How to transfer a portfolio from a broker to another?


The competition among brokers has led to a significant increase in requests for portfolios transfer between different entities. However, many investors are unsure about the process, the associated deadlines, and the potential costs involved. How can you transfer a portfolio from a broker to another? Keep reading.

In this article, we aim to clarify these details and provide a comparison of costs.

Can I transfer a portfolio from a broker to another?

What is a portfolio transfer request?

If you want to transfer your assets from your existing broker to another one, you will have to put in a portfolio transfer request with your existing provider.

People often transfer their assets to a new brokerage to take advantage of promotions, lower fees, and many other reasons. In the UK, for instance, due to Brexit, many brokers have ceased their operations, a case in which you should transfer your assets to another firm.

Requirements to make a portfolio transfer from a broker to another

Transferring securities is also known as an in-specie transfer. It allows you to transfer your current assets to another broker.

However, the requirements and process may differ depending on your current and new broker. It's always recommended to contact both brokers to find out exactly how the process works and what you need to do.

In general, you'll have to contact the new broker and let them know you want to transfer your assets. They'll inform you regarding what transfer forms you need to fill in and other necessary steps.

What is a securities account or brokerage account?

A securities account, also known as a brokerage account, is used to hold and trade financial securities like stocks, bonds, mutual funds, and ETFs (Exchange-Traded Funds). It allows you to buy, sell, and hold these securities. When you purchase stocks or other investments, they are kept in this account.

What fees are charged for transferring securities?

When transferring securities from one broker to another, there are several potential costs that you might encounter. These costs can vary depending on the brokers involved and the specific types of securities being transferred.

Some of the main costs associated with in-specie transfers include:

  1. Transfer fees: Some brokers charge a fee for transferring out securities. This fee can be a flat rate or based on the number of positions (individual stocks, bonds, etc.) being transferred. It's common for fees to range from a modest amount to a more significant fee for larger or more complex portfolios.
  2. New account fees: The receiving broker might have fees associated with setting up a new account or for incoming transfers, although many brokers waive these fees to attract new clients.
  3. Foreign exchange fees: If you're transferring securities held in a different currency, there might be foreign exchange fees or currency conversion costs.

In some cases, if the fees charged for transferring securities are too high, you may also opt to close all of your current positions and transfer the money instead.

👉 Find out, how to create your stock portfolio.

Tips to keep in mind before transferring a portfolio

  • Inquire about the existing and new broker regarding all costs, direct and indirect, pertaining to the transfer
  • Find out all the steps regarding the procedure
  • Make sure you can cover the transfer fees

What problems are there with omnibus accounts?

It is possible and quite common for brokers to hold retail investors' assets in an omnibus account. By pooling clients' assets in an omnibus account, brokers can manage trades and hold securities more efficiently. This consolidation can reduce operational costs and simplify the process of executing transactions.

In the UK, brokers are regulated by the Financial Conduct Authority (FCA), which sets rules for the proper segregation and protection of client assets. Even if the assets are held in an omnibus account, they are typically segregated from the broker's own assets, offering protection to the investors.

Transferring assets from an omnibus account, like those used by many brokers for retail investors, is generally straightforward, but there are specific considerations and potential issues, so transferring assets from an omnibus account may not always be possible. This is why it's important to contact both your current broker and future broker to understand what the procedure is in your specific situation.

In an omnibus account, unlike the nominal account, the assets are in the name of the broker that manages them and not in our name, despite being the sole and exclusive owners.

Does transferring my securities portfolio affect me tax-wise?

Generally, transferring assets between brokers doesn't trigger a capital gains tax event. However, it's always a good idea to consult with a tax professional about your specific situation. Keep in mind that your tax situation will be impacted if you decide to close all your positions and transfer only the cash.

Comparison of fees for securities transfer

BrokerTransfer to brokerTransfer from brokerMore information
DEGIROFree€20.00 per position + external costsDEGIRO review
Interactive BrokersFree$100 + external costsVisit the broker
IGFreeFreeIG review

Summary

Transferring securities between brokers is typically a feasible and common practice. This process, while generally straightforward, requires careful consideration of various factors such as transfer fees, timeframes, and regulatory compliance.

It's essential for investors to be aware of potential challenges and to communicate effectively with both their current and receiving brokers to ensure a smooth transfer. While such transfers usually don't incur immediate tax liabilities, consulting with a tax professional is advisable to understand any potential implications.

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FAQs

How long does it take to transfer securities between brokers?

The time it takes to transfer securities can vary, typically ranging from a few days to several weeks, depending on the brokers involved and the type of securities. Electronic transfers are usually quicker, while manual processes can take longer. It's best to check with both brokers for an estimated timeframe.

Can I transfer all types of securities between brokers?

Most common types of securities, like stocks, bonds, and mutual funds, can be transferred between brokers. However, some assets, especially proprietary or exclusive products offered by your current broker, may not be transferable. It's important to verify with the new broker whether they can accept all the types of securities you wish to transfer.

Are there any tax implications when transferring securities?

Generally, transferring securities between brokers does not trigger a taxable event, as it's typically done as an “in-kind” transfer without selling the assets. However, specific situations or types of transfers could have tax implications.

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