Breaking up is easy to do
How do I part ways with my broker? It’s a lot more simple than you might think
Question:
I’m not happy with my broker and want to move my tax-free account and discretionary investments. They’re local JSE exchange traded funds (ETFs) and a few shares. Unfortunately, I also have Tongaat shares, which are suspended. Do I have to sell everything and transfer the cash across to my new broker and what happens to the Tongaat shares?
Answer:
For the discretionary account, don’t sell. If you do, you’ll incur capital gains tax (CGT) as well as transaction costs and the risk that the shares and ETFs may move higher during the process. Rather do a transfer.
First