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 securities 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.
M1 Finance charges no commissions or management fees so you can maximize your returns and get the most from your money. Plus, our transfers team makes moving your other investment and retirement accounts to M1 easier than ever.
Missing ShareBuilder? Learn why M1 is the best alternative to decide if it’s time to transfer.