Switching Brokerage Firms.

[aviator]

Hi Mark,

Soon I will be switching from one brokerage house to another. The former, which I'll call FirmA, has bought individual stocks and bonds. The company I'm switching to, which I'll call FirmB, invests mainly in mutual funds.

Currently my investments in FirmA are setup in FM and all works well. When I switch to FirmB, there will be an "in kind" transfer meaning that individual stocks and bonds will live at FirmB until they can be liquidated and mutual funds can be bought.

I tried an experiment of doing a "transfer between" in FM by creating within FM the accounts for FirmB that will soon contain the assets from FirmA. But when I went to perform a "transfer between" to test moving an asset from FirmA to FirmB, FM was expecting the asset to already exist in FirmB's accounts. I have over 400 securities at FirmA, so creating each manually is not an option.

I'd appreciate your thoughts and advice on the best way to proceed.

Thanks.

[Mark]

Hi aviator,

Yes, this is a limitation in the "Transfer Between" wizard... You must first create the new investment, before you can transfer to it. I'll suggest a couple of options:

1) You could just rename your FirmA sub-portfolio to FirmB. You will not have a record of the shares changing firms, but you could record a memo in the sub-portfolio notes. This is the easiest solution, and keeps a tax basis/performance valid record of the history of your holdings.

2) If you want to maintain a FirmA and also create a new FirmB, you could do a bulk investment creation of all FirmA investments, by exporting prices from FirmA, closing your portfolio file (*.mm4), and importing those prices back into a new sub-portfolio. Use "File / Import / Prices / Generic...". Make sure to turn on the option to create new investments as needed. This will create all these investments for you, and they will be empty of transactions. You can now use copy/paste to transfer all these investments back to a new FirmB sub-portfolio in your original portfolio file. Then, you can more easily use the Transfer Between wizard, but you'd still need to run the wizard for each of your 400 holdings.

[aviator]

Thanks, Mark.

Here's what I've done and, hopefully, this will make sense to you and it will work for me when the transition happens:

1. I created a new portfolio (.mm4) just for FirmB. At this point, the portfolio is virtually empty save for the few sub-portfolios that I had to create to keep the hierarchy correct.

2. I've set up transaction retrieve settings to download directly from FirmB's OFX server. They already have a user ID and password for me but, until the transition actually happens, all the accounts are empty.

3. I performed steps 1 and 2 above because I desperately need to preserve FirmA's unrealized gains/losses for tax purposes. As mentioned in a previous post, FirmB will eventually liquidate all of FirmAs investments (which consist of individual stocks and bonds) to buy mutual funds. We (myself and the good folks at FirmB) have to be very careful to not trigger capital gains unless absolutely sure it's to our benefit.

4. Another benefit to this method is that when the investments get transferred to FirmB, they will also get downloaded into FirmBs portfolio. This will allow me to compare what I originally had at FirmA to what FirmB is saying they received.

Thanks again for your help with this. It's appreciated.

[Mark]

Hi aviator,

Yes, you could do this. It is not necessary to create a new portfolio file (*.mm4) file though. You can have both of them in the same portfolio file. It is usually easiest to only have a single portfolio file, and use sub-portfolios for everything. Something like this:

Code: Select all

- Master Portfolio
  - Firm A
    - sub1
    - sub2
    - sub3
    - sub4
  - Firm B
    - sub1
    - sub2
    - sub3
    - sub4

Or, you could put your "Firm A" inside some other sub-portfolio, like "Old", or something.

The down side to this approach is that when your shares get transferred to Firm B, you will probably not get your cost basis information transferred. It will probably come in at a cost of 0, or maybe the current market value. It depends how Firm B reports these transfers in their OFX feed. Your cost basis in Firm A will still be available, but it will be in the Firm A sub-portfolio, so when you eventually sell out of Firm B, you may have to manually edit the cost basis in Firm B.