Transferring Investments to a New Account

The first time that I wanted to close an investment account with one company and move the contents to a new account with another company, I went about it in entirely the wrong way. You may have heard the expression “you can’t push a rope.” Well, the same seems to be true for money. Let me explain.

I started by talking to my old investment advisor and giving him the bad news about my plans to make a change. He spent some time trying to change my mind, but gave up after it was apparent that my mind was made up. I asked him what I had to do to get the investments moved, and he told me that I had to contact some administrative person whose telephone number he didn’t have handy.

After several telephone calls and some broken promises over the course of more than a month, I was getting quite frustrated. I didn’t realize it at the time, but my problem was that I was trying to push the money rather than pull it.

When I spoke to the new company that would be handling my investments about my problems, I was told to just come in and fill out a short form, and they would handle everything. It all became clear to me at that moment. The new company is motivated to get the money moved, and the old company isn’t. I never even had to speak to anyone at the old company again.

If you are planning to change investment accounts, you might want to ask the new company about what costs you will get hit with when closing the old account (and maybe ask if the new company will absorb some of these costs). There might be brokerage costs for selling stocks or mutual fund units, account closing fees, or transfer fees. You could also contact the old company to confirm what fees you will be changed, and who knows, they might even give you a good reason for not making the change.

Another thing to consider is moving investments “in kind.” Suppose that you hold 100 shares of Microsoft. If they are moved “in kind,” then the shares are moved directly to the new account rather than selling them first and then sending money to the new account. This isn’t always possible because some companies put their clients into investments only they provide that can’t be held in the new account.

It turns out that pulling money into a new account is far easier than pushing money out of an old account.