How to Transfer Stocks off E*TRADE • Benzinga – Benzinga

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E*TRADE is a popular platform for new and experienced traders alike. While it offers great customer service and many assets, there are some downsides to the platform that may not make it the best fit for your trading needs. 

If you want a low-cost margin account or forex trading, E*TRADE might leave you wanting. Learn how to transfer stocks off E*TRADE now.

Step 1: Review your alternative broker options.

Before you can transfer your account, you need to choose its destination. If you’re transferring off E*TRADE, the broker you go to depends on your reasons for wanting to move. 

Here are a couple tips to help you pick the right alternative:

  • You want to do margin trading or short selling. E*TRADE offers margin accounts and allows short selling, but it doesn’t offer the lowest margin rates and fees are higher for infrequent traders. Look for brokers with low-cost margin accounts to minimize the cost of margin trading or short sales.
  • You want to trade currency. E*TRADE doesn’t offer currencies so look for forex brokers that specialize in this kind of trading.
  • You want to do paper trading. While E*TRADE has a paper trading platform, it requires a separate registration on their designated trading simulator platform. There are more beginner-friendly brokers out there with better integration of paper trading and other educational tools.

The new broker should offer the kind of assets you want to trade and the kind of account you want to open. To start your search for an E*TRADE alternative, check out our comparison of some of the best online stock brokers:

Step 2: Check fees and commissions.

Before making your final decision on a broker, check the fees and commissions charged. Maybe the new broker has lower margin rates, but that’s completely offset by the higher commissions on trades. Do a full cost comparison between E*TRADE and each of the alternatives you’re considering.

In addition to checking the standard fees associated with the account, you also need to check transfer fees. E*TRADE charges $75 for a full account transfer off the platform and $25 for a partial transfer. 

However, many brokers offer to reimburse that transfer fee as a way to encourage investors to make the switch to their platform. To get the fee reimbursed, contact customer service for the broker you are moving to before you start the transfer. The offer isn’t always advertised but is often available upon request and it’s better to ask ahead of time.

Step 3: Open an account.

Once you are 100% confident in your decision, open an account with your new broker. You need to do this before you can request a transfer because the assets need a destination account to be sent to.

When you do this, be sure to open the right kind of account. For example, if you’re transferring a margin account, you need to open a margin account with the new broker. A standard cash account can’t accept a leveraged account. 

If you’re transferring a retirement account, make sure you’re transferring into another retirement account. Otherwise, you risk losing the account’s tax protected status.

When you’re trying to transfer an individual account into a joint account, or vice versa, change the account type at E*TRADE before you start your transfer. If you don’t, you’ll encounter a roadblock as the receiving broker can’t complete a transfer between different account types.

Step 4: Transfer your securities.

For a standard cash account where you don’t owe any money to E*TRADE, you can start your transfer as soon as your new account is up and running. To do that, send your transfer request to the new broker, not to E*TRADE. 

Unless there is an unusual delay or problem, you will handle the entire transfer process with your new broker exclusively. You file the request there, and the new broker will work with E*TRADE to complete the transfer. 

Double Check Fractional Share Value

E*TRADE will liquidate your fractional shares, including those from reinvested dividends, and transfer them to your new account as a cash balance. Most brokers do this because it’s easier than transferring partial shares. 

For assurance purposes, check the value of any fractional shares you own so that you know how much cash you should expect to see after the transfer completes.

Step 5: Check restrictions.

While the account is transferring, your access will likely be restricted for anywhere between 4 to 10 days. You can buy and sell new shares, but you can’t trade any shares in your existing portfolio.

For long-term investors with a buy and hold strategy, this won’t be a big deal. For short-term traders and short sellers, it could pose a risk. 

Here’s how to navigate those risks:

Minimize Risk Exposure Before the Transfer

For swing traders or day traders, an account hold could expose you to risk if you’re not careful. Make sure you close out any volatile, short-term trades before you start the transfer. If there are any new trades you’re planning to make, deposit cash into your new account and open the new positions there. 

For short positions, you may want to close them before you start the transfer. If you’re exposed in a short sale during those restricted days, you’ll be helpless to respond to changes in the market. Any new short sales you’re considering in the meantime should be handled over in your new account.

Cover the Margin if Necessary

If you have a margin account with open short positions or leveraged trades (for example, you owe E*TRADE money), double check any limitations or restrictions from the receiving broker about transferring a leveraged account. 

While it’s usually not an issue to transfer a leveraged margin account to a new broker, there are some cases where they reject a margin account. This is usually because the account doesn’t meet the brokers own margin account requirements, or it decides the securities in the account are low quality.

If your margin account won’t be accepted, you can avoid selling your securities by depositing enough cash into the account to cover the margin. This way, you’re just doing a normal security transfer.

Step 6: Close your E*TRADE account.

You can close your account once you have confirmed that the transfer was completed successfully. 

Check for the following: 

  • The total value of your account has transferred
  • The allocation of your portfolio (you have the right number of shares of each stock)
  • Any liquidated assets (like fractional shares or crypto that couldn’t transfer)
  • No pending withdrawals, deposits or trades in your E*TRADE account
  • All restrictions related to your account, both at E*TRADE and at the new brokerage, are lifted

Taking the time to get all your ducks in a row is important. It’s easier to handle any delays or problems with the transfer while your E*TRADE account is still open. Don’t rush to close it until you know everything is in order. 

Always Compare Benefits

Before you decide to make the switch, do a full comparison of costs and benefits between E*TRADE and the broker you are considering. You might be enticed by an offer of lower fees or rates, but the other broker might lack the securities you prefer to trade or have more restrictive margin account requirements. 

Here are some helpful questions to ask before you go through with a transfer:

  • Will I be charged inactivity fees? E*TRADE does not charge inactivity fees, but some brokers do.
  • What is customer service like? E*TRADE is well-known for its responsive and friendly customer service. Some brokers fall short in this area. Do some research on customer experiences with your new broker so you know what you’re walking into.
  • Does it offer all the securities that I trade? If you’re moving because E*TRADE doesn’t offer currency trading, make sure the new broker has the currencies you will trade. For retirement accounts, you may want to make sure you have access to mutual funds. For beginner investors, fractional shares may be a high priority. 
  • Are there any incentives? One of the best things you can do is call up customer service at the new broker to find out what incentives are offered to new accounts. This might include reimbursing the transfer fee, free cash or stock and other perks.

Prepare Your Portfolio for an Account Transfer

Whether you’re looking for a more robust currency trading platform or a broker with more affordable margin rates, find an account that better suits your needs to prepare your portfolio for the transfer today. 

The process takes a couple weeks, so make sure your portfolio isn’t vulnerable to any short-term risks before you initiate the transfer. You also want to make sure you’re confident in the brokerage account you’re moving to, so you aren’t paying a $75 fee just to end up having to transfer again. 
Take a look at some of our recommended brokers and fit your fit today.

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