If I move my accounts, what actually happens to them?

Most people who are unhappy with a large firm stay anyway, and the reason is rarely loyalty. It is the picture of the move itself: everything sold, a tax bill, weeks of paperwork, a gap in which nobody is watching. That picture is mostly wrong. A transfer between custodians is a form, not a liquidation. The positions travel as they are, the cost basis follows them, and the account you are leaving keeps working until the day the new one takes over. This page walks through what actually happens, in the order it happens, including the parts that are genuinely awkward.

Graphic to come Two custodians, one set of positions travelling between them An editorial illustration: a shelf of holdings drawn as small labelled blocks lifting from one building and landing in another, unchanged. One block, marked proprietary, stays behind. Ink and sage on paper, no logos.

The transfer is a form, not a sale

Brokerage and retirement accounts move between firms through a clearing system called ACATS, the Automated Customer Account Transfer Service. The firm you are moving to opens an account in your name at its custodian, you sign a transfer authorization, and the new custodian sends the request to the old one. The old firm checks that the name, account type and Social Security number match, and then delivers the positions electronically. Nothing is sold to make that happen. A share of an index fund leaves as a share of the same index fund and arrives as one. In the language of the form, the transfer is in kind.

Two things follow. First, a move creates no tax event on its own; only a sale does, and in-kind means no sale. Second, the old firm cannot decline. Once the request validates, the rules of the clearing system require delivery, which is why the timeline below is measured in business days rather than in negotiations.

What a move looks like, day by day

The rail fills as you read. Timings are typical for a full transfer of a standard brokerage or IRA account between two large custodians; partial transfers and unusual assets take longer, and the notes say where.

1. Before anything is signed

   A position-by-position read of the statement

   Every holding gets sorted into three piles: moves as it is, moves but changes form, or has to be sold first. This is also where a lending line, a margin balance, or an annuity gets noticed, because each of those needs its own plan. You should have the sorted list in hand before you sign a thing.

2. Day 0

   New account opened, transfer authorized

   Account opening and the transfer form are usually electronic and take an afternoon. The new account is titled exactly as the old one, because a mismatch is the most common reason a transfer is rejected and sent back to start.

3. Days 1 to 3

   The old firm validates the request

   The delivering firm has a short window to confirm the details or reject the request. Rejections are almost always clerical: a middle initial, a trust name abbreviated differently, an account that was still coded as a joint account after a death. They are fixed and resubmitted.

4. Days 3 to 6

   Positions and cash arrive

   The old account is frozen for trading while the positions transfer, which is the only stretch when no one can act on it, and it is measured in days. Standard securities land together; a few holdings, such as certain bonds and alternative funds, may arrive later or by a separate process.

5. The following two weeks

   Cost basis and residuals follow

   Cost basis travels on its own rails, usually within days of the positions. Dividends and interest that were declared but not yet paid arrive in the old account and are swept over afterward, so the old account is closed only once it has stopped receiving anything.

6. Week three onward

   The plan starts

   With everything in one place and the basis confirmed, the actual work begins: what to hold, what to sell over time and when, what the tax picture looks like this year, and what the estate documents need to say about the new accounts.

What moves, and what has to be sold

Turn over each card. The answers are the usual case for a move to Charles Schwab or Fidelity, which is where our clients’ accounts are held; a specific fund or product can differ, and the pre-signature review is where that gets settled.

Cost basis comes with the shares

The fear underneath the tax question is that the record of what you paid gets lost in the move and every later sale is taxed as if the shares had cost nothing. It does not work that way. Since 2011 custodians have been required to track the basis of covered securities and to pass it along when the shares transfer, and they do so through a companion system to ACATS that sends the purchase dates and prices lot by lot. Basis for shares bought before the rule took effect, called noncovered shares, may travel as well but is not required to; those are the lots we reconcile against your own records or the old firm’s statements.

Graphic to come Tax lots arriving alongside the shares A small diagram: one holding drawn as a stack of tax lots, each with a date and a price, moving as a stack. One older lot is outlined rather than filled, labelled ‘noncovered, confirm by hand’.

The securities-based line is the part that needs a plan

If you have borrowed against your portfolio through the firm’s bank, the pledged account is collateral, and collateral does not walk out the door with a balance outstanding. This is the one piece of a move that can genuinely force a decision, so it is handled before the transfer request goes in rather than discovered by a rejection. The options are ordinary: repay the line from cash, refinance it against the accounts once they are at the new custodian, or transfer everything except the pledged account and deal with it second. Which one is right depends on what the line was for and what selling to repay it would cost, and that is a conversation, not a form.

Where your money actually sits afterward

This is the question people are most reluctant to ask out loud, so here is the plain answer. Our clients’ accounts are held at Charles Schwab or Fidelity, in the client’s own name. We are the adviser on the account, not the custodian: we can trade in it and deduct our fee from it under an authority you sign and can revoke, and we cannot move money out of it to anyone but you without your written instruction for that specific transfer. The custodian sends its own statements and tax forms, separately from anything we report, so there are always two sets of books to compare. If you ever stop working with us, you revoke the authority and the accounts stay exactly where they are.

Graphic to come Client, custodian, adviser: three parties, three separate lines A triangle diagram. The client at the top; the custodian and the adviser at the two lower corners. The client–custodian line is labelled ‘account in your name, statements, tax forms’; the client–adviser line ‘advice, plan, fee’; the custodian–adviser line ‘limited trading authority’. Ink lines on paper, sage for the client node.

Your part, and ours

What you do in a move fits on one card. The rest is ours.

What it costs to move

The old firm may charge an account-closing or transfer-out fee; it is a flat amount, disclosed in its fee schedule, and some receiving custodians reimburse it. A proprietary fund sold in a taxable account may realize a gain, which is real money and is why it is quantified first. Beyond those two items a move has no price. The fee you pay us is the same whether your accounts arrived last week or ten years ago, and it is written in the same public brochure as everyone else’s.

The principle to carry

The move is smaller than the reasons for it. Once the list is sorted, a transfer is a few signatures and a couple of weeks, and the questions that made you consider it, who you reach, how the plan is built and whose side of the table the advisor is on, are the ones that deserve the deliberation.

Aspirean is an independent, fee-only, fiduciary wealth management firm with offices in Marin County, St. Joseph and Chesterton. If you are weighing a move, we would rather sort the statement with you than have you guess at it.

This piece is general education, not individual advice.