Dear Dr. Don,
The broker with whom my husband and I have worked for several years was referred to us by my now deceased father. We’re seeing signs that our broker (with a very large firm) is becoming forgetful and possibly even on the verge of being incompetent. In our last phone call, he mentioned he only has three clients, but he could not remember where they lived. He always tells me the same stories (unfortunately, with different endings). How do we go about moving our six accounts at this firm? A couple years ago, the firm sent a notice saying that if we moved our accounts we’d be charged a transfer fee of $500 per account. Is that normal? Thanks for any advice you can offer.
— LG Transfer
The firm has the right to charge you a fee for the transfer. The amount of the transfer fee should be spelled out in the account agreement. Paying $3,000 to move your six accounts does seem like a fairly steep price to pay. Look before you leap to another firm, because it might charge a fee to transfer investments into a new account.
According to the Securities and Exchange Commission’s online publication, “Transferring Your Brokerage Account: Tips on Avoiding Delays,” “Some types of securities may not be transferred. These securities include: securities sold exclusively by your old firm; mutual funds or money market funds not available at the new firm; limited partnerships that are private placements; annuities; or bankrupt securities.” You’ll also want to consider the tax impact of selling investments that won’t transfer to the brokerage account at the new firm.
I’d suggest you talk to the manager at your current brokerage firm. Express your dissatisfaction with your financial professional, and ask if the manager can recommend another person at that firm to work with you on your investments. Meet with that person and decide if you are willing to stay with the firm.
It may be a little uncomfortable for you. But if your dissatisfaction is with your current financial professional and you’re happy with the brokerage firm, this could be the solution that avoids the transfer fees and potential income tax and capital gains tax ramifications of moving the accounts elsewhere.
It sounds like you aren’t the first client voting with your feet in leaving your current broker. It’s just a question of how long a walk you want to take and what you’re willing to pay for the privilege.
Get more news, money-saving tips and expert advice by signing up for a free Bankrate newsletter.
Ask the adviser
To ask a question of Dr. Don, go to the “Ask the Experts” page and select one of these topics: “Financing a home,” “Saving & Investing” or “Money.” Read more Dr. Don columns for additional personal finance advice.