Worth it to move $ for a sign up bonus?

[EdwardMM]

Hi all, just a basic opinion question. I have a large portion of my money at Scottrade (about $550K across 3 accounts my wife and I have). All of my cash is invested in vanguard index funds. I've been a Scottrade customer for years and inertia has kept me there.

I've seen offers here and there that if you move $500K to another broker you can get a bonus of $1k, $2k or more. It seems like moving accounts could be relatively straightforward (though a lot of initial paperwork). Does anyone see value in moving those funds to get the bonus? What are the drawbacks of moving your funds every 12 to 18 months to capture a new sign-up bonus?

[seattlecyclone]

One potential drawback is that cost basis information could get lost in the shuffle. Not sure how realistic this is though.

[jjcamembert]

I only do it if I want to move my money to a new broker anyway (for better commission structure, platform, etc). For me, the hassle of filling out forms, faxing them, phone calls, etc isn't worth what amounts to matching the market's risk-free return rate. Return-wise it's not some amazing deal: IMO there's a lot of ways with a $500k account to make an extra $1k that have less hassle.

I've transferred accounts twice in the past year (not for bonuses necessarily) and found the cost basis and tax reporting to be pretty smooth. Although you do then have several places to look for tax returns.

[Mrbeardedbigbucks]

I just did this not long ago to take advantage of a $1200 sign up bonus at Fidelity. I believe if you transfer between 500k-$999,999 its $1200 bonus.  It was a very easy process. Almost everything was done on Fidelity.com, my two accounts transferred in 1 week, the cost basis transferred on our taxable account and the bonus was deposited in about 4 weeks. If for some reason your account type can't be opened on their website (like a trust account) or if Scottrade requires a transfer form rather than accepting electronic submission, Fidelity will prefill and overnight the transfer form and include a prepaid return overnight envelope. I had a representative walk me through everything. He was very easy to deal with and also offered to reimburse any close out fees from the firm i transferred from. So yes, in my opinion it's worth it. I spent less than an hour to make $1200 and there was zero paperwork for me.

It's not only the $1200 that I liked. Fidelity also has a debit card that reimburses all ATM fees with no min balance or annual fees, similar to the Schwab card that everyone likes. If you trade stocks or ETFs there's many ETF's you can trade without a commission or if you trade stocks the commission is only $4.95. The retirement planning tool is very good as well. If you enter a detailed budget, it assumes a different rate of inflation for different types of expenses like 7% annual rate for health care vs 2.5% for everything else. This can probably be done with other retirement planning calculators but it's nice to have good retirement planning calculator at the company you invest with.

If you want, i can give you the phone number and extension of the representative that helped me. He didn't try to sell me anything. He did ask me if I was self directed or looking for help with managing the accounts but once I told him self directed, he just walked me through everything online and even called me when the assets transferred. He also gave me a tour of the website and the retirement planner. He gave me his direct number and email address. I already emailed him once to ask a question about something and he got back to me within a couple hours.  I believe the GoCurryCracker.com guy has his accounts at Fidelity.

[bacchi]

I also recently transferred my Scottrade accounts to Fido for the bonus. It always annoyed me that I had to call Scottrade for a withdrawal and, now that I'm withdrawing money on a regular basis, the annoyance overcame my inertia.

[Pipboy]

One potential drawback is that to move funds to certain brokerages, you need a medallion signature guarantee. This isn't always easy to come by. That said, I move a chunk of my Vanguard money around chasing bonuses pretty regularly. I converted admiral shares to their ETF equivalent to make this possible.

[Mrbeardedbigbucks]

One potential drawback is that to move funds to certain brokerages, you need a medallion signature guarantee. This isn't always easy to come by. That said, I move a chunk of my Vanguard money around chasing bonuses pretty regularly. I converted admiral shares to their ETF equivalent to make this possible.

I've transferred from two different firms and haven't had to get a signature guarantee. That's not very common and probably only required when transferring between unlike registrations.

These days it's very easy to transfer assets. With some of the bigger players like Fidelity, Vanguard and Schwab, it's mostly done electronically on their websites.

[EdwardMM]

Thanks so much for the advice, everyone! I am going to look into bonuses available at Fidelity and see what they're willing to do.

[respond2u]

I had 4% of my portfolio in e*trade with my ex-wife as beneficiary. When I found out that I'd have to submit paper forms to change that, I looked to change and saw Schwab was giving $500 for me to move money, so I did. It's been worth it, essentially free money with no more hassle than I was going to have to go through before.

[kpd905]

Are all of these deals only available for taxable accounts?  Or are any available for IRAs?

Edit: I see Schwab has a bonus for IRAs, $500 for $100,000 seems like a good deal.  TD and Scottrade give $300 for $100k. 

Schwab, TD and Scotttrade all require the money to stay put for a year it seems.  Merrill Edge only requires it to stay for 90 days and pays $600 for $200k. 

Scotttrade pays $2500 for a $1 million balance.  Looks like this could provide a nice chunk of my expenses in retirement, along with some checking and credit card bonuses.

[Car Jack]

One potential drawback is that to move funds to certain brokerages, you need a medallion signature guarantee. This isn't always easy to come by. That said, I move a chunk of my Vanguard money around chasing bonuses pretty regularly. I converted admiral shares to their ETF equivalent to make this possible.

Between my wife and me, we've transferred probably a dozen accounts.  I have never in my life needed a medallion signature guarantee.  Although my credit union does this for free, I rarely have to even touch paper to move funds.  The times I've had to touch paper has mainly been to print out the signature pages, sign them and then scan the signature pages back in.

I do know that Vanguard seems to be the ones stuck in 1973 and requires the King to put his wax imprint on all declarations.  Someday, they'll join us in the 21st century.  They have good funds but I only buy them as ETFs through TDAmeritrade for the most part.

[Mrbeardedbigbucks]

I just stumbled upon The Finance Patriot blog. He has a good write up on 'brokerage hacking'. If you're willing to have your portfolio invested at multiple brokerage firms, you can make a nice part time income by taking advantage of sign up bonuses. You can still invest in low cost index funds and ETF's just in different places. Your mutual funds or etf's will transfer in-kind and cost basis transfers from one firm to the other. The only downside is having to log into multiple websites to track your investments but I think the easy money made from this out weighs the hassle of having to log into multiple websites.

http://www.thefinancepatriot.com/a-beginners-guide-to-brokerage-hacking-and-why-i-have-never-had-a-vanguard-account/