayrun into delays if you forget to include it. When transferring only some of thesecurities in your account, carefully list the securities you want to transferon the form.
The easiest way to transfer your account is to keep the typeof accounts the same (joint account transfers to joint account; IRA to IRA) andaccount owner the same. You can change account type or ownership at the time ofthe transfer, but this may delay the transfer. You may need to providedocuments proving changes to ownership, such as a marriage certificate, divorcedecree, 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 yourrecords.
Understandthe Transfer Process
All transfers start and end with your new firm, but your oldfirm needs to take action too.
Most account transfers between brokerage firms are madeusing the Automated Customer Account Transfer Service (or "ACATS")system. The National Securities Clearing Corporation operates ACATS, and boththe 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 thetransfer process within a limited period of time. If the transfer is madethrough ACATS, and there are no problems, the transfer should take no more thansix business days to complete from the time your new firm enters your form intoACATS.
During this time, your old firm compares the information youprovided on the transfer form with its information. If the information matches,your old and new firms review the transferable assets. If the transfer includesa margin account, the new firm also examines the account to see whether theaccount meets the firm's margin standards. Firms may have different marginstandards about how much they will lend you to trade. While the transfer is inprogress, your account may be "frozen" for part of the time. If thisoccurs, you may be unable to trade. Check with both your old and new firms ifyou want to trade during the transfer process.
Under the "ACATS for Banks" program initiated byDTCC in February 1999, banks may voluntarily participate in ACATS. If a bankparticipates in the program, then a transfer from the participating bank to abrokerage firm or vice a versa should occur in the standard ACATS time frame ofsix business days. If you are transferring your account to or from a bank youshould ask whether the bank participates in the "ACATS for Banks"program.
Be aware that delays may occur when you transfer aretirement account. Because retirement accounts require a financialinstitution, 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 financialinstitution before the transfer can occur. A delay may happen if you have notpaid the maintenance fee to the old custodian or the new custodian does notallow a security in the retirement account to be transferred. Once everythingis in place, the transfer can be made through ACATS.
Sometimes, a transfer is made manually. This occurs whenyour assets are with a bank, mutual fund, credit union, insurance company, orlimited partnership that does not participate in ACATS. This also may occur ifyou request a liquidation of assets other than the standard money market fundin your account. There are no set time frames for completing a manual transferwith these financial institutions. For that reason - and the potential risk ofmarket volatility should there be any delay - you may not want to liquidate anyassets via instructions on the transfer form.
A manual transfer may also occur when you request a partialtransfer of your account between brokerage firms. The rules of the NYSE andFINRA require firms to expedite or complete these requests in a reasonable amountof time, but firms have the option to make these transfers electronicallythrough ACATS. If you are making a partial transfer, tell the new firm youwould like the transfer to go through ACATS.
Since both the old and new firms must act to complete thetransfer, stay in touch with both of them. Make sure the new firm has receivedyour transfer form. If you sent the form to a branch office, it may take a fewdays before it is received at the firm's headquarters for processing.
You may also want to ask the old firm whether it hasreceived the transfer request. If the transfer goes through ACATS, the old firmhas three business days from the time it receives the transfer form to decideif it is going to complete or reject the transfer. If the assets in an accountcan be transferred through ACATS, a firm can reject a transfer request only ifthe form has been completed incorrectly or there is a question about theownership of the account or the number of shares. Ask the firm whether it willtransfer your account or if there is a problem with your instructions. If thereis a problem, ask for an explanation and how to correct it.
If the old firm takes no action on the request or a problemis not resolved within six business days, the transfer request is purged (ordeleted) from ACATS. If that happens, the new firm must start over by againinputting the transfer request into ACATS.
KnowWhich Securities May Not Transfer
Sometypes 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 newfirm;
-limited partnerships that are private placements;
If your request includes some of these non-transferablesecurities, it may take longer to complete a transfer. Your old firm isrequired to transfer whatever securities or assets it can through ACATS and askyou what you want to do with the others. You generally have two choices: eithersell the non-transferable security and transfer the cash, or leave the securitywith your old firm. Sometimes, you may be able to take possession of thesecurity itself. Taking possession of a security may pose risks, such as thesecurity could be stolen. Also, it may not be advisable for retirement plans.
KeepThese Final Thoughts in Mind
Your old firm may charge you a fee for the transfer to coveradministrative costs. Sometimes, the new firm will also charge a fee. These feesare typically spelled out in your account agreements with the firms.
Expect delays in receiving dividends, interest, and proceedsfrom sales of securities. They often arrive at your old firm after the transferhas taken place. Your old firm is required to transfer them to you at your newfirm — within ten business days of receipts — for at least six months after theaccount transfer is completed.
If you feel like your account has not been transferred in atimely fashion, ask to speak to the compliance director at your old or newfirm. If you are not satisfied, contact the New York Stock Exchange or theFINRA, depending on where your brokerage firm is a member.
Finally, Ask Questions! A simple error could significantlydelay the transfer. Be certain your old and new firms have the information theyneed to make the transfer happen in a timely fashion.