How to Transfer a Brokerage Account

With all the excellent online stock brokers available, sometimes one of the smartest financial moves is to transfer a brokerage account. You could save money by switching to a broker with lower fees, and your new broker may give you more investment options as well.

If you haven't done this before, you might wonder what's the best way to move your investments from your old broker to the new one. To help you get your new brokerage account set up without a hitch, we're going to cover the process to transfer a brokerage account.

How to transfer brokerage accounts

To transfer a brokerage account, you'll need a brokerage account with your new broker (the one that will receive the transfer). Once you've set that up, here's what to do:

1. Log in to your account with the new broker.
2. Go to the transfer page. Where you find this depends on the layout of the broker's website. If you have any trouble finding it, contact the broker for assistance.
3. Choose the option to transfer a brokerage account. This should take you to the broker's transfer form.
4. Fill out the form with the required information.

Enter your account information with your old broker on the transfer form.

After you submit the form, the transfer process is mostly a hands-off affair. The action happens behind the scenes, as your new broker communicates with your old broker to get your investments moved over.

It usually takes six business days to transfer a brokerage account. Your old broker validates the information within three business days and transfers the assets within another three business days. It can take longer, though, particularly if there are any discrepancies during the validation process.

Fees to transfer a brokerage account

Many brokers charge a fee when you transfer brokerage account assets. The typical fee ranges from about $50 to $100, but not every broker has an account transfer fee. The only way to know how much your old broker charges is to check its list of fees or contact customer service.

You may avoid this fee though, because your new broker may cover it. Brokers often do this as an incentive to attract new clients. If your old broker has a transfer fee, ask your new broker about footing the bill.

Even if your new broker doesn't offer this, it could still be worth the money to transfer a brokerage account. The potential benefits of switching brokers -- such as free trades or new account bonuses -- often far outweigh a one-time transfer fee.

What to do before you transfer a brokerage account

There are a few things you should do to prepare and protect yourself before you transfer an account:

• Make a list of your investments: It's smart to record all your investments, including the number of shares and your cost basis (the price you paid for each investment, which is important for calculating capital gains or losses). All this should transfer over, but it's good to have just in case.
• Download tax documents: Your old broker should still send you the appropriate brokerage tax documents. For extra security, download any tax forms yourself.
• Be ready to lose access to your assets during the transfer: As mentioned above, the transfer process generally takes six business days. During that time, you won't be able to sell any of the investments you're transferring.

When it makes sense to transfer a brokerage account

Investors don't change brokerages very often, but there are situations when it's for the best. Here are the most common reasons to consider moving to a new brokerage firm:

• You're paying unnecessary fees: The major brokers now offer zero-commission trading. If your broker is still charging you trade fees, it's time to switch to one that won't, so you save money on every investment.
• You want to get a special offer: Investors with large balances are coveted clients. Some brokers have special offers, most often cash bonuses, for new investors who bring enough assets over.
• You're changing jobs: A 401(k) isn't exactly a brokerage account, but if you change jobs, you'll most likely want to roll over (transfer) your 401(k). You could roll it over to your new company's 401(k) or to an IRA with an online broker.

When you've found a new broker and set up an account, transferring your assets is simple enough. You just fill out the form to transfer the brokerage account. The brokers handle the rest. They'll let you know if there are any issues that need your attention, but in most cases, transfers are routine, and happen quickly.