brokerage fees Archives

Dear Liz: My brokerage recently sent an updated fee list. They now are charging $100 to close an account. That seems an incredibly high fee should I choose to move my investments somewhere else. The fine print says the fee will not apply to anyone who holds at least $5 million in qualifying assets. Well that certainly isn’t me. So they’re hitting those who have the least with a ridiculously high fee when it comes time to end the account. Is this typical across the investment industry?

Answer: Unfortunately, yes, but the usual fee is closer to $75.

Many brokerages have lowered their fees in recent years, with many eliminating commissions. But the account closure fee has stuck around, probably because most people don’t think about the costs of shutting down an account after they’ve opened one.

Dear Liz: I have two accounts at a full-service brokerage. One is an inherited IRA and the other is a Roth IRA that I opened. Both have a mix of stocks and mutual funds that I chose. My accounts have done well, but I am not happy with the commissions that my brokerage charges when I trade, which I don’t do often. What do I have to do to move these accounts somewhere else that doesn’t charge such high commissions? I don’t want to sell the stocks and funds in the accounts, but to transfer them intact. If I had to sell the funds, I’d end up paying some of the fees that I’m trying to avoid.

Answer: As long as you don’t own any proprietary mutual funds in those accounts, you should be able to transfer the actual investments and your IRAs to another brokerage — just pick a discount brokerage this time. Those high commissions erode the amount you’ll have at retirement and aren’t necessary if you’re managing your own investments.

The new brokerage will be eager to help — just call and explain you want to transfer the assets “in kind.” You’ll be provided with the information and forms you need to start the process, and the new brokerage will take it from there.

Be prepared for one bite in the form of “account liquidation” fees. Many (but not all) investment firms charge these when you close IRAs, and they can range from $20 to $95 per account.

Q&A: A $100 fee to close a brokerage account? Really?

Q&A: How to get out from under high brokerage fees