Here's the short answer: your investments move to your new advisor in-kind, meaning they transfer as-is through an automated system called ACATS. You almost never need to sell anything to make the switch, and your old advisor doesn't get a vote. Once you sign the paperwork authorizing the move, your new firm initiates the transfer, and your old firm is required to cooperate ¹. The rest of this guide walks through exactly what happens, day by day, and what it means for your taxes.

How the Transfer Process Works

Most account transfers happen through the Automated Customer Account Transfer Service (ACATS), an electronic system built specifically so investors can move firms without disruption. Under FINRA Rule 11870, your old firm has one business day to validate the transfer request once it's submitted, and three business days to complete delivery of the assets after that ². In practice, a standard full account transfer typically settles within four to five business days from start to finish ³.

Day-by-day ACATS transfer timeline

Timelines reflect standard FINRA/ACATS processing. Partial transfers, manual transfers, and accounts with nontransferable assets can take longer.

What Transfers In-Kind vs. What Must Be Liquidated

Most of what you own transfers in-kind: individual stocks, bonds, ETFs, and most publicly traded mutual funds move to your new account exactly as they were, with no sale, no new purchase, and no gap out of the market.

The exception is proprietary or firm-specific holdings, things like a proprietary mutual fund share class, an annuity or insurance-wrapped product only available through your old firm, or certain alternative investments that your new firm doesn't custody. Those assets are considered nontransferable. Your old firm can remove them from the transfer using a "receiver delete," but only for assets that are genuinely nontransferable, and it's required to notify you in writing when it does ⁴. In that case, you generally have three options: leave that position at your old firm, liquidate it and transfer the cash instead, or, if it's a proprietary fund with a lower-cost equivalent, ask your new advisor whether an equivalent replacement makes sense.

Tax Implications and Cost-Basis Carryover

An in-kind transfer is not a taxable event. Because nothing is sold, there's no capital gain, no capital loss, and nothing to report on that year's tax return simply because you changed firms.

What does need attention is cost basis. For "covered" securities, generally those purchased in 2011 or later, your old firm is required to send a transfer statement to your new firm with your original cost basis and holding period, and that information is required to carry over automatically ⁵. For "noncovered" securities, typically older holdings or shares with an incomplete purchase history, the cost basis may not transfer cleanly, and your new firm may show it for reference only rather than reporting it to the IRS. If you hold older or inherited positions, it's worth confirming your cost basis landed correctly at your new firm before you ever sell, since a missing or blank basis can cause the IRS to assume the entire sale proceeds are a taxable gain.

Picking the right advisor for your needs

Switching advisors can feel like a bigger disruption than it actually is. In most cases, your investments move without being sold, the timeline is measured in days rather than months, and your old advisor's cooperation is a regulatory requirement, not a courtesy. The main things worth confirming with a new advisor before you sign anything are whether you hold any nontransferable assets and how your cost basis will be handled. If you're weighing whether to make the move in the first place, our companion piece [LINK: Signs It Is Time to Switch Financial Advisors] and our [LINK: Fiduciary Hub] are good places to start.

Schedule a Consultation with Journey Advisory Group

To learn more about how Journey Advisory Group handles account transfers for high-net-worth households, contact us at info@JourneyAdvisory.Group or call 800-749-7143. You can also visit JourneyAdvisory.Group to schedule a consultation with our team.

Disclosure

This material prepared by Journey Advisory Group, LLC is for informational purposes only. It is not intended to serve as a substitute for personalized investment, tax, or legal advice, or as a recommendation or solicitation of any particular security, strategy, or investment product. Facts presented have been obtained from sources believed to be reliable. Journey Advisory Group, however, cannot guarantee the accuracy or completeness of such information, and certain information may have been condensed or summarized from its original source.

SEC Registration does not constitute an endorsement of the firm by the SEC nor does it indicate that the advisor has attained a particular level of skill or ability. Securities investments contain risks including the possible loss of principal. Neither asset allocation nor active management guarantee a profit or protection from loss.

Journey Advisory Group is a fee-based advisory firm and SEC-registered Registered Investment Adviser (RIA). Additional information about Journey Advisory Group's services, fees, and potential conflicts of interest is available in Form ADV Parts 2A and 2B, which can be obtained through the SEC's Investment Adviser Public Disclosure website at adviserinfo.sec.gov or by contacting the firm directly.

JAG does not provide tax or legal advice, and nothing contained in these materials should be taken as tax or legal advice.

References

1. FINRA.org, "Customer Account Transfers."

2. FINRA Rulebook, "11870. Customer Account Transfer Contracts."

3. DTCC, as reported in FTF News, "FINRA Reminds Firms of ACATS's Improvements."

4. Federal Lawyer, "FINRA Rule 11870," discussing FINRA Regulatory Notice 22-19 on nontransferable assets.

5. Charles Schwab, "Form 1099-B: Cost Basis and Options Trading."