Moving Brokers - What Should I Know Before I Transfer Funds Out of My Online S

[Lorene Chow]

A decade ago, you would cringe at the thought of transferring your
funds from one brokerage at another. These days with the number of
discount online brokerages available transferring your funds is a lot
easier. But, there are still a few things to bear 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 but not when you are moving funds
in. 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
hasn't 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 this oversight.

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