I was looking at the status of a transfer of a brokerage account from Fidelity to Vanguard, and read that it is estimated to take 5-7 business days:

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Why does it take 5-7 business days to transfer a brokerage account from Fidelity to Vanguard? (i.e., why isn't it faster?)

  • How is this different that your prior question Why does Vanguard take over one day to convert after-tax 401(k) to 401(k) Roth within one's plan? – Morrison Chang Jun 28 '18 at 4:18
  • @MorrisonChang In this question 1) the transfer is between two institutions 2) the type of account between the source account and the target account is the same. 3) The duration is much higher (5-7 business days vs. 1 business day). – Franck Dernoncourt Jun 28 '18 at 4:20
  • Why do you expect it to be faster then when it is between two different institutions? See: finra.org/investors/… – Morrison Chang Jun 28 '18 at 4:23
  • @MorrisonChang Thank you for the link. 5-7 business days sound long to me for a process that seems to me fully automated. – Franck Dernoncourt Jun 28 '18 at 4:26
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    "seems to me fully automated" I think you give both sides too much credit for automating these processes. I bet there's still quite a bit of human intervention. – D Stanley Jun 28 '18 at 14:04

One big reason (and maybe the only one) is that the institution that has to give up the money is reluctant to do so, and will do anything to make it slow and complicated for you.

Most major institutions can pull money from your checking account same day and you can invest it on the same day. The reverse direction always takes several days at least, for mostly that reason. There is little valid concern why putting the money back in your checking acount is less secure or needs more verification, etc., except they don't want it to be fast and easy.

Personal experience:

  • institution smoothly accepts 250k$ same day, but requests a Medallion Signature Guarantee for giving up 600$.
  • transfer out from employer 401(k) to institution works within one day, surprise. Your employer is not as much concerned about losing your investments.
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  • Thanks. "needs more verification" -> is the verification automated or done by humans? "will do anything to make it slow and complicated for you." -> do you have some examples of how they delay the transfer? – Franck Dernoncourt Jun 28 '18 at 15:30
  • QFT. I've been trying to transfer money from 403(b)s a couple other places to Vanguard. There's resistance and runaround every step of the way. "Sorry, can't do that online." "We need a notarized signature from your wife." "You need to get this approved by someone else." It's absurd. – Kevin Jun 30 '18 at 16:55

In the United States the Financial Industry Regulatory Authority (FINRA) is a non-governmental self regulatory organization for regulatory oversight over all member securities firms that do business with the public.

It will help to read Understanding Brokerage Account Transfer Process as the page lists the steps required by both the Delivering and Receiving Firms.

While it may seem everything is automated the Delivering Firm needs to confirm the ownership of the receiving account (name, tax id, etc.) and the Receiving Firm needs to confirm that assets under transfer match what is supported (margin requirements, equity minimums).

Quoting the section on Time Frame:

Once the customer account information is properly matched, and the receiving firm decides to accept the account, the delivering firm will take approximately three days to move the assets to the new firm. This is called the delivery process. In total, the validation process and delivery process generally take about six days to complete.

The Security Exchange Commission page on Transferring your Brokerage Account: Tips on Avoiding Delays lists other types of securities which would cause delay like:

  • securities sold exclusively by your old firm;

  • mutual funds or money market funds not available at the new firm;

  • limited partnerships that are private placements;

  • annuities; or

  • bankrupt securities.

Separately I find it interesting that the delivery process is about three days, one day more than T+2 Settlement

2018-06-30 Additional info:

As the transfer process uses ACATS, I was able to find additional pages on the process:

DTCC - Automated Customer Account Transfer Service

Placetrade - What happens once I submit a request to transfer my account (ACAT)?

Placetrade's one in particular does give a day by day timeline.

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Because human beings have to look at it and take action. There are human beings at both the sending and receiving companies who have to co-ordinate their actions. Even if the process took only ten minutes, it's not like there are people at both institutions dedicated to your account, sitting by their phones or their computers just waiting to hear from you. You're one of many thousands of customers. They have to get around to you.

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  • Thanks. Each transfer has to be approved by a human? – Franck Dernoncourt Jun 28 '18 at 15:31
  • I severely doubt that humans are reviewing every transaction. – Aganju Jun 28 '18 at 16:25
  • @Aganju Well, I've never worked for an investment company. But I would be surprised if you could transfer an account to another company without a human being ever looking at it. If there's someone on here who actually knows the process and can tell us exactly how it works, I'd be interested to hear. – Jay Jun 28 '18 at 18:27

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