Understanding the Brokerage Account Transfer Process

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At times, investors transfer their securities accounts between broker-dealers. While the process generally runs smoothly for the vast majority of the thousands of accounts transferred each year, there are times when delays occur and investors pose questions. In an effort to help investors better understand the account transfer process, we are issuing this educational information to provide some basic facts about the account transfer process.

Most customer accounts are transferred between broker-dealers through an automated process. Transfers involving the most common assets, for example, cash, stocks and bonds of domestic companies, and listed options, are readily transferable through ACATS. Individuals wanting to transfer their securities account from one broker-dealer to transfer stock between brokerage accounts initiate the process by completing a Transfer Initiation Form TIF and sending it to the firm to which they want to transfer their account.

The firm a customer is transferring the account to can provide the form to facilitate the transfer. The new firm is called the "receiving firm. Although automated, the account transfer process is somewhat complicated and is impacted by certain factors and regulations, the most important of which are discussed below.

Once transfer stock between brokerage accounts receiving firm obtains the TIF, it enters certain customer data, including the name on the account, Social Security number, and account number transfer stock between brokerage accounts the delivering firm into ACATS.

Shortly after the data is entered, an automated function permits the delivering firm to see that a request to transfer the account has been made. If the account request is rejected, the new firm may correct the data from that which it originally entered or it may have to contact the customer to make sure the information on the TIF form is correct.

Once the customer account information matches, the transfer request is considered to be validated. In most cases, the validation process will take about three business days to complete once the new firm enters the request into ACATS. Once the transfer request is validated, the delivering firm will send a list of the assets in the account to the receiving firm via ACATS. The receiving firm will review the list of assets to decide whether it wishes to accept the transfer of the account.

It is important for investors to recognize that broker-dealers are not required to open or accept the transfer of an account and can decide which investments they choose to transfer stock between brokerage accounts.

In transfer stock between brokerage accounts regard, transfer stock between brokerage accounts customer might initiate a transfer request only to find that the new firm has declined to accept the account. For example, the new firm may decide not to accept the account due to the quality of securities supporting a margin loan, or because the account does not meet its minimum equity requirements.

Once the customer account information is properly matched, and the receiving firm decides to accept the account, the delivering firm will take approximately three days to move the assets to the new firm. This is called the delivery process. In total, the validation process and delivery process generally take about six days to complete. Factors that may result in additional time needed to transfer an account. Generally, transfers where the delivering entity is not a transfer stock between brokerage accounts for example a bank, mutual fund, or credit union will take more time.

In addition, transfers of accounts requiring a custodian, like an Individual Retirement Account or a Custodial Account for a minor child, may take additional time. Many events, as described above, occur simultaneously during the account transfer process. Prior to moving accounts from one firm to another, it is always a good idea to review and understand the transfer process.

In addition, communicate with the new firm and determine whether any specific policies or constraints might impact transfer stock between brokerage accounts transfer of your account. For example, if you have a margin account, you should ask if the new firm will accept a margin account and, if so, what are its minimum requirements.

In short, make sure the intended new firm is a good fit for you before you attempt to transfer the account. In addition, investors can become familiar with the account transfer process by discussing it with the new firm. Ask questions, like the anticipated length of the transfer process given the specific type of account such as cash, margin, IRA, custodial and the assets held such as stocks, bonds, options, limited partnership interests.

Inquire about anything that may cause a delay during the account transfer process. Ask how the firm informs customers that the transfer process is complete?

Investors should also consider that buying and selling securities during the account transfer process often complicates and delays the transfer. As a result, investors are best served if they avoid trading during the transfer process. For example, if ABC security is a volatile stock and you are concerned about not being able to sell your stock during the transfer process, you should consider selling ABC before entering the transfer request.

Transfer stock between brokerage accounts are accounts transferred between broker-dealers? What must a customer do to start the account transfer process? What is involved in the account transfer process? Receiving Firm Transfer stock between brokerage accounts Once the transfer request is validated, the delivering firm will send a list of the assets in the account to the receiving firm via ACATS.

