FAQ: Changing brokerages

q_lurker SuperUser ✭✭✭✭✭
edited June 2023 in FAQ'S (Windows)

There are a variety of circumstances too numerous to list that develop where a user might be changing brokerages.  This Alert involving TD Ameritrade and Schwab is a prime example: 

In all cases, the user is ahead of the game to proactively handle this event.  In cases I know of, simply relying on downloads from the Financial Institutions (FI) will not yield complete and fully adequate results.  Invariably, the cost basis and lot information is lost when the user is not proactive.  Fundamentally, there are two approaches available:

  • Keep the same Quicken account(s)
  • Create new Quicken accounts

Choosing one path over the other is very much user choice and circumstance dependent.

  • Keeping the same account.

This basic approach becomes deactivating the online service for the existing account, changing the financial institution information, and the activating the account for the new financial institution (FI).  When you connect the account to the new FI, there may be a breadth of new transactions that get downloaded such as Add Shares transactions.  In many cases, those transactions just need to be deleted.  It may be that some securities were sold and others bought as part of the account transition, especially if money market funds are being treated as securities.  All in all, this process should properly maintain all cost basis information.  The user still needs to be thorough in reviewing the details.

  • Creating a new account

This too can be an effective and relatively easy path.  It is usually best to create this new account first as an offline account not affiliated with a financial institution.  The next step is to use Shares Transferred between Accounts to move all the holdings from the old brokerage account to the new offline account.  Cash (if any) is a separate transfer.  If a security does not transfer to the new account, it can be sold and the cash transferred, or transferred and sold in the new account.  This transfer process will also maintain the cost basis and acquisition dates from the old brokerage to the new.  The Shares Transferred function will create a new Add Shares in the new account for each lot of each security.  That can become a lot of transactions, but that is really neither good nor bad.  Just be prepared.

Once the user is comfortable with the holdings in the new account, it can then be activated for an online connection and downloads with the new brokerage.  As with the other process, the first download from the new brokerage may contain numerous transactions that are unnecessary and should be deleted.

EDIT 4/20/23 — If you set up a new account and transfer the holdings, you should also disable online services for the old account. This will prevent extraneous Removed transactions from being downloaded in that account. If the Removed transactions have already been downloaded, they must be deleted before entering the Shares Transferred.

  • Why one versus the other

Almost all is personal preference. 

Keeping the same account minimizes the number of accounts overall in Quicken that the user might deal with.  Depending on what performance measure the user follows, results can be cleaner.  Tracking long term performance can be easier to see.     

Creating a new account offers the possibility of 'starting fresh' with a small account.  Often accounts with fewer transactions are more responsive in the user interface.

  • Special cases

Some brokerages require one account for each mutual fund held; others do not.  Such a change might call for one procedure over the other.

In some cases the switchover may take some time.  Not all securities get transferred on the same date.  In such a case, the new account approach might be better with the Shares Transferred being used as the actual securities are transferred.  But either approach can still work if the user is active in managing and following the process.         

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