How to Transfer Stocks Off Fidelity

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Contributor, Benzinga
March 17, 2021

Fidelity is a comprehensive online brokerage that suits both rookies and experienced traders alike. With full access to U.S. stock and options markets, a wide selection of fee-free funds and state-of-the-art educational offerings, Fidelity is equally suitable for veteran swing traders. Mobile traders will also appreciate Fidelity’s app, which mirrors the platform’s full capabilities.

While there isn’t really much to criticize about Fidelity, you may want to look for a different brokerage if you’re a margin trader looking for lower rates. Fidelity doesn’t also provide access to the futures markets. Learn how to transfer stocks off Fidelity today.

Step 1: Review your alternative broker options.

Before initiating a stock transfer, you must first choose the intended destination, otherwise, you’ll need to close all your positions and cash out your funds. Even so, consider an account transfer since you won’t need to actually sell your shares nor expose them to the eye of the taxman. You’re simply changing hands from one broker to a new one.

The brokerage you choose will depend on the features you’re looking for, the kind of trading you’ll do as well as your reasons for leaving Fidelity. If you’re looking for access to the futures markets, you’ll want to look at Benzinga’s list of recommended brokers who allow futures trading. If you’re a margin trader, Fidelity may not have the best rates, so you’ll want to explore brokers with low-margin accounts to reduce the cost of your margin trades.

Ultimately, ensure that your next broker has the features that Fidelity doesn’t offer, otherwise, the stock transfer will be in vain. Check out our comparison table of the best online brokers to find a Fidelity alternative.

Step 2: Check fees and commissions.

In most cases, the broker you’re leaving behind won’t spare you if you choose to transfer your assets to another brokerage — but Fidelity lets you transfer assets at no cost. Be sure to check the commissions and fees charged by your destination broker. You could be running away from Fidelity due to the higher margin rates only to land on a broker who charges higher commissions on traders.

Perform a full comparison between Fidelity and each of the brokerage alternatives you’re weighing. Remember, some brokers will entice you with the incentive to offer a rebate of the transfer fee as a way of encouraging you to make the switch. Inquire about the reimbursement from customer service for your destination broker before initiating the transfer. Some brokers won’t advertise the offer but will avail it upon request.

Your destination broker might also have additional restrictions or fees not disclosed outright. Do your homework beforehand to understand all your options and avoid unpleasant surprises thereafter. Remember, you’re looking for a better alternative — don’t settle for less.

Step 3: Open an account.

After performing some due diligence and confirming your decision as the right one, it’s time to open an account with your new broker. It’s the only way to guarantee that your assets will be transferred to your new brokerage.

For starters, you’ll need to think about the type of account you own and replicate the same with your new broker. If you currently own a margin account, you’ll need to open a similar account with your new broker. You can’t transfer assets from a leveraged account into a cash account. The same applies if you’re transferring a retirement account — the source and destination account must match.

As with Fidelity, you’ll probably not need any special onboarding once you open an account with a new broker. All that’s required of you is to instruct a stock transfer.

Step 4: Transfer your securities.

Once an account with your new broker is ready, you need to instruct a stock transfer. You have the option to transfer your entire brokerage account (full transfer) or particular securities (partial transfer). The most common way of moving securities between brokers is through the Automated Customer Account Transfer Service (ACATS).

To initiate the transfer of securities from one broker-dealer to another, you’ll need to complete the Transfer Initiation Form (TIF) and send it to your new broker. Your new broker can provide this form. Once your new broker (the receiving firm) receives your TIF, it initiates the process by establishing communication with your current broker via ACATS.

Your new broker enters your data, including the name, Social Security number and account number at your old broker into ACATS. An automated function will then allow your broker to see that a request has been made to transfer the account.

To prevent any unauthorized transfers, your broker will reject transfer requests where some information provided by your new broker doesn’t match what it holds in its records. The transfer request is validated once the customer account information matches. You can expect the validation process to take 3 business days from when your new broker enters your request into ACATS.

After validating the transfer request, your broker will send a list of the assets you hold to the receiving firm through ACATS. Your new broker will then review this list of assets and choose whether to accept the transfer. If the receiving broker accepts the account, the delivering broker will take about 3 business days to move your assets. According to FINRA, the entire validation and delivery process typically requires 6 days to complete.

Discussing the account transfer process with your new broker can help ensure the process is a success. Ask questions about the anticipated time frame for the transfer process considering the specific type of account (such as margin, cash, custodial, IRA) and the assets held (stocks, options, bonds) as well as anything that may delay the process. Ask your broker how they alert customers once the transfer is complete.

Step 5: Check restrictions.

It’s always a good idea to discuss, review and understand any specific policies, restrictions or constraints that may impact the transfer. For instance, if you hold a margin account, you need to ascertain that your new broker accepts margin accounts. If it does, check for any minimum requirements.

You must also remember that trading securities during the account transfer process will often complicate and derail the transfer. Some brokers will freeze an account that’s in the process of being transferred — no trades are allowed until the transfer is complete. You are best served if you don’t execute any trades during the transfer process. If you have concerns about not being able to sell a stock during the transfer process, you should consider selling it before initiating the transfer request.

Step 6: Close your Fidelity account.

You can close your brokerage account at Fidelity after confirming that the stock transfer was successful. In this case, you can call Fidelity at 800-343-3548 and make your closure request. Be sure to have your account number on standby since you’ll need it.

Always Compare Benefits

It’s important that you perform an individual “cost-benefit” analysis before switching to a new broker. Fidelity’s higher margin rates could be pushing you away, but another broker’s high trading commissions could just be as detrimental to your investing goals. And while no broker is perfect, you don’t want to find yourself tied up to a broker that doesn’t come any closer to what you’re already getting.

If your broker charges you for not making enough trades or failing to meet the minimum balance requirements, it’s probably time to make the switch. If your broker’s customer service is so hard to catch, it’s time to comparison-shop. Ultimately, you’ll have some trade-offs to make, so be sure to pick what works for you.

Find your new Broker Today

If you’re reasonably satisfied with your current broker, there’s probably no reason to transfer your account. However, things like limited product offerings, draft fees and commissions, scarce educational resources or unresponsive customer service may trigger your search for a new broker. In this case, you’ll need to prepare your portfolio for an account transfer.

Do your research, explore your options and assess the implications of performing the transfer. Benzinga’s list of recommended brokers is a good place to start your search for Fidelity alternatives.

Related content: Best Fidelity Mutual Funds