How to switch from online broker

Switch online brokerYou have opened a trading account with a bank or broker and you’ve trading/investing for a while. As a trading you are doing well, but you are wondering if this is (still) really the best broker for you. There are several reasons that could make you doubt. For example:

  • You pay a higher fees than you would with another party (and that’s a shame, because costs do affect your return).
  • You need more features than you have now, such as tools, tips, an app for your Smartphone or tablet, good price information.
  • The range of investment products and specific tradable instruments of your current broker is too limited.

Perhaps you are already thinking about another specific broker. A logical question is: is it possible to switch from online broker, if you wanted to? And if so, how does it work? We provide you with a roadmap.

Read also: How to find the broker that suits you

1. See if your broker can transfer your portfolio

In many cases you can switch to another broker, without first having to sell everything from your portfolio (you would have to buy everything again with your new broker). In fact, you simply transfer your portfolio.

2. Check the product range of the new broker

Sometimes you cannot transfer your entire portfolio to a new broker. That is the case if you have certain investments in your portfolio the new broker is not offering. Think of asset classes or specific investments, such as specific funds. You can then choose to sell the investment, or (if you don’t want that) you maintain your account with your current broker (as well).

3. Check whether you need to pay for the transfer

There are brokers who charge money when you switch certain assets from their portfolio to a new broker. You then pay to your current broker.

You pay per fund. If your portfolio consists for example of fund A, fund B and fund C, you pay a fixed amount for A, a fixed amount for B, and a fixed amount for C, regardless of the how much you actually have in these funds. For example, you pay just as much if you have 10 x fund A, as you would if you had 1 x fund A.

4. Ask your new broker if you can get compensation

Many brokers offer you, as a new customer, a compensation for the costs paid – which are called transfer fees – for example, in the form of cash or discount on transaction fees. Think of it as a welcome gift or a way to lower the threshold to switch. Often, there is a limit to this bonus.

We have selected the best brokers for you on this page. Note: not all these brokers allow for a transfer of your portfolio.

5. See if you need to close small positions

Sometimes the proportion of the cost with respect to the value of your investments is so high that it may be better to close the position, that is, to sell the security (and maybe buy it again with your new broker). Fees of 5% with respect to the value of your investment, for example, is already quite high.

6. Do a request for transfer at the new broker

If you want to switch brokers, you do not need to tell your current broker in advance. In most cases it is sufficient if you contact the new broker and indicate that you want to switch from online broker. Many brokers do have a “switching service”.

You will have to fill in a form on which you indicate that you want to switch and what exactly it is you want to transfer. The new broker will do the rest. Note: If you have a joint account (with your partner), the other has to sign as well. Otherwise, the old account cannot be switched.

Good to know: the new broker can immediately figure out how it is with points 1, 2 and 3 of this roadmap and tell you whether the compensation (step 4) applies. Some brokers will even work out for you whether it is better to close certain positions (step 5).

Read also: Nine books you have to read according to Warren Buffet

7. Check if (and when) you can invest while your portfolio is being transferred

Once you have completed the transfer procedure the new broker will initiate the transfer of your portfolio.

Investments that are listed in your home country will usually be transferred within ten days or so. When your investments are listed abroad it may take longer. How fast it goes exactly depends largely on how the efforts of your current broker.

It is wise to ask whether you are able to buy and sell in the time that your portfolio is being transferred. This is not always possible. It can also be that you are prevented from trading only on the actually day of the transfer.