Step-by-step guide to stocks and shares Isa transfers
By Michael Trudeau
Step-by-step guide to stocks and shares Isa transfersThe stocks and shares Isa transfer process is not without its pitfalls. This guide will help you make the right decisions.
Which? Money has found that parts of the investment industry are coming up short when it comes to efficiency and swift transfer processes – we've even found some examples of transfers taking more than 10 weeks to complete.
But your choice of Isa provider can make a real difference to your returns, with charges and investment choice just two factors to consider when making sure you are using the right one for you.
Here, we take you through the steps you need to follow when transferring to ensure everything goes through as quickly and efficiently as possible.
1. Shop around for the best Isa for you
There are plenty of stocks and shares Isa providers to choose from, and most DIY investors (those not using a financial adviser) will use a fund supermarket.
Find out more: Fund supermarket reviews – our unique ratings for stocks and shares Isa providers
2. Decide if you want to transfer your Isa as stock or cash
If you're happy with your investments, opt for a stock transfer. If you want to start afresh, go for a cash transfer.
If you would prefer to transfer to the safety of cash, it is now possible to transfer to a cash Isa without losing the Isa status on your money.
If you transfer as stock (known as an in-specie transfer), your investments will be re-registered as they are and you won't be out of the market. With a cash transfer, your investments will be sold and the proceeds passed to your new provider for them to reinvest in line with your instructions. This approach might be cheaper, as many fund supermarkets levy a transfer charge for every line of stock you hold. However, you'll suffer from the bid-offer spread between the selling and buying prices, and you'll also spend time out of the market, which means you could miss out on beneficial movement in prices.
3. Contact your new provider or visit its website
Once you've selected your new provider, you will need to contact it and complete its transfer form. Most will offer the option to download the form online, but it will be necessary to print off and send the form through the post as most providers will want a 'wet' signature.
If all goes to plan, your new provider will organise everything from here and tell you when the transfer is complete.
4. Exit fees
It's possible that your old provider will charge you exit fees, especially if you have opted to transfer as stock. While some providers won't charge you anything, we've found others charging exit fees ranging from £15 to £30 per stock.
However, it's possible that your new provider will agree to cover these charges for you, so get haggling. It's not uncommon for providers to cover hundreds of pounds' worth of exit fees as an incentive to use their service.
5. Once your transfer is under way, get chasing
If things seem to drag on, hit the phones again. Call your new provider to find out what's going on. However, it's more likely to be your old provider dragging its feet.
Your new provider should chase for you but it won't hurt for you to give it a nudge yourself.
6. Once your transfer is complete
Leave it a few months and then call your old provider to check if any dividends or interest payments have come in. For example, dividends are normally paid around two months after the qualifying date, so it's possible that a payment will arrive in your old account long after you are up and running with your new provider.
Your old provider should forward these payments to your new provider automatically, but we've found examples of dividends sitting in dormant accounts for months or being paid out by cheque.
- Last updated: April 2017
- Updated by: Michael Trudeau