Broker Dragging Feet on Transfer

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MikeonBogleheads
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Broker Dragging Feet on Transfer

Post by MikeonBogleheads »

I have a relative that is transferring their IRA assets from Morgan Stanley to Vanguard. They have been working with Vanguard onboarding and in mid February instructed MS to transfer their funds. Some funds were transferred by MS but they still have others. They have not even sold 5 mutual funds (LMNOX, CPUIX, AFNIX, WCMIX and CCAPX). These were all instituitional class that Vanguard would not take.

Is there some regulation that requires the broker to act within "X" days AND complete the transfer? What action do you recommend?
livesoft
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Re: Broker Dragging Feet on Transfer

Post by livesoft »

I don't know about regulations, but this could probably happen if the person helping to do this quit or was fired. When the ball is dropped, sometimes there is no one there to pick it up. What that means is that one has to keep the ball rolling themselves by contacting them.
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jebmke
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Re: Broker Dragging Feet on Transfer

Post by jebmke »

The first step is to contact ML and ask if there is something holding this up. Was that done?
When you discover that you are riding a dead horse, the best strategy is to dismount.
livesoft
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Re: Broker Dragging Feet on Transfer

Post by livesoft »

jebmke wrote: Mon Apr 01, 2024 8:12 am The first step is to contact ML and ask if there is something holding this up. Was that done?
Sorry, I have to laugh about the typo. I can imagine the response from "ML" being "Sir, this is a Wendy's!"
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jebmke
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Re: Broker Dragging Feet on Transfer

Post by jebmke »

livesoft wrote: Mon Apr 01, 2024 8:13 am
jebmke wrote: Mon Apr 01, 2024 8:12 am The first step is to contact ML and ask if there is something holding this up. Was that done?
Sorry, I have to laugh about the typo. I can imagine the response from "ML" being "Sir, this is a Wendy's!"
heh heh -- I had ML on my brain from the VFSUX mega-whine; my worst experience (via observation, not direct) was with ML after they acquired a bunch of stuff during the recession; I saw statements and tax docs that would make you hide your money in a cave for the rest of your life.

edit: on the other hand, maybe ML has some experience extracting assets from MS and can provide some insight. :P
Last edited by jebmke on Mon Apr 01, 2024 8:20 am, edited 1 time in total.
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Watty
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Re: Broker Dragging Feet on Transfer

Post by Watty »

MikeonBogleheads wrote: Mon Apr 01, 2024 8:06 am What action do you recommend?

I may be missing something but if they call up the broker and "tell" not "ask" them to sell the mutual funds then they should be sold either immediately or at the close of the day.

If these are in a taxable account that may generate capital gains which would be taxable so they would need to understand and be OK with that.

I did not look them up but if they are some sort of non-traded REIT or some other non traded investment like a master limited partnership then they can be more difficult to sell.
Parkinglotracer
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Re: Broker Dragging Feet on Transfer

Post by Parkinglotracer »

Sec.gov website offers the following advice:

If you feel like your account has not been transferred in a timely fashion, ask to speak to the compliance director at your old or new firm. If you are not satisfied, contact the New York Stock Exchange or the FINRA, depending on where your brokerage firm is a member.

I would be assertive and make my directives clear in writing (email). In that email I would include what my previous directions were (who you talked to, when, what the directives were). I would asked to be notified of when the actions are taken.

It is hard for me to imagine that a broker would “drag their feet” in today’s world. Do they have any reason to think your directives are not serious or vague?
BradleyB
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Re: Broker Dragging Feet on Transfer

Post by BradleyB »

Sometimes you just have to know who to talk to. I have had experience with vendors (flooring, for example) where our contact no longer worked there and no one picked up his accounts. I called the branch manager and settled it.

More recently, the "advisor" handling our deceased parents money was nonresponsive, same as yours. I emailed the senior partners and even her assistant, which I got as a CC on an old email. Solved in a couple of days.
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Meg77
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Re: Broker Dragging Feet on Transfer

Post by Meg77 »

I work for a big firm similar to Morgan Stanley, and there are definitely regs about transfers. Sounds like the actual transfer - the ACAT - was done timely. But they can't sell the mutual funds without a direct trade request being confirmed by the client. All your relative has to do is call MS and request the trade. And it will have to be executed immediately. I'm not sure of the exact regs since I don't personally trade, but it's a big deal and there are compliance flags if a requested trade isn't executed same day, or promptly the following morning if placed outside trading windows.

