Investors have long demanded better solutions to manage their assets, and with the proliferation of new technologies, they now have more options than ever. Innovative new platforms have disrupted the world of personal finance, making building wealth simpler, quicker, and less expensive than ever before. As traditional brokerages struggle to keep up, many find themselves looking to transfer their investments to a platform better suited to their financial needs.
Whether transferring an IRA or taxable brokerage account, investors have two options for moving an account from one brokerage to another: transfer in cash or transfer in kind.
Cash transfers require you to sell your assets and liquidate your account with your old brokerage. As a result, you’ll likely pay 15 to 20 percent in capital gains tax in the process, slashing your portfolio value before the securities even reach your new account.
In-kind transfers (also known as direct account transfers) alleviate this issue, allowing you to transfer stocks and funds directly from one brokerage to another and maintain your cost basis along the way — so you can finally ditch your brokerage and keep your portfolio on track at the same time. The only fees you’ll likely encounter are those from your existing brokerage charging you for the outgoing transfer.
Here’s what you’ll need to do to transfer in kind:
Step 1: Make sure your brokerage supports in-kind transfers.
If your current platform doesn’t participate in the direct transfer process, you may be stuck liquidating your account if you wish to move your investments.
Step 2: Open the appropriate account type with the new brokerage.
Your new account type will need to match your old account type for an in-kind transfer to work. So, for example, if you wish to transfer your Roth IRA, you’ll need to open a Roth IRA with your new brokerage before you can move over all your stocks and funds.
Want to change to a new account type? You’ll need to make the switch with your current brokerage before you can make the move to a new one.
Step 3: Contact the new brokerage with your latest account statement.
Let’s be honest: your old brokerage probably doesn’t have much incentive to help you move all your money to another platform. That’s why your best bet is usually to contact your new brokerage to get the ball rolling. Let them know you want to transfer your assets in-kind and send them a copy of your latest account statement. If there are any stocks, funds, or other securities you don’t wish to transfer to your new account, this is the time to say so!
And that’s it! From there, direct account transfers generally take 7-10 days to complete, though this largely depends on how quickly your old brokerage is willing to get you out the door. You may not be able to access or edit your portfolio for a few days along the way, but don’t panic! This is totally normal when transferring stocks from one brokerage to another. Your account is simply in the process of being moved.
Want to avoid account transfer fees?
This July ONLY, transfer any investment account of $20,000 or more to M1 Finance and we’ll cover the cost.* Just email our team at [email protected] with a copy of your most recent statement to get started!
*Offer applies to direct account transfers from participating brokerages. Offer limited to $200 in transfer fees. Does not apply to securities held in DRS/DWAC.
Member of SIPC. Securities in your account protected up to $500,000. SIPC insurance does not protect against loss in the market value of securities. For additional information visit www.sipc.org. Securities and services are provided to clients of M1 by M1 Finance LLC, member FINRA/SIPC. Investments are not FDIC insured and may lose value. Investing in securities involves risk and there is always the potential of losing money when you invest in securities. Please consider your objectives and M1 fees before investing. Past performance is not a guarantee of future results. Using margin involves risks: you can lose more than you deposit. you are subject to a margin call, and interest rates may change. Not an offer, solicitation of an offer, or advice to buy or sell securities in jurisdiction where M1 Finance LLC is not registered.