Moving our GI portfolio to TradeKing

June 30th, 2009 · No Comments

My last posts about picking a brokerage talked about how my wife and I had decided to go with ShareBuilder on a temporary basis, but were now looking to switch to somewhere else.  I know it has taken many more months then we first envisioned back then, but in the last week we’ve gotten off our fat asses and started to transfer our GI portfolio to TradeKing.

Breaking through to being able to trade options.

Breaking through to being able to trade options.

It turns out that back in March we had made a decision to go with InteractiveBrokers, and even spent some time writing code to explore automated strategies with their interactive API (spent more time coding than posting to this blog in fact!)  But then we came to the actual account opening and discovered their minimum was more than the total of our GI portfolio.  They wanted a minimum of $10,000 USD whereas we had only slightly over $2,500.  So we jumped back to square one of evaluating other brokerages, albeit in a very, ahem, slow manner.

It’s been almost 3 months since then, and while we did do a bit more comparison research, what’s really kept this on the back burner (and kept the blogging rate down) was other important projects going on in our lives.   However, I can now report that we’re actually taking concrete steps to get things moving with TradeKing: opening accounts, establishing ACH linkages, filling out ACAT forms — oops, wait.  Read on.

Unlike most other financial institutions we’ve dealt with, TradeKing is a real stickler for only allowing like-to-like account ownerships when it comes to moving money.  If you want to establish an ACH transfer, and you have individual ownership of your TradeKing account, they insist that you also have individual ownership of the linked bank account.  And likewise for joint accounts.  Well, it turns out my wife and I have not really been sticklers for this previously, and thus have a mish-mash of accounts either individually owned by me, or individually owned by her, or jointly owned by both of us.   This has made it difficult to move our total GI portfolio to TradeKing.   I strongly recommend you figure out how you’ll make these transfers work before opening an account with them!  In the end, we’ve opened three new accounts at various institutions this week in order to establish the linkages we want.

Also, there has been two frustrating consequences of having gone with ShareBuilder to start our GI investing portfolio.  First, it turns out that ShareBuilder is not part of the ACAT network, and thus transferring assets out of a ShareBuilder account requires a manual process which they state in the fine print can take up to 30 days.  I called ShareBuilder’s customer service to get an idea of the realistic time it takes and was told by two different customer service people that it will take a minimum of two weeks, and more likely a goodly portion of week three, for them to complete their side of the transfer.

Second, ShareBuilder can’t transfer any partial shares as part of the transfer process.  So you either have to do a partial transfer where they’ll leave the fractional shares in your account (Honestly, why would they suggest that?  Does anyone really want to own JUST fractional shares of a stock or ETF???) or do a whole transfer in which case they liquidate the fractional shares and charge you a full comission on each position’s fractional share sale.  i.e. If you’re long in four positions with fractional shares, that’s four full commission trades at $9.95/each.  Yech.

In the end, we ended up merging our two individual accounts with them into one, at which point we only had two long positions.  It was cheaper and faster to liquidate these positions and insta-move the resulting cash to our ING Direct accounts for transfer to TradeKing than it would have been to go through the asset transfer process.   Yes, we actually have to wait for the trades to settle prior to moving the cash around.  Yes, there’s a few day delay while waiting for ACH transfers.  And, yes, we’ll end up owing some income tax as a result of selling out of our positions.  But honestly, I just wanted to get on with things.  We’ve dragged our feet enough.

Tags: Brokerage

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