I don't think that's the issue though; it sounds like your relative just thought this would happen automatically and didn't reach out and the MS advisor hasn't reached out proactively either. Which is also somewhat odd given the delay, but that tells me they may not have a dedicated advisor - often the case if the account is too small and has been moved to a centralized cost center or something. Still, he or she can just call whatever number they have from a statement or the website and request the trade.

Once the funds are in cash the transfer will happen automatically, or Vanguard can request a new transfer if too much time has passed. Usually a sweep is in place for at least a month or so after an ACAT request is made so that dividends or any other cash items are moved over as well that hit after the initial transfer.
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illumination
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Re: Broker Dragging Feet on Transfer

Post by illumination »

I remember having a similar issue with Northern Trust. Funny how that "white glove" service goes out the window when it comes time to leave. But any type of "discount brokerage" and a transfer usually only takes a few days. When my wife left Morgan Stanley, she also found everyone suddenly not being able to do the most basic tasks to facilitate the transfer.

In my case, I was an absolute pest and they agreed to freeze any further fees on their end. They blamed the delay on an authorization letter being on the wrong desk. Sure. They were able to milk the account for a little more. It took like 2 months to simply move an account. They then refused to provide a 1099 for the year, had to recreate it myself from past statements.
Exchme
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Re: Broker Dragging Feet on Transfer

Post by Exchme »

I had this happen with a small advisor. They "forgot" one thing after another. It took 2 months of chasing them around and writing increasingly frustrated emails until they finally did it. Magically that was the last day of the quarter so they didn't refund any fees.
Kruser64
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Re: Broker Dragging Feet on Transfer

Post by Kruser64 »

Had this happen with a small bank that dragged their feet. Got hit with the "we apologize, we're understaffed" excuse, lol, like I care. I threatened to file a complaint with the CFPB and they magically processed the transfer right away.
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nisiprius
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Re: Broker Dragging Feet on Transfer

Post by nisiprius »

Never work with the sending brokerage. Always work with the receiving brokerage, in this case Vanguard. Contact them and see if they will handle it. Even if you assume no deliberate slow-walking or "account retention," the sending brokerage has no incentive to work hard or prioritize your requests. The receiving brokerage does.
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BolderBoy
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Re: Broker Dragging Feet on Transfer

Post by BolderBoy »

Parkinglotracer wrote: Mon Apr 01, 2024 8:18 amIt is hard for me to imagine that a broker would “drag their feet” in today’s world. Do they have any reason to think your directives are not serious or vague?
Maybe there is a quarterly bonus in play?
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Parkinglotracer
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Re: Broker Dragging Feet on Transfer

Post by Parkinglotracer »

BolderBoy wrote: Tue Apr 02, 2024 10:37 am
Parkinglotracer wrote: Mon Apr 01, 2024 8:18 amIt is hard for me to imagine that a broker would “drag their feet” in today’s world. Do they have any reason to think your directives are not serious or vague?
Maybe there is a quarterly bonus in play?
Yes but wouldn’t it be professional suicide to get a compliant made about you that will follow you around on the Finra website for your whole career?

https://www.finra.org/investors/need-he ... 0sanctions.


One time at band camp story … I started to transfer out of major broker we all know and love the contents of a large joint brokerage account with rights of survivorship that I held with my father right after he passed away. The broker spent 6 or 9 minutes telling me why it wasn’t a good idea “for tax reasons” . After the third time he said no I stated who my next calls were going to be with if he refused my legal request for the transfer. Of course sometimes I don’t think people are assertive enough. That being said I guess there are sales folks that will sit on instructions to try to make a buck. I think those people deserve a finra complaint and a letter to their boss.
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MikeonBogleheads
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Re: Broker Dragging Feet on Transfer

Post by MikeonBogleheads »

Thanks to all for responding. My relative contacted me yesterday to say that the broker's assistant had contacted them and said the funds have been sold and can now be transferred. The timing, immediately after the close of 1Q, certainly is curious.
There had been 2-3 calls between my relatives and the broker and/or broker's assistant handling the "off-boarding". The process was kicked off by a request to Vanguard and the ACAT process started. When Vanguard informed my relatives that they could not directly take some of the funds, that is when the communication with broker started. I cannot say whether they directly told the broker to sell those specific funds, but there was no doubt the intention was to close the account. If they can hide behind "well, we were never actually told to sell them", so to make their 1Q goal, that is pretty sad.
Again , thanks to all that offered guidance.
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