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Dumping Your Broker
By JLP | September 25, 2006
There’s no doubt that moving your money from one broker to another can be a royal pain. According to Ron Lieber’s Green Thumb column ($) in this weekend’s Wall Street Journal, there are several reasons why it takes so long to transfer accounts:
1. The account transfer forms must be double-checked at both ends in order to make sure the accounts can be transferred as requested, which is a time-consuming process. If you are transferring an IRA account, it can take even longer.
2. Brokers don’t communicate with the clients, so if there is a problem with the transfer, you may not know about it. So, it is best for you to keep on them to make sure things are going as planned.
3. Wrong numbers (usually caused by mergers of the brokerage firms) on the account forms can REALLY slow things down.
4. The article also mentions that some firms have internal account designators that are different from the those on the account statements, which can lead to rejected account transfer requests.
Anyway, as the article states, the good thing is that the NASD is trying to figure out a way to speed things up and to make sure brokerage firms aren’t making things harder than they need to be.
Oh, and here are three guides that might help you move your money:
NASD - Understanding the Brokerage Account Transfer Process
SEC - Transferring Your Account
NYSE - Moving Financial Assets (PDF)
If you want to compare brokers, check out this Smart Money article.
September 25th, 2006 at 9:36 pm
anyone know of any good articles (objective, and by that i guess i mean an article that isn’t secretly endorsed by one of them)that compare different brokerages against each other?
September 25th, 2006 at 10:44 pm
Very good article here:
http://www.smartmoney.com/brokers/index.cfm?story=august2006&pgnum=2
September 26th, 2006 at 4:41 pm
Transferring accounts is actually not that complicated if you know what you’re doing. The biggest problem I’ve seen is that the companies giving up assets are pissed that a transfer request came through, so they delay the process for a week or two. There are actually laws against holding on to assets for too long, so usually the transferring agent will process the transfer sooner than later. The other problem is that many brokers just can’t seem to spend 5 minutes to make sure a transfer is done properly. I’m talking about verifying account numbers, checking in with a broker/dealer on the status of the transfer, and calling a client to update them on the status of a transfer. If everything is done with a little care and concern, it’s amazing how fast a transfer can be done.