The Automated Customer Account Transfer Service (ACATS) makes moving your investment assets from one brokerage firm to another easy. Developed by the National Securities Clearing Corporation (NSCC), this system automates transferring assets like stocks, bonds, mutual funds, and cash between brokerages or banks. It’s a vast improvement over the old manual transfer system, which took much longer and was prone to errors.

If you’re considering switching brokerages, you’ll likely use ACATS to transfer your account smoothly without selling off your assets or letting your old brokerage know. Let’s explain how ACATS works, what it can transfer, and how it compares to the old non-automated process.

What Does ACATS Do?

ACATS helps transfer all sorts of investment products—stocks, bonds, cash, exchange-traded funds (ETFs), and most mutual funds—from one brokerage firm to another. The system speeds up the transfer process, reduces the chance of mistakes, and helps everything go smoothly.

In the past, moving accounts between brokerages was a slow, manual process that could take weeks. With ACATS, transfers typically take just 3 to 6 business days. That’s a big deal for anyone who wants to move their assets without unnecessary delays.

How Does ACATS Work?

Here’s how the ACATS process works in a few simple steps:

Step 1: Initiation

The process starts when you move your account to a new brokerage. The new firm submits a Transfer Information (TI) form to begin the transfer. The form lists your account details and the assets you’re moving.

Step 2: Review

They review your account details and the assets you’re transferring. They check your account details and move the assets. The delivering firm then has one business day to respond, either approving or rejecting the transfer if there are any issues.

Step 3: Adjustment Period

After the delivering firm adds the assets, both firms can review everything. They can adjust the transfer by adding, removing, or modifying assets. This review period lasts through the next business day.

Step 4: Settlement

The transfer moves into the settlement phase once everything is confirmed. During this time, the receiving firm prepares to take control of the assets. The process usually wraps up within one business day.

Step 5: Completion

The new brokerage transfers the assets and officially moves the account. The NSCC settlement process transfers any cash assets.

What Assets Can You Transfer with ACATS?

The good news is that ACATS handles many different types of investment products. You can move:

• Publicly traded stocks
• Bonds (corporate, municipal, Treasury)
• Mutual funds
• ETFs
• Certificates of deposit (CDs)
• Cash

You can also transfer different accounts, like individual retirement accounts (IRAs), trusts, and brokerage 401(k)s.

What Assets Can’t ACATS Transfer?

While ACATS covers a wide range of investments, there are a few that it can’t handle. These include:

• Annuities: Insurance companies hold annuities, so ACATS can’t transfer them. You’ll need to fill out specific forms to change the agent of record on annuities.
• Proprietary Investments: Some brokerages prevent mutual funds or investment products from moving to another firm. You may need to sell these investments before transferring.
• Over-the-Counter (OTC) Securities: Some brokerages may block the transfer of OTC securities. You must check with your brokerage if you hold any of these assets.

ACATS vs. Non-ACATS Transfers

Before ACATS came along, transferring assets between brokerages was slow and manual. Non-ACATS transfers could take up to a month or more. These manual transfers were also more prone to mistakes, like typos or miscommunications between firms.

With ACATS, the process is automated and standardized. That means fewer errors, faster transfers, and less hassle. ACATS transfers typically finish in a few business days, not weeks. It’s a huge time saver, especially if you want to settle your assets in your new account.

ACATS Fees: What You Should Know

One thing to remember when transferring your account is that some brokerages may charge an ACAT fee, especially if you’re moving assets out of your account. Depending on the firm, these fees can be as high as $100 or more. It’s a good idea to check with your current brokerage before you start the transfer process to know what to expect.

Some brokerages don’t transfer fees, so check if they will help you.

Benefits of ACATS

ACATS offers several benefits for investors:

• Faster Transfers: What used to take weeks can now be done in just a few days. You no longer have to wait for your assets to move.
• Less Risk of Errors: The automated system reduces the chance of human mistakes like typos or incorrect data entry.
• Simplifies the Process: You don’t have to sell your assets before transferring them. The system moves your holdings as they are, so you don’t have to worry about repurchasing them later.
• Works with Multiple Asset Types: Whether you have stocks, bonds, or mutual funds, ACATS can handle it.

FAQs

How long does an ACATS transfer take?

Typically, complete ACATS transfers take 3 to 6 business days, much faster than older manual transfer methods.

Can I transfer my retirement accounts using ACATS?

Yes, you can use ACATS to transfer accounts such as IRAs, brokerage 401(k)s, and other types of retirement accounts.

Are there any fees for an ACATS transfer?

Some brokerages charge fees for transferring assets out of your account. These fees can range from $50- $100 or more. Check with your current brokerage to see if any fees apply.

What types of assets can’t be transferred through ACATS?

ACATS does not handle annuities or proprietary investments held by brokerages. Some over-the-counter (OTC) securities may also be ineligible for transfer.

Do I need to inform my old brokerage before starting an ACATS transfer?

No, you don’t need to inform your old brokerage beforehand. The new brokerage will handle the transfer process for you once you have completed the required forms.