RTI INFO : PROTECT YOURSELF - AFTER YOU INVEST UNDERSTANDING THE BROKERAGE ACCOUNT TRANSFER PROCESS 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. HOW ARE ACCOUNTS TRANSFERRED BETWEEN BROKER-DEALERS? 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. WHAT IS INVOLVED IN THE ACCOUNT TRANSFER PROCESS? Although automated, the account transfer process is somewhat complicated and is impacted by certain factors and regulations. TIME FRAMES Once the customer account information is properly matched, and the receiving firm decides to accept the account, the delivering firm will take some days to move the assets to the new firm. This is called the delivery process. 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. 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. WHAT CAN A CUSTOMER DO TO ENSURE THAT THE ACCOUNT TRANSFER IS SUCCESSFUL? 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 the 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, 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. Some firms may even "freeze" an account that is in the process of being transferred, meaning that no trades will be permitted until the transfer is complete; an important point to discuss with the firms prior to initiating 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.
Posted on: Tue, 16 Jul 2013 07:09:03 +0000
Trending Topics
Recently Viewed Topics
© 2015