‘Should I wait until the market calms down or pull the trigger now?’ I’m tired of my brokerage charging 1%, and I want to move my money now, but don’t want to lock in losses. What’s my move?

Question: My current brokerage account charges 1% and also has high-priced funds so I’m thinking of moving my money.  My question is should I wait until the market calms down or pull the trigger now?  I’m assuming I will have to liquidate my funds before moving the money, and I was told by the brokerage where I want to move my money that it would take approximately seven days before the money would be back in the market.  I do not want to lock in losses but would I be if I’m out of the market for only seven days?  I would appreciate any thoughts you may have.

Answer: First up, your instinct to move your money is likely a good one. For one, the high-priced funds are likely not necessary, and simply just costly to you. What’s more, though 1% is a pretty standard fee for a financial adviser, there are plenty of good advisers at good financial firms who will manage your money and charge less. This tool can help match you with an adviser who might meet your needs.

What’s more, you may not have to be out of the market at all, pros say. Indeed, depending on your investments, you might be able to transfer the entire account without having to sell your investments, says certified financial planner Danielle Miura of Spark Financials. Adds certified financial planner Cody Garrett of Measure Twice Financial: “Many positions can simply transfer in kind without any tax or market consequences.”

If that’s your situation, “this means you don’t have to sell your shares and you can stay invested during the transfer process. Once the shares have transferred to your new investment firm, you should be able to make changes within a couple of business days,” says John Piershale, certified financial planner at John Piershale Wealth Management.

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To figure out if yours can transfer, provide a list of the funds you’re in now to the brokerage you want to move your money to “to determine if they can accept an in-kind transfer of those securities,” says Garrett. In other words, don’t assume your funds cannot be directly transferred, and instead ask the brokerage what can and cannot be transferred. Most mutual funds, cash, stocks and bonds are transferable with no tax penalties or associated fees. “Meanwhile, investments such as cryptocurrencies and options are usually not transferable,” says Miura.

If you do have to liquidate funds, Garrett says don’t make any decisions without considering the anticipated tax consequences, especially if you plan to liquidate funds within a taxable brokerage account rather than a tax-deferred retirement account. Stocks that have been held for a year or less are subject to short-term capital gains tax, and funds removed from a 401(k) before age 59.5 are subject to a 10% penalty tax in addition to taxes owed to the IRS. And, he adds, that you will want to “ensure the transfer is completed and quickly reinvested in alignment with [your] unique investment objectives,” says Garrett.

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Miura notes that: “There’s some risk to not having your assets in the market for seven days, however, in the long run, seven days won’t make a big difference. Unfortunately, whether you sell the assets now or later is difficult to determine.” 

If questions like that are stressing you out, pros say you may want to hire a financial adviser. But don’t necessarily just go with the one provided to you for free by the brokerage firm you move your money to — because sometimes those advisers aren’t fiduciairies and they may be earning a commission. You may want to opt for a certified financial planner who has a legal and ethical obligation to act in your best interest.

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