How to move stocks and transfer brokerages, stress-free

By Stacker

Published July 12, 2024 2:19 AM

Andrii Yalanskyi // Shutterstock

How to move stocks and transfer brokerages, stress-free

Money and stocks transfer represented by ten pieces of dice on a yellow background.

If you’re unsatisfied with your brokerage account, you can easily transfer your funds to a competitor because moving stocks from one broker to another isn’t as stressful as you think. Money.ca explains that, in most cases, you can initiate the process to transfer stock from one broker to another without leaving your couch, as it only takes a few clicks.

Some of the common reasons for moving stocks from one broker to another include the following:

You’re not satisfied with the current account due to poor customer service or account fees.
You want to earn better returns for your money.
You’re fed up with the app or website and want something that provides a better user experience.
You’re switching between a self-directed and a robo-advisor account.

With more young investors turning to robo-advisors, such as Wealthsimple, to manage their funds, you don’t want to feel stuck with your current brokerage account. Or you may be ready to switch to a self-directed account or a brokerage that provides more resources.

While the process of switching accounts is relatively simple, it’s crucial to ensure that you transfer your brokerage account correctly. Mishandling this process could lead to issues. For instance, choosing the wrong transfer option could result in your current brokerage selling off your securities to send over cash, when your intention was to retain your holdings. If you’re using a registered account like a TFSA or RRSP, this could negatively impact your contribution limits and possibly hurt your bottom line come tax time.

It’s important to be cautious.

How to transfer stock between brokers

How can you transfer stocks between brokerage accounts?

1. Account Transfer Online Notification (ATON)

The easiest way to transfer stock from one broker to another is to use ATON (Account Transfer Online Notification), which automates the exchange and confirms transfer requests. If both institutions are ATON eligible, the request must be handled through ATON. The entire process can be initiated online, and you may have to fill out a few forms to confirm your transfer.

2. Alternative options

Alternative options include phone, email or showing up in person to request a transfer with your new institution.

Transfer brokerage account details

You’ll want to gather the following information before requesting a transfer:

1. The name of the institution or brokerage from which the funds are coming.

2. The account number for the one you’re transferring over.

3. The address of the brokerage.

Considerations: Moving stocks from one broker to another

When moving stocks from one broker to another, you have to figure out how you plan on making the transfer.

You have two options:

In-cash: Your original institution will liquidate your assets and transfer the funds to the receiving institution.
In-kind: You have your account transferred “as-is” and assets are moved over in the same form.

Know that you, as the account holder, have control over the transfer. The receiving institution must initiate the transfer, but they can only do so once you complete and sign a transfer form.

You also can’t make withdrawals from your old institution during the transfer period, and deposits must go to your new account.

It’s worth pointing out that every brokerage account has outlined steps for transferring an account. For example, with Questrade, you can transfer an account on the website by going to the funding section and selecting the appropriate option.

How long does it take to transfer brokerage accounts?

You’re likely wondering how long it will take to transfer brokerage accounts. Rest assured, this is a normal part of the process and it’s out of your hands. According to most brokerage accounts’ official websites, a transfer can take up to four weeks, depending on the institution and the account type.

The account transfer can take six to eight weeks if the initial account declines the first transfer attempt. To be on the safe side, you’re better off factoring in a period of anywhere from two to six weeks.

How much does it cost to transfer a brokerage account?

Transfer fees may hold you back, but many brokerage accounts handle the fees when you transfer funds because they want your business. The fees for transferring a brokerage account over can range from $30 to $150.

Most of the bigger banks will charge you $150, but the goal is to find a new account to reimburse you for the fees, so you don’t have to worry about this. Brokerage account transfer fees should be covered for you, or you may want to think twice about switching over, unless you have another incentive for switching.

RRSP/RESP/TFSA brokerage account transfer comparison

Remember, you can only transfer your funds over to the same type of account at a different financial institution. Before you initiate a transfer, you’ll want to confirm that your new brokerage or bank offers the same kind of account (RRSP, RESP or TFSA) you’re trying to transfer.

Wealthsimple

Will cover fees to transfer funds in. Will not charge you to transfer money out.

Questrade

Will cover fees for transferring funds up to $150/account. Charges $150 to transfer funds out.

CIBC Investor’s Edge

Will not cover fees or reimburse you to transfer an account over. Charges $150 to transfer out.

Moka

Will not cover fees for transferring funds in. Charge $50 to transfer out your RRSP funds.

BMO Investorline

Will not cover fees for transferring funds. Charges $135 to transfer out money.

Webull

Will cover up to $100 in fees for transferring an account over. Will charge $75 for outgoing transfers.

How not to transfer your brokerage account

If you transfer an account over “in-kind,” you’re swapping financial institutions without changing the actual assets in the account. There are no tax implications if you move your assets from one RRSP account to another with a new brokerage. However, there are three concerns you can’t ignore when transferring your brokerage account:

You can’t transfer fractional shares when transferring brokerage accounts, which must be liquidated first.
GICs must also be sold off, or you must wait until maturity.
USD cash balances may be automatically converted into CDN, and you will be charged a fee for the conversion.

Transfer brokerage account tax implications

Transfer brokerage account tax implications arise when you transfer an account in cash because your original brokerage will sell off the assets to send over the funds to your new account. You have to deal with capital gains taxes if you make any money on securities, which will impact your tax situation for the year.

When transferring a TFSA account, it’s essential to be aware of the potential consequences. For instance, if an asset you own in your TFSA account isn’t supported by the account you’re transferring to, you may have to do a cash transfer. This could have implications on your contribution limits, making it crucial to track them to avoid any potential tax issues.

Next steps

If you’ve been putting off that account transfer, understand there’s nothing to worry about, and moving stocks from one broker to another isn’t as intimidating as it seems. If you’re ready to transfer an account over, you’ll want to start by confirming that your new brokerage offers the same type of account.

This story was produced by Money.ca and reviewed and distributed by Stacker Media.

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