Time Frames Once the customer account information is properly matched, and the receiving firm decides to accept the account, the delivering firm will take approximately three days to move the assets to the new firm. Factors that may result in additional time needed to transfer an account Generally, transfers where the delivering entity is not a broker-dealer for example a bank, mutual fund, or credit union will take more time.

What are realistic expectations of the time that is required to transfer an account? What can a customer do to ensure that the account transfer is successful?

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When investors transfer securities account assets between broker-dealers, the process runs smoothly for the vast majority of the thousands of accounts transferred each year. But there are times when delays occur and investors have questions. Here are 5 things you should know about the account transfer process. How are accounts transferred between broker-dealers? Most customer account assets can be transferred through an automated process.

Transfers involving the most common assets for example, cash, stocks and bonds of domestic companies, and listed options are readily transferable through ACATS. What should I do to start the account transfer process? If you'd like to transfer your securities account assets from one broker-dealer to another, you need to initiate the process by completing a Transfer Initiation Form TIF and send it to the firm you'd like to start working with.

The new firm, called the "receiving firm," can give you this form. What's involved in the account transfer process? Although automated, the account transfer process is somewhat complicated and affected by certain factors and regulations.

This is a brief overview of what's involved. Shortly after the data is entered, an automated function permits the delivering firm to see that a request to transfer the account has been made. To best prevent the unauthorized transfer of customer account assets, delivering firms will reject any transfer request where certain data for example, the customer's name or Social Security number provided by the receiving firm does not match the information on the delivering firm's records.

If the account request is rejected, the receiving firm may correct the data, or it may have to contact the customer to make sure the information on the TIF is correct. Once the transfer request is validated, the delivering firm will send a list of the assets in the account to the receiving firm via ACATS.

The receiving firm will review the list of assets to decide whether it wishes to accept the transfer of the account. It's important to know that broker-dealers are not required to open or accept the transfer of an account; it's possible to initiate a transfer request only to find that the receiving firm has declined to accept the account.

The most common reason for declining a transfer is due to the receiving firm's credit policies. For example, the receiving firm may decide not to accept the account due to the quality of securities supporting a margin loan, or because the account does not meet its minimum equity requirements.

When the customer account information is properly matched, and the receiving firm decides to accept the account, the delivering firm will move the assets to the receiving firm. What are realistic expectations of the time that is required to transfer an account? Many events occur simultaneously during the account transfer process. Even with today's technology, a successful account transfer from the delivering firm to the receiving firm will usually take, at a minimum, about a week.

It's best to plan ahead for any potential delays. Transfers where the delivering entity is not a broker-dealer for example, a bank, mutual fund or credit union generally take more time. In addition, transfers of accounts requiring a custodian, like an Individual Retirement Account or a Custodial Account for a minor child, may take more time. What can I do to ensure the account transfer is successful? Before moving account assets from one firm to another, it's always a good idea to review and understand the transfer process for a specific firm.

Ask the new firm questions about the anticipated length of their transfer process, what might cause a delay and how it informs customers when the transfer process is complete.

You may also want to ask whether any policies or constraints might impact the transfer of your account. For example, if you have a margin account, you should ask if the new firm will accept it and, if so, what are its minimum requirements. Keep in mind that Brokerage firms can decide which investments they choose to accept. Specifically, if you own any proprietary products or non-securities products such as insurance products with your current firm, you probably can't transfer them to the new firm.

In short, make sure the new firm is a good fit for you before you attempt to transfer the account. You should also consider that buying and selling securities during the account transfer process often complicates and delays the transfer. Some firms will even "freeze" an account that is in the process of being transferred, meaning that no trades will be permitted until the transfer is complete.

You are here Home For Investors Investor Highlights 5 Things to Know About Transferring a Brokerage Account When investors transfer securities account assets between broker-dealers, the process runs smoothly for the vast majority of the thousands of accounts transferred each year.