4 Reasons to Switch Brokerage Accounts
by Maurie Backman | Updated July 21, 2021 - First published on July 4, 2021
You don't have to stick with the same brokerage forever. Here's when it pays to make a change.
Investing your money in a brokerage account is a great way to grow wealth, especially on a long-term basis. But not all brokerages are created equal, and the account you start out with doesn't necessarily have to be the account you keep open forever. Here are a few good reasons to change brokerage accounts.
1. It's a struggle to make your minimum account balance
Some brokerage accounts impose a minimum balance. That minimum may be $500, $1,000, or more. If you're having a hard time sticking to that requirement, it could be time to get yourself a new account. There are plenty of brokerages that don't impose minimums at all, and those may offer you more financial flexibility.
2. You're being charged too many fees
Just as banks and credit card companies charge different fees, so too do brokerage accounts charge their fair share. But not every brokerage account imposes fees or the same fees. So if you feel you're losing too much money to different charges, it could be time to make a switch. Some brokerages, for example, charge inactivity fees for not making enough trades. But if you're the type who doesn't trade often, then there's no reason to keep forking over those fees when you might find an account that doesn't impose them at all.
3. The customer service is poor
You should be able to send an email to your brokerage account provider and get a timely response. Similarly, you should be able to pick up the phone and get connected to a live person within a reasonable time frame. If that hasn't been your experience, then it's time to think about making a switch.
4. The platform isn't user friendly
Whether you use your brokerage account to trade frequently or not, its platform should be intuitive and easy to navigate. If you find yourself getting confused or tripped up by different features and quirks, then you may want to switch to a brokerage account that's simpler to work with. Similarly, if you find that your account doesn't offer an investment app or is hard to access via your mobile device, that's another good reason to go elsewhere.
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Make that switch
One thing you should know about transferring from a brokerage account is that you'll generally be charged a fee to do so. Usually, that fee will range from $50 to $100, though you might pay a little more or less. But don't let that fee deter you from making a change if your brokerage account isn't working for you. Though it's unfortunate to have to fork over that money, you might actually recoup it quite easily in the form of lower fees in your new account.
Another thing to keep in mind is that if you don't like your brokerage account, you may not be motivated to pump more money into it. And that's a shame, because the more you invest, the more wealth you stand to accrue over time. As such, you shouldn't hesitate to research your options if you're just not happy with the brokerage account you've landed on.
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