Leaving an advisor can feel like a big, awkward decision. The move itself isn’t. You sign a form at the new firm, the request runs through the industry’s automated transfer system, and a standard transfer is usually done within a week. You don’t need your old advisor’s permission, and you don’t have to sell anything. What costs people money is everything around the transfer, so here is the checklist first and the reasons behind it after.
The checklist
Tick it off as you go.
0 of 23 done
Before you move Gather and decide
Start the move At the new firm
Retirement accounts Never take the check
While it moves Usually under a week
After it lands Check everything
Your ticks are saved in this browser only.
Before you move
Most transfer problems are settled, one way or the other, before the form is signed.
Statements and cost basis come first. Online access to the old accounts can end once they’re closed, so download two years of statements and tax forms and export the lot-by-lot cost basis. Stocks bought before 2011, mutual funds before 2012, and bonds and options before 2014 are “noncovered”: the old firm doesn’t have to pass their basis along, so the new firm may show it as unknown.
Match every account exactly. Each new account needs the same owner and registration as the old one. Retitling, such as moving an account into a trust, is a separate step with its own paperwork.
Ask about exit fees. Many firms charge to transfer an account out, commonly about $50 to $100 per account, and no rule caps the amount. Get it in writing, and ask whether the new firm covers it.
Know what runs on autopilot. Monthly contributions, systematic withdrawals, required distributions, bill payments and dividend reinvestment are standing instructions at the old firm. They don’t follow the money.
What may not transfer cleanly
Most stocks, bonds, ETFs, cash and listed options move through the automated system without trouble. The SEC lists the usual exceptions, and each one needs a decision before the transfer starts.
| Holding | Why it’s a problem | Usual options |
|---|---|---|
| Funds sold only by your old firm | The new firm may not be able to hold the old firm’s own products | Leave it, move it to the fund company if allowed, or sell it, ideally inside a retirement account |
| Mutual funds the new firm doesn’t carry | No arrangement between the new firm and the fund company | The same choices; money market funds are usually converted to cash |
| Annuities | A contract with an insurance company, not a security in the account | Keep it with the insurer, or exchange it under Section 1035 |
| Private placements and limited partnerships | Often can’t be re-registered at a new custodian | Usually stay with the old firm or the sponsor until they wind down |
| Fractional shares | Many systems can’t move part of a share | Usually sold for cash |
Annuities run on their own clock. Surrender charges can apply for years after purchase. A Section 1035 exchange avoids tax on the move, not the surrender charge, and a new contract usually starts a new surrender period. Get the schedule and current value from the insurer before anyone suggests replacing one.
Selling isn’t free just because it’s easy. In a taxable account, every sale to “clean up” a portfolio can trigger a capital gain. A fund with a high expense ratio can still be worth holding for a while if selling it means a five-figure tax bill. That’s a calculation, not a reflex.
How the move actually happens
The transfer is started from the new firm’s side. You never have to ask the old one.
- You open the new account with the same owner and registration as the old one.
- You sign a transfer form at the new firm, filled in exactly as the old statement reads.
- The new firm submits it through ACATS, the automated transfer system run by the National Securities Clearing Corporation, which FINRA and NYSE member firms are required to use.
- The old firm has one business day to accept the request or flag a problem, then three business days to complete the transfer.
The old firm can reject a transfer only for narrow reasons: a form filled out incorrectly, or a question about who owns the account or how many shares are in it. If a problem isn’t fixed within two business days, the request is purged and the new firm has to start over. That’s why the form has to match the old statement letter for letter.
In kind, not in cash. Ask for the transfer “in kind,” so every holding moves exactly as it is. A transfer that sells everything first turns paperwork into a tax event.
While it moves, sit still. Buying or selling during a transfer can complicate and delay it. Dividends and interest paid after the transfer usually land at the old account and follow later in a smaller sweep. Expect a call from your old advisor; a short, polite note closes the relationship cleanly.
IRAs and 401(k)s: never take the check
Retirement money should move directly from one custodian to the other. The IRS calls that a trustee-to-trustee transfer. It isn’t a distribution, it isn’t taxed, and there’s no limit on how often you can do it.
The check is the trap. If an IRA pays the money to you instead, you have 60 days to get it into another IRA. You can do that kind of rollover only once in any 12-month period, counting all of your IRAs together. A second one is a taxable distribution, and the IRS won’t waive that limit.
