Stocks Transfer from Scottrade to TradeKing Completed
A couple of weeks ago, I wrote that Scottrade, my long-time stock broker is about to launch its own flexible dividend reinvestment program, which the brokerage firm says will be different from the traditional dividend reinvestment program (DRIP) that automatically reinvest dividends after they have been received without investors’ intervention. In fact, none of the dividend reinvestment programs as far as I know, whether they are for stocks, ETFs, or mutual funds, require manual action from investors. So when I first read “flexible” in Scottrade’s short description of the program, I was suspicious and became even more so when it appeared that the program may not offer the option to automatically reinvest dividend payouts after all. However, I still wanted confirmation from Scottrade before making any change on how I will continue to invest in dividend-paying stocks. My long standing position on dividend reinvestment when it comes to Scottrade, which is a rare exception because it doesn’t allow dividend reinvestment for stocks and ETFs, is that I want a traditional DRIP that automatically invest payouts without fees. I felt very disappointed when I sensed from their announcement that I may not get what I have been waiting it for years after all.
So the next day after that article, I tweeted Scottrade with my question on whether the flexible reinvestment program will allow automatic dividend reinvestment for free. This is how I asked my question:
“Your flexible reinvestment program, can I auto reinvest dividend for free?”
Later in the afternoon, the answer from Scottrade came back as
“Hi Sun, no manual trades will be required in the reinvestment program and it is free of charges and commissions”
When I got the response, my interpretation, from how I asked the question, was that the program does not allow automatic reinvestment (I was later pointed out the answer actually meant “no manual trades will be required”, not “no, manual trades will be required” as I read, but it still only solved part of the problem I have with the program, so it won’t change my decision anyway.). Even though it will be commission-free to invest dividends, the biggest problem of the program, from my view point, is that I can’t reinvest all the dividend payment because it only allow the purchase of whole shares. If the distribution is not enough to buy even one share of the stock, not just the stock issuing the dividend but any stock, which is usually the case at the beginning, then the money will be sitting there doing me nothing good until the next dividend time or new fund is added.
Somehow I felt that by doing this, Scottrade benefits itself more from the program than its customers do. To me, the program is useless and, thus, it’s time to take my dividend paying stocks elsewhere. The destination of my choice is TradeKing because it has a traditional DRIP program that I have been using since became a customer in 2007. The next day, I sent paperwork to TradeKing to transfer all eight stocks that distribute regular dividends from Scottrade to TradeKing.
- China Life Insurance (LFC)
- Bank of America (BAC)
- Las Vagas Sand (LVS)
- PowerShares Golden Dragon China Portfolio (PGJ)
- Apple (APPL)
- Citigroup (C)
- Powershares Water Resource Portfolio (PHO)
- Visa (V)
It’s not my entire stock holdings at Scottrade, but a large portion of it.
The transfer occurred rather quickly, but not without a glitch. To transfer a, brokerage account to TradeKing, an ACAT form needs to be submitted and that’s basically the only thing I need to do for the transfer. However, since I was doing a partial transfer, I needed to list all the eight stocks. TradeKing’s ACAT has one page for partial account transfer, but it has only space to list four securities, so the rest has to be listed on a separate page that also came with the ACAT form. I submitted the entire ACAT form including the additional page with four stocks to TradeKing on May 10th to initiate the transfer.
Last Friday, when I logged into my TradeKing account, I saw only the first four stocks were transferred. The last four are still with Scottrade. I then called TradeKing to ask why, the representative on the phone, after did his research, told me the clearing office might have overlooked the additional page because that page is not normally used. Of course, I was not very happy with the answer because that page was not that I inserted myself, rather it was part of form. I was even more annoyed when he kept saying he was there to help me and asking me whether I want to request the rest four stocks being transferred.
Well, the instruction was very clear on what to transfer and what not. If they did their job, then there wouldn’t be the opportunity for him to help me on the phone in the first place. And instead of telling me that they will go back and fix the error they made, he kept asking whether I want to transfer the other four. Of course, I wanted to transfer all eight. Isn’t that the instruction?
Even though this stock transfer was completed rather quickly, I was not that satisfied about how it was handle.
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