Account Transfer from ShareBuilder to Zecco: The Information You Need

Last week I posted an entry on transferring my account at ShareBuilder to Zecco. After the post was published, I got an email from Drew who is interested in some more information about the transfer:

I enjoyed your current posts on Zecco and moving from ShareBuilder to Zecco. I currently have a portfolio with ShareBuilder but I’d like to move onto Zecco – would you mind posting more on how you initiated your transfer, what happened to your partial shares, and fees?

The actual transfer process is quite easy (how long it will take to complete and whether the process can go smoothly are separate issues). If you determined to make the shift, then all you need to do is download an account transfer form from Zecco website (PDF file), fill it out, and send it over.

1. Information in the form

There are three sections on the form that you need to fill out. The first part is your account information (click the following image to enlarge).

zecco acat form

I was a little confused about the “Title of Your Account” when I got the form, so I called Zecco and was told that the title of your account is actually the type of your account: individual account, joint account, or IRA account, like that. However, the form doesn’t ask the name(s) of the account holder(s). To be safe, I put Joint Account and our names anyway.

The second half of the first section is information about your ShareBuilder account. In addition to the account title, account number and name of the brokerage, you will also need ShareBuilder’s Broker Clearing No. This information is not available on ShareBuilder website, so I had to call them to ask for it (ShareBuilder customer service number 1-800-747-2357) and was told the number is 0443. The form also requires ShareBuilder’s mailing address:

ShareBuilder
1445 – 120th Avenue Northeast
Bellevue, WA 98005

The second section of form concerns how you want your account at ShareBuilder transferred.

zecco acat form

Here, you will have to choices: In Kind Transfer, which means you will transfer whatever you have at ShareBuilder as they are; Liquidate, meaning your positions at ShareBuilder will be liquidated first and the proceeds will be transferred to Zecco. For me, I chose In Kind Transfer, so I got to keep all the shares I have. If you choose Liquidate and it’s a regular account (as oppose to IRA account) , you will be responsible for taxes for any gains realized from this transaction.

On the account transfer form, you will also find the following paragraph:

I authorize you to liquidate any non-transferable proprietary money market fund assets that are part of my account and transfer the resulting credit balance to PFSI.

This refers to any uninvested cash in your ShareBuilder account, which is held in the money market account as shown in the following image.

sharebuilder.png

My understanding is this part will be liquidated and transferred as cash to your Zecco account.

The last part of the form is where you sign and date the form. It also has a section for Medallion Signature Guarantee, but I was told that the signature guarantee is not necessary.

2. Send your form

Once you are done with the form, you can fax it to Zecco to get the transfer process right away (Zecco fax number is 1-909-657-6638). However, you still need to mail the original form back to

Zecco Trading
P.O. Box 4328
Ontario, CA 91761

Considering that it will quite some time (20 business days) for the transfer to be completed, it’s better to fax them your form first.

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3. Fractional shares

Though Zecco doesn’t support fractional share purchases, there shouldn’t be a problem if you make in kind transfer from ShareBuilder, which allows you to buy fractional shares. My reason is since Zecco supports dividend reinvestment, they will purchase fractional shares for you with your dividend distribution anyway.

Update: After getting a comment from aschmuck, I searched Zecco’s website about partial share transfer. Here’s the policy regarding partial share transfer:

Can I transfer stocks to Zecco Trading in kind?
Yes, in order to transfer your positions in kind, without having to liquidate, you will need to fill out the ACAT (Account Transfer) form. Please keep in mind that only full shares of equities can be transferred.

Related information can also be found on ShareBuilder website (Help -> Help Topics -> Transferring Account Assets), which says

As only whole shares can be transferred, any partial shares that you have will be sold and the proceeds will be transferred with the money market cash balance.

There is a fee of $50 for a full account transfer to another brokerage. This includes the transfer of all whole shares of securities held in your ShareBuilder Account, the liquidation of any partial shares (as needed), and the transfer of the money market cash balance.

Thus, ShareBuilder will liquidate the partial shares you have and the transfer the proceeds as cash. Since ShareBuilder charges $15.50 per real-time trade, my following comment on selling shares instead of transferring them for small accounts makes more sense.

4. Fees

As you can imagine, since Zecco wants your business, they are not going to charge you for transferring an account to Zecco and that’s indeed the case, though there’s a $50 fee listed in their fee schedule for account transfer. I assume that’s for account transfer out. Then, since ShareBuilder is not happy for you leaving them, they will charge you $50 for your departure.

If you have a small account at ShareBuilder and only make a small profit (or a small lose), I feel that it’s better to just sell all your shares and close the account than transferring it out. From ShareBuilder’s website, it doesn’t seem ShareBuilder charges fee for closing the account. In this case, paying $50 account transfer out fee isn’t worth it.

These are the issues I can think of regarding account transfer. Since the transfer is still in progress, I don’t know if there will be any other problems and exactly when the transfer will be completed. I will post any development when it occurs.

If you are interested in getting a Zecco brokerage account, either opening one directly or through account transfer, check out my Zecco review first for more details about the discount broker. See discount broker comparison for how Zecco compares against other discount brokers.

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10 Responses to “Account Transfer from ShareBuilder to Zecco: The Information You Need”

  1. Jim |  Jun 28, 2007 at 11:56 am

    Interesting. I contact Zecco’s customer care to inquire about free dividend reinvestment of fractional shares and they replied back saying that it was not offered at this time.

    Were you told otherwise?

  2. Zecco Review |  Jun 30, 2007 at 1:26 am

    Sun,

    I have a question about ShareBuilder. I had an account with them a while back, and Sharebuilder charged $15 per stock sell. I had a couple hundred bucks in that account, so it made more sense for me to transfer the funds, rather than pay $15 per stock to close my position.

    Have their sell trade fees changed since then?

  3. aschmuck |  Jun 30, 2007 at 2:50 am

    Zecco review, ShareBuidler is $15.95 to sell a stock.

    Sun do you have fractional shares? If so will you let us know how it is handled? I think one of 3 things will happen:

    1. You will be left with the fractional shares in your account and will not be able to get the cash out without selling.

    2. ShareBuilder will automatically liquidate the fractional shares and bill you $15.95 for each different stock sold.

    3. The transfer will be denied since the fractional shares can not be transfered.

  4. Sun |  Jun 30, 2007 at 6:19 pm

    Jim: I am not aware that Zecco only makes whole share dividend reinvestment. From their website, it says they offer free dividend reinvestment, so I assume when dividend is distributed, they will automatically reinvest whatever it’s worth, whole share and/or partial share. I have never seen anything like this before. Looks like I will have to call them again to clarify the issue.

    Zecco Review: But if you transfer the account, it will cost you $50. To me, paying $15 fee to sell your shares is a better option than transferring them and paying $50 transfer fee.

    aschmuck: Thanks for the information. I wasn’t able to find information about partial share transfer from Zecco, though when I searched their forum/blog, I did find a post about this matter and got some information on Sharebuilder website. Could you please show the link on Zecco website about ” Zecco states it can only transfer whole shares”?

  5. aschmuck |  Jul 01, 2007 at 3:05 am

    It is in the help section
    http://www.zecco.com/trading/TradingReference.aspx?tab=FAQ#section-8

    Can I transfer stocks to Zecco Trading in kind?
    Yes, in order to transfer your positions in kind, without having to liquidate, you will need to fill out the ACAT (Account Transfer) form. Please keep in mind that only full shares of equities can be transferred.

    (it could be made clearer)

  6. Sun |  Jul 01, 2007 at 10:08 pm

    aschmuck: Thanks for pointing me to the information. I don’t know how I missed it. So far I haven’t heard anything about my transfer yet, but it looks like the partial shares will be liquidated as that’s what ShareBuilder does when an account is transferred out. If that’s the case, then this transfer is too costly as I will have to pay $15.50 fee to sell the partial shares. I should have just sold all my shares and closed the account instead of transferring it out.

  7. Drew |  Jul 04, 2007 at 11:21 pm

    Thanks for the post Sun!

    I was curious about the partial share transfer issue. So it will cost $15 to liquidate partial shares?!

    I’m new to investing so my ShareBuilder account is small, so this would eat into my profits quite a bit. This may be a stupid question, but is there a way that I can only transfer whole shares (and retaining my partial shares in my ShareBuilder account)?

    Finally, how is ShareBuilder going to compete with Zecco in the long run and how does Zecco say in business?

  8. Sun |  Jul 07, 2007 at 3:57 pm

    Drew: Since ShareBuilder charges $15.50 for real-time transaction, I suspect they will charge less simply because I want to sell partial shares. But I won’t know until it’s done and see how much the who process really cost me.

    In addition to the $15.50 fee for selling your shares, transferring account out of ShareBuilder will cost you another $50. If you have a small account, then perhaps selling all your shares and closing the account at ShareBuilder and starting all over again at Zecco is the best way. Of course, it depends on how much you have made with ShareBuilder from your investment. It looks like from ShareBuilder’s website that they don’t charge fees for closing the account. I don’t know if you transfer only the whole shares, but ShareBuilder says on their website you will pay $10 per security transferred out.

    Though Zecco doesn’t change commissions, they are still a small player and not everybody feels comfortable with them. I myself am a little skeptical on how long they can maintain the fee-free structure and their customer service really isn’t great. I guess there are still many waiting. Also many have been with their current broker for a long time (I have been using Scottrade for six years), and they probably don’t want to abandon it (I still keep my Scottrade account and most of my investments).

  9. John |  Jan 10, 2008 at 3:19 pm

    Also, it will take approx. 30 days for transfer according to a Sharebuilder associate.

  10. Chris |  Feb 25, 2009 at 12:40 pm

    Putting your money with Zecco is a mistake. No more free trades, they have the worst accounting methods (I am complaining to FINRA because I think they stole money from me), and their customer service reps don’t know SEC rules and are rude. The management is not knowledgeable either.