An ACAT out fee, charged by some brokerage firms when you transfer assets from your account to another brokerage, can be as high as $100 or more per transfer.
Understanding ACAT Out Fees
The Automated Customer Account Transfer Service (ACATS) facilitates the transfer of investment assets from one brokerage firm to another. While the service itself streamlines the process, the outgoing brokerage firm may levy a fee for processing the transfer of assets out of your account. This charge is commonly known as an "ACAT out fee" or "account transfer fee."
What Is an ACAT Out Fee?
An ACAT out fee is a specific charge imposed by a brokerage firm on its existing customers when they choose to move their assets from that firm to a new brokerage. This fee is applied per transfer, meaning each time you initiate an ACAT transfer out of an account, you might incur this cost.
Why Do Brokerages Charge This Fee?
Brokerage firms typically implement ACAT out fees as a strategy to make it more costly for customers to close their accounts and move their investments elsewhere. By charging such a fee, they aim to create a disincentive for customers to switch providers, potentially encouraging them to stay with the current firm even if they are considering alternatives.
Cost Breakdown of an ACAT Out Fee
The cost of an ACAT out fee is not standardized across all brokerage firms and can vary. However, based on industry practices, these fees can be significant.
| Aspect | Details |
|---|---|
| Fee Type | ACAT Out Fee (also known as Account Transfer Fee) |
| Charged By | The outgoing brokerage firm (the firm from which you are transferring assets) |
| Cost Range | Up to $100 or more per transfer |
| Purpose of Fee | To deter customers from closing their accounts and moving assets to another financial institution, making it more expensive to switch brokers. |
| Impact on Investors | This fee can add to the overall cost of switching brokerage firms, potentially influencing an investor's decision to consolidate accounts or seek out new investment opportunities elsewhere. |
Important Considerations for Investors
- Review Fee Schedules: Before initiating an ACAT transfer, always review the fee schedule of your current brokerage firm to understand any potential charges.
- Total Transfer Costs: Factor in the ACAT out fee when calculating the total cost of moving your investments, as it can impact your overall financial planning.
- Negotiation or Reimbursement: While not universal, some receiving brokerage firms may offer to reimburse ACAT transfer fees, especially for larger accounts, as an incentive to attract new customers. It's always worth inquiring with the new brokerage about such policies.
Understanding the potential costs associated with an ACAT out fee is crucial for investors planning to transfer their assets between brokerage accounts.
