When you hire a stock broker, you had better really, really like the person. Switching to a new brokerage firm is such a big pain, both in terms of time and hassle, you don't want to do it very often.
To be fair, according to the Securities and Exchange Commission many transfers occur without a hitch. But even in the best-case scenario, transferring an account can take up to three weeks, during which time you are usually not permitted to buy or sell stocks in the account. (Just think of the money you could lose if a stock begins to tank during the transition.)
Another problem is the process itself. Although the transfer is almost entirely automated, the process is so complicated that it's easy for delays to occur. (When I transferred stock from one firm to another, it took eight weeks for the changeover. It was only finalized after I threatened to file a complaint with the SEC.)
The SEC has put together a list of recommendations on how to avoid delays. It is worth studying.
• Understand the transfer process before beginning. If you have any questions, ask the receiving broker.
• Make sure you use the right transfer forms. Review them carefully and make sure you fill them out correctly. The names on the forms must be identical to the names on the account. Any discrepancy will hold up the transfer.
• Check to see if all your accounts are transferable. Firms have different standards for margin accounts and retirement accounts.
• Make copies of everything before sending anything out.
• To avoid delays you should keep the type of accounts the same. If you decide to change the type of account or ownership, you will have to provide documentation.
For additional information, click here.
