Personal Finance

Money at 30: What If You Need to Move Your Stock Portfolio?

So far 2019 has been a year of learning for me. More specifically, as a newbie investor, I’ve been trying to expand my portfolio and put more of my extra funds into the market. This journey has led to a few questions regarding different brokerage account options and the pros and cons that come with them.

Something that’s plagued me ever since Robinhood made headlines for all the wrong reasons has been the question about how viable different FinTech startups are in the long run. See, with online savings accounts, I know I can take my cash and any interest I’ve earned and call it a day. But what happens if I want to take stocks I’ve purchased on Robinhood or other emerging platforms and move them elsewhere? Well, I think I found the answer(s).

Here are a couple of ways you can make the move between brokerage accounts.

Selling and Rebuying

The first option you have for moving your stocks from one brokerage account to another is fairly straightforward: sell your current positions and rebuy them on your new account. Of course the risks and downsides are also pretty obvious here. For one, stock prices do fluctuate and timing your selling/repurchasing may not be exact. Therefore there’s a very real chance that you could end up losing money in between. On the other hand you could also sell your portfolio for a bit higher than you buy it back for — but that’s absolutely not a guarantee.

Another obvious potential downside to this plan is that you may be subjected to two sets of fees. Depending on your brokerage accounts’ trade fees, this could add up to a significant sum. Because of this you probably want to consider another way.

Automated Customer Account Transfer Service

As it turns out, I was far from alone in my thought that there should be a way to simply move your portfolio from one brokerage account to another. That’s pretty much what the Automated Customer Account Transfer Service (ACATS) is all about. Incidentally, ACATS actually replaces the previous manual transfers that used to be the go to method to complete such requests.

To move your assets over, the brokerage account you want to move your portfolio to will need to initiate the transfer. Once your current broker confirms everything, the transfer can begin. According to the Securities and Exchange Commission (SEC), this entire process can take two to three weeks — and that’s if everything goes smoothly. Luckily, since your positions aren’t being sold, you won’t be affected by changes in price during this time. Unfortunately though, since you won’t be able to trade your stocks during the transfer process, there is a chance that you may not be able to buy or sell at the ideal time either, so make sure to plan ahead.

ACATS Fees
Being a Robinhood user, once I learned about ACATS, I figured I’d look into how the company handles transfers. Sure enough I came across a page titled “Transfer Stocks Out Of Your Robinhood Account” that explains a bit more about the ACATS process. This is also how I learned that transferring your account may come at a cost.

In the case of Robinhood, they note that there’s a $75 fee for transferring stocks or cash to a different brokerage. To be fair, since their platform allows for fee-free trades, it’s understandable that they’d want to disincentivize users from buying stocks and then sending them away. However, for small-time traders like myself, this fee would amount to such a large percentage of my portfolio that I actually would be better off going old school and just selling my positions on Robinhood and then rebuying elsewhere.

Even if you’re not a Robinhood user, it’s worth noting the possibility of ACATS fees as they are something to look into before requesting a transfer. Similarly, if you’re torn between doing a partial or full transfer, these fees may also play a role in that decision. Hopefully, whatever you choose, your transfer and future fee savings will be worth this potential one-time expense.

If you’re thinking about moving your investments to another brokerage or want to have a backup plan just in case, it’s nice to know that you do have a couple of options. In most cases, an ACATS transfer can be the most direct route. At the same time, fees associated with these transfers may require some extra consideration. Nevertheless it’s nice to know that these transfers are possible and could help you determine if trying free FinTech brokerages are worth a shot or not.

Also published on Medium.

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