Quick Look: How to Transfer Stocks Off Robinhood
- Pick a new broker
- Resolve negative balances and account restrictions
- Read up on fees, restrictions and limitations
- Open an account with the new broker
- Request an account transfer
- Choose a full or partial transfer
- Allow time for the transfer to take effect
In the aftermath of the Reddit group, WallStreetBets’s short squeeze on GameStop (GME) and other stocks, Robinhood blocked investors from trading any of the stocks the subreddit users were targeting for the short squeeze. While Robinhood was not alone in restricting the trading of certain stocks, many brokers did not place any restrictions or who did so only because their clearinghouses required it.
A clearinghouse is an SEC-registered organization responsible for keeping track of which stocks are owned through which brokerages. All clearing brokers (platforms like Robinhood that facilitate trading) need to be a member of a clearinghouse. If the clearinghouse sets new limits on stocks, its member brokers have no choice but to comply. Even so, some brokers, like Robinhood, went above and beyond, blocking more stocks than the clearinghouse required.
These restrictions have upset many users who are now looking to transfer their account out of Robinhood and on to a platform that they can trust to allow unrestricted trading. No matter the reason you want to transfer your stocks off Robinhood, this quick step-by-step guide will help you navigate the process and know what to expect as you’re making the move to a new broker.
Step 1: Pick a New Broker
Before you can initiate a transfer, you need to decide where that transfer will go. Otherwise, you’re just cashing out your account, which closes out your position in all of your stocks and, depending on the value of your portfolio, could lead to a hefty bill during tax season. The advantage of an account transfer is that you don’t need to actually sell your shares or risk exposing them to taxation. You’re just moving your portfolio to a new broker.
Choosing that new broker will depend on what kind of trading you do, what features you want and your motives for leaving Robinhood. If your motive for leaving is in response to the restrictions. For example, you’ll want to cross-reference our recommendations below with this list of brokers who did not restrict trading. Moreover, you should review brokers that provide you with a few options that make them easier to use, including:
- Quality interface: The interface should be easy to use, understand and manage.
- A massive selection of assets: You need a selection of assets that helps you build a stout portfolio.
- Knowledgeable custom service: You need to know that the customer service team can help you and give you the information you need to manage your account.
- Security: The site should be secure and explain why it’s secure so that you know your money and personal data is safe.
If you’re just looking for a broker that offers features that Robinhood doesn’t (like mutual funds, bonds or tax-protected investment accounts), just make sure your next broker has those features. Either way, you can begin your search for the best brokers with this quick comparison table of some of our top recommendations:
Step 2: Resolve Negative Balances or Account Restrictions
If you have a margin account with a negative balance or any account with account restrictions, you need to settle up with Robinhood before you can move to a new broker. You can do this by either depositing cash into the account or by selling off some shares to make up the balance owed. If you aren’t sure how to resolve negative balances or account restrictions, reach out to the broker for assistance. There may be alternative options that you can avail yourself of.
Step 3: Read Up on Fees, Restrictions and Limitations
Robinhood charges a flat $75 fee, regardless of whether you’re doing a full or partial transfer (more on that later). However, some brokers might offer to cover that transfer fee for you, making it effectively free. To find out if a broker is willing to cover the fees, you’ll need to call directly and ask. It’s usually a “by request only” or “limited time only” offer when it is available.
Other restrictions and limitations on Robinhood’s end relate to fractional shares and cryptocurrency. If you hold either of these, you won’t be able to directly transfer them to your new broker, even if the new one offers both. Instead, your fractional shares will be automatically sold and appear as a cash balance in your new account.
Meanwhile, any cryptocurrencies will remain in your Robinhood account unless you cash them out before you initiate the transfer. Make sure to do this to avoid the need to request a second account transfer.
Additional restrictions, limitations or fees might exist for your new broker as well. Make sure you do your research before you make any moves to avoid any unpleasant surprises.
Step 4: Open an Account with Your New Broker
Once you’ve done your research and you’re confident in your decision, it’s time to open your new account. Even though you’re planning to transfer accounts, you don’t have to go through any special onboarding process to open an account. You can sign up and open the account as you normally would. The actual transfer will happen later.
As you work with the new broker, learn the ins and outs of the system. When you’re comfortable with the new broker, it will be easier to make changes to your account, invest, manage your money and build wealth.
Step 5: Request an Account Transfer
The last action required on your part is to make the official account transfer request. You’ll do this at your new broker. In some cases, the broker will ask during the onboarding process if you plan to transfer any accounts over to your new account. In other cases, you’ll need to open up the account and then contact customer support to make the request.
In either case, you arrange this entirely with the new broker who will then draft up the paperwork and file the request with Robinhood’s clearinghouse. The clearinghouse will then handle the actual transfer of assets and funds. There is no reason to contact Robinhood at any point, except when settling a negative balance or cashing out your crypto investments.
Full Transfer vs. Partial Transfer?
When you make the request, you can either request a full transfer or a partial transfer. As the name implies, a full transfer will completely move your entire portfolio over to your new broker and then close out your Robinhood account.
Once you’ve done that, your Robinhood account will be restricted so that you can’t make any new trades while the transfer is in progress. You can still view your stocks and other assets in the app to monitor changes. You just can’t do any rebalancing or trades.
After the initial transfer is complete, you might still receive additional assets in a “residual sweep.” This residual sweep is done to collect any pending dividend payments, unsettled trade orders or assets that weren’t included in your portfolio at the time of the first transfer.
A partial transfer will be a little less complicated. You’re transferring just a select portion of your assets. Any residual dividend payments or unsettled orders will just be added to your remaining Robinhood account which will still be open and functional, though you will have restrictions on the assets in the process of transferring.
Think of a partial transfer as a way of investing in a new brokerage without moving all your money. Robinhood might offer certain assets or opportunities you prefer, but you may want to look into other options elsewhere, using the money and assets you’ve built up in your Robinhood account.
Step 6: Wait 5-10 Business Days
In most cases, especially when you’re transferring from one online broker to another, you can complete the entire transfer process online in a matter of minutes. Of course, if you have any account restrictions or a negative balance, the process might take longer.
Once you’ve made your official transfer request, all you need to do next is wait. Typically, it will take anywhere from 5-10 business days to verify and complete the account transfer. However, this varies from broker to broker. You’ll get a more specific estimate after you make your transfer request. Also, given the surge in Robinhood transfer requests, it might take a little longer.
Depending on your new broker, you might be able to have your account covered. This means the broker will basically “lend” you the value of your assets and funds so that you can start trading right away. Usually, this option to cover is only available for larger portfolios and it’s by no means automatic. You’ll need to request this if you want it.
If the ability to start trading immediately with your new broker is important, you can contact the brokers you’re considering to find out which ones will cover your account. For an easier alternative, you can also just deposit cash into your new account while you wait for the rest of your assets and funds to move over.
Find Your New Broker Today!
Whether you’re looking for a brokerage with a similar user-friendly mobile trading platform but a better selection of tax-protected investing accounts or you’re on the hunt for a broker that’s less likely to restrict your ability to trade volatile stocks, start doing your research today! Once you’ve chosen your new broker and read up on what kind of fees and limitations to expect, you’re ready to transfer your stocks off Robinhood as soon as possible!
Frequently Asked Questions
Should you transfer stocks off Robinhood?
Some investors may feel Robinhood does not act in their best interests and will transfer their stocks from the platform. Do you research before making this choice.
Is Robinhood a good broker?
Robinhood is a good broker that has helped many investors with their portfolios, but you should do your research to determine if it is the right broker for you.
Why did Robinhood make staff cuts?
On August 2nd, 2022 Robinhood announced they cut around a quarter (23%) of their staff due to their sixth quarterly loss. This move is a bit of a surprised after laying off 9% of their staff in April of 2021.