From a 401(k), the check costs 20% up front. An employer plan that pays you directly must withhold 20% for taxes. To roll over the full amount, you’d have to replace that 20% from other money within 60 days. A direct rollover avoids the withholding entirely.
Plan around the required distribution. If you’re taking required minimum distributions, decide which firm pays this year’s before the move. A missed RMD carries a 25% excise tax on the shortfall, cut to 10% if it’s corrected within two years.
Your 401(k) doesn’t have to move at all. Changing advisors doesn’t touch a workplace plan. Whether to roll it into an IRA is a separate decision with its own trade-offs.
The tax traps
Selling to move
Liquidating a taxable account to transfer cash realizes every gain at once. Move in kind and decide later.
Lost basis
The old firm must send basis for covered holdings within 15 days of settlement. For older lots it may have nothing to send, and an “unknown” basis can mean overpaying tax on a sale unless you can prove what you paid.
Wash sales across firms
Sell at a loss at the old firm and buy the same security at the new one within 30 days, and the loss is disallowed. The rule applies across all of your accounts.
Two sets of tax forms
Expect 1099s from both firms for the year of the move. Your CPA needs both, and the gains and basis have to reconcile.
After it lands
The move isn’t done when the money arrives. It’s done when you’ve checked it.
Check the first statement against the last. Every holding, every share count, every cost basis figure. Fill any basis gaps from the records you exported before the move.
Re-file your beneficiaries. Confirm the IRA and transfer-on-death beneficiaries at the new custodian match your estate plan. A new form replaces whatever was on file, and an IRA without a valid beneficiary can end up payable to your estate. One family learned that the hard way in an IRS private letter ruling, after a transfer form named the estate by mistake.
Restart what ran automatically. Contributions, withdrawals, required distributions, bill payments and dividend settings. Margin and options approvals are set up at the new firm, not carried over.
Close the old accounts and tell your CPA. Once the stragglers arrive, confirm the old accounts show a zero balance and are closed. Then send your CPA the new account numbers, both sets of tax forms, and any sales made around the move.
How Morrowgate handles a move. Before anything moves, every account goes on one family balance sheet. Anything that won’t transfer cleanly, or would be taxable to sell, is flagged and run past your CPA first. Accounts are held primarily at Fidelity, with Schwab available. Once everything lands, titling and beneficiaries are checked against your estate plan, and your attorney is brought in where they don’t match.
Questions people ask
How long does it take to switch financial advisors?
The transfer itself: Investor.gov puts a standard transfer at about three to five business days once the new firm submits it. Retirement accounts, margin, ownership changes and holdings that won’t transfer can stretch it to a few weeks.
Do I have to tell my old advisor I’m leaving?
No permission is needed. The new firm requests the transfer. Most people send a short note anyway; it closes the relationship cleanly and gets ahead of the phone call.
Will I owe taxes when I transfer my account?
Not on an in-kind transfer between accounts of the same type, or a direct transfer of an IRA. Taxes come from selling in a taxable account, or from retirement money paid to you and not redeposited within 60 days.
My advisor changed firms. Do I have to follow?
No. Your account stays where it is unless you move it. If your advisor is a broker, FINRA requires the new firm to give you an educational notice covering transfer costs, what may not move in kind, and the incentives brokers can receive for switching firms. Read it, then decide the way you would with any new advisor.
Can I move only part of an account?
Yes. A partial transfer of specific holdings or cash is common, for example to leave behind a holding that can’t move while transferring the rest.
Where this guidance stops
This article is general education on switching advisors and moving investment accounts: how the rules and the options generally work. It is not tax, legal or investment advice, and nothing here is a recommendation for your situation. Rules change and outcomes turn on the facts, which is why a CPA and an attorney look at a family’s own numbers before anything is done.
Sources
- FINRA Regulatory Notice 22-21: customer account transfers (Rule 11870)
- Investor.gov: Investor Bulletin, transferring your investment account
- Investor.gov: Transferring your brokerage account
- SEC: Transferring your brokerage account, tips on avoiding delays
- IRS: Rollovers of retirement plan and IRA distributions
- IRS: Required minimum distribution FAQs
- 26 CFR 1.6045A-1: transfer statements for securities
- 26 CFR 1.6045-1: covered securities and basis reporting
- IRS Publication 550: wash sales
- Investor.gov: Section 1035 exchanges
- IRS Private Letter Ruling 201628005
- FINRA: When your financial professional changes firms
- NerdWallet: How to switch brokers and move your investments