Transferring Accounts Between Firms

You may find yourself considering transferring your investment accounts between investment firms. This could be because your advisor is changing firms or retiring, or because you want to make a change.

Before starting a transfer, it’s important to recognize why you’re considering the move.

Your financial advisor changes firms:

Some financial advisors may choose to leave in hopes of better opportunities with another firm while others may be asked to leave due to changes within the firm itself. You may decide to rejoin your advisor and go through the process of transferring your accounts, or you may be hesitant about such a change. Maybe the old firm is a household name, which makes you feel secure, and the new firm is one you’ve never heard of. You shouldn't simply follow your advisor, but do what’s best for yourself, your assets, and your family.

As the investor you have the following options:

• stay with your current firm,
• move to your financial advisor’s new firm or
• go to a new firm with a new advisor.

It helps to get a better understanding of the reasons behind your advisor’s move and your advisor should be able to explain the pros and cons of moving. Questions to ask your advisor to start you thinking about the options and their consequences:

• Why is the advisor making the move and what potential impact does this have on your investments?
• Does the new firm provide more or less products and services, than the firm that currently has your accounts? For example, some firms only offer their own products or those of their affiliates.
• If the new firm has an approved list of investment products and how does it differ from the list of the firm where you currently have your accounts? proprietary products (i.e. their own affiliated products), unaffiliated products or everything
• What is the new firm's commission and fee structure, and does it differ from the old firm?
• What costs will you pay in the short term and in the longer term if you change firms?
• Will you need to cash in your investments, or will the new firm accept your investments as they are? If it must be a cash transfer what are the tax consequences of this?

In the meantime, your accounts may be reassigned to someone else within the firm and you should be informed of the change by phone call or mail. When someone new takes over your account, that person should call you to schedule a meeting to review with you your risk profile, investment objectives, time horizon and investment knowledge along with other "know-your-client" information. The new advisor should also review your holdings and determine whether they are still suitable for you.

Your financial advisor retires:

Everyone retires, even your financial advisor. Hopefully, they will have let you know well in advance of their plans and who will be taking over for them. In addition, similar to your advisor changing firms, your investment firm will also inform you if someone new has been assigned to your accounts.

You want to make a change:

Other common reasons that may cause you to initiate a change and look to transfer your accounts may include:

• frustration with current services;
• seeking better investment options or lower fees; or
• consolidating accounts for convenience.

Make An Informed Decision

Before you decide, research potential firms to find the right fit for your investment needs. First make sure any potential firm or advisor is registered. Use the National Registration Search to check if an individual or firm is registered. You should also consider factors such as reputation, services offered, investment options, fees, and customer support and whether the firm and advisor align with your investment values.

Keep in mind, you also have the option of leaving some of your assets at your current firm and moving the remainder to a new firm. For more guidance refer to The of Office of Investor’s “Selecting an Advisor” article.

If You Do Move, Understand the Transfer Process

In most cases the transfer is almost entirely electronic which makes transferring your account from one firm to another easier than you think. The transfer usually process takes about 10 days, depending on the investments within the account and typically involves three primary methods:

1. In-Kind Transfers: This involves moving your investments “as is” from one firm to another. Your securities are transferred without selling them, avoiding potential tax consequences and market exposure during the transfer process.
2. Partial Transfers: A partial request will ask for specific amounts of Cash (CAD or USD) and/or specific investments to be transferred. You will need to indicate what you’d like to transfer since it’s not the entire account.
3. Cash Transfers: In some cases, particularly when in-kind transfers are not possible, investors may opt for cash transfers. This involves selling your investments with the current firm, liquidating them into cash, and then transferring the cash proceeds to the new firm to reinvest in new securities.

Potential Challenges

While transferring investments, you may face challenges such as transfer fees, account closure fees, and potential delays in the process. There may also be some securities which you are unable to transfer. Examples of securities that you may be unable to transfer include:

• securities sold exclusively by your old firm (proprietary products);
• private placements;
• annuities; or
• bankrupt securities.

If your request includes some of these non-transferable securities, it may take longer to complete a transfer. Your old firm is required to transfer whatever securities or assets it can and ask you what you want to do with the others. You generally have two choices: either sell the non-transferable security and transfer the cash or leave the security with your old firm.

Frequently Asked Questions

Conclusion

By assessing your needs, researching potential firms and advisors and understanding the transfer process, your investments can continue to work towards your financial goals without interruption.

If you feel like your account has not been transferred in an appropriate fashion visit CIRO’s How to Make a Complaint section.