Platform Transfers

How to transfer investments from one platform to another

Suppose that you’re unhappy with the service or costs of your current investment platform. Some platforms make it very difficult and time-consuming to transfer your investments. Here is some guidance to make it easier.

Research

You must do some planning and fact-finding before you start. This will help you avoid the pitfalls, delays and obstacles put in your way. You should expect the platform you have spurned to be disappointed to be losing you and your associated income stream.

If you have more than one account to transfer, do the easiest one first, so you can learn from your experience as you go along. This might be your general investment account, your smallest account, or the account with the easiest investments to transfer. The limitations on what investments can be held in ISAs and SIPPs may make one of them easiest for you.

Before you start, you need to check that your new platform can hold your existing investments, so you need a list of your investments in each account and you need to tick them off one by one as to whether they can be held.

In most cases you will want to transfer “in specie” which means you do not have to sell the investment and then buy it (or something similar to it) back. Selling and buying incurs costs of trading, buy/sell spreads and capital gains tax (except in the case of an ISA or SIPP).

Shares are generally easy to transfer, but some low-cost platforms (e.g. FreeTrade) will not allow you to hold shares in smaller quoted companies listed on AIM or on Aquis Exchange. Overseas-listed shares can also be a problem.

If you cannot transfer them in specie, you will have to sell the shares and transfer the cash. In a general investment account, you can of course withdraw the spare cash and reinvest it in your new platform; but if you don’t want to incur capital gains tax, then you have to continue to hold some of your shares in the current platform.

Funds can be simple to transfer in specie, but only if both platforms offer the same funds and share classes. You should check the details very carefully as there are often different classes of funds and different platforms offer different classes and often the different classes have different fee structures.

If you have unquoted shares or property (e.g. in a pension plan) in your accounts, then these are likely to be more difficult or impossible to transfer in specie.

Instructions

First, recheck your reasons for wanting to transfer from one platform to another and whether you will still be able to achieve your original objectives.

Next, either sell the shares and funds that you cannot transfer in specie to the new platform; or take a decision to keep them on the current platform.

Then, to initiate the transfer, contact the RECEIVING platform/broker and let them know what you want to do. They will undertake the necessary formalities. Nevertheless, it is sensible to also advise your current platform/broker, so that they are aware that they can expect to receive a transfer request.

You can expect your existing platform to try to persuade you to change your mind, to raise questions, seek clarification and, in the worst-case scenario, possibly attempt to delay the process. Your planning should mean that most of their reasons for delays will have already been covered off (proof of identity, account names and numbers, bank account details, etc, clear and precise description of what you want them to do, in specie transfers, etc).

Transfer Process

Once you have initiated the transfer, it should proceed as follows:

1. The new platform requests a valuation from your current platform.
2. Your current platform sends the new platform details of all the investments to be transferred.
3. The two platforms agree a transfer date.
4. The transfer proceeds on the agreed date (cash is transferred separately and last).

Delays can occur at any stage in this process. If your new platform doesn’t advise you automatically of the progress of these stages (some platforms do), you should chase them to find out.

In the event of delays, you may well find that your current platform has been slow in responding to requests from your new platform. You should then chase your current platform to respond to your new platform’s requests. If necessary, if there are excessive delays, register a formal complaint with your current platform, which can ultimately be escalated to the Financial Ombudsman Service (FOS) in the worst cases.

If both the current and new platforms are major platforms, this transfer process should occur entirely electronically and promptly. Delays are more likely to occur where one or both of the platforms are smaller platforms/brokerages, who do not have electronic transfer systems in place.

Troubleshooting

Some of the problems of transferring investments to a new provider were explained in an excellent article by Moira O’Neill in the FT on 8 September.

She wrote that some investors are forced to wait months to see the transfer of investments, and that “many are put off transferring their ISAs, pensions and general investment accounts between investment platforms just by the thought of the administration involved. Others worry about spending time out of the stock market while their investments are moved, meaning they miss opportunities to buy cheaply or stay invested through a market rally.”

In 2019, the Financial Conduct Authority (FCA) decided that the transfer process entailed unnecessary complexity and cost for consumers. It changed the regulations to require platforms to offer consumers the chance to transfer their investments in specie without having to realise them into cash and then reinvest.

ShareSoc has already pressed the FCA on this issue, in our response to their consultation in 2019. Perhaps it’s time for ShareSoc to re-engage with the FCA about these issues, as difficult transfers remain a barrier to competition. Add your comments below if you think we should.

One of the problems with in specie fund transfers is that some funds issue units that are only available on specific platforms (i.e. a cosy deal has been done between the fund and the platform. This was the case with Woodford and Hargreaves Lansdown). Arguably, the FCA should ban such platform-specific units in the interests of transparency and levelling the playing field (Hargreaves, with 40% market share, is able to exploit its power to secure the best deals for its customers).

Following the guidance above should hopefully make things as simple and quick as possible.