Transfer A Brokerage Account: How Much Does It Cost?

Switching brokerage account isn’t always straightforward. There are certain costs associated with the switch. The good news is most brokers offer reimbursements to cover the cost.

I have in the past transferred my brokerage account from one broker to another twice. Once from ShareBuilder to Zecco, and once from Firstrade to TradeKing. I also did an IRA transfer from Scottrade to Vanguard a while ago and had a very bad experience that I don’t even want to mention. The main reason for the switch was to save on commission, even though I don’t trade a lot so the saving from switching to a cheaper broker isn’t significant.

Usually, transferring account from one broker to another is quite simple. All you need to do is

1. Open an account with the broker you want to transfer to if you don’t already have an account with them;
2. Initiate the account transfer process by submitting a Automated Customer Account Transfer (ACAT) form;
3. Wait for the process to complete,
4. Finally, request reimbursement of any account transfer-out fee charged by the other broker you want to leave.

While the opening an account part can be done online and takes only a few minutes to complete, in most cases you do have to submit the ACAT form by fax or mail, which takes some additional time. The most time consuming part of the whole account transfer process is the waiting, which can go as long as several weeks. When I was transferring my IRA account from Scottrade to Vanguard, I was told that the paper form that I submitted had to be mailed from one firm to the other so the process can start. Can’t believe nowadays they still use snail mail, but that’s usually what it takes.

On one hand you probably think that the broker you are leaving isn’t happy about losing you, so they may impose fees if you want to get out. That’s indeed usually the case. A $50 account transfer-out fee is pretty standard. On the other hand, the broker on the receiving end may not show their appreciation of having you as a new customer because a lot of brokers still want you, their new customer, to pay for the account transfer fee. This somehow doesn’t sound right to me, but that’s what happens. Fortunately, there are a few brokers do encourage account transfer-in by reimbursing the transfer fee.

Following are some information on how to transfer your brokerage account from one firm to another. I only list some discount brokers here because I feel that most of the time the reason for switching is commission. To me, it doesn’t make too much sense to transfer from a $4 commission broker to a $10 commission broker, unless there’s some serious mess up

Scottrade (reviews)

• Scottrade will reimburse you up to $100 when you transfer your account of $25,000 ore more;
• Open a Scottrade account, transfer your account at other brokers, and request a reimbursement;
• Offer ends December 31, 2008;
• Scottrade commission: $7 per trade;
• Scottrade account transfer-out fee: Free;

TradeKing (reviews)

• TradeKing doesn’t charge a fee for incoming account transfer and it will reimburse up to $150 account transfer fee charged by other brokers;
• Open a TradeKing account first and submit account transfer form (fax or mail);
• Transfer takes up to 7 to 10 business days;
• TradeKing commission: $4.95 per trade;
• TradeKing account transfer-out fee: $50;

Firstrade (reviews)

• Firstrade will reimburse up to $100 account transfer fee charged by other brokers when transferring $25,000 or more to Firstrade;
• No expiration date;
• Open a Firstrade account, transfer your account at other brokers, and request a reimbursement;
• Transfer usually takes up to 7 business days;
• Firstrade commission: $6.95 per trade;
• Firstrade account transfer-out fee: $50;

ShareBuilder (reviews)

• ShareBuilder gives no benefit for transferring an account from other broker to them;
• Open a SharBuilder account first and submit account transfer form by mail;
• Account transfer can take as long as 4 to 6 weeks;
• ShareBuilder commission: $9.95 per real-time trade, $4 auto investment plan;
• ShareBuilder account transfer-out fee: $50;

Zecco (reviews)

• Zecco also doesn’t encourage account transfer-in because it provides no reimbursement or incentive to do so, but you get zero commission trades ;
• Open a Zecco account first and submit account transfer form by mail or fax; scanned form is also acceptable;
• Account transfer takes 10 to 20 days to complete;
• Zecco commission: $0 per trade;
• Zecco account transfer-out fee: $50;

E*Trade

• E*Trade is not any better than other brokers in terms account transfer-in: no fee reimbursement or anything;
• Open an E*Trade account and you will have the opportunity to transfer the account in, or choose to send in the form later by mail or fax;
• Account transfer usually takes 3 to 6 weeks;
• E*Trade commission: $12.99 per trade;
• E*Trade account transfer-out fee: $60;

SogoTrade (reviews)

• SogoTrade also gives you up to $100 for transferring your account of $25,000 ore more to SogoTrade;
• Open a SogoTrade, submit account transfer form, and request fee reimbursement;
• No expiration date;
• Account transfer takes 7 to 10 business days;
• SogoTrade commission: $3 per trade;
• SogoTrade account transfer-out fee: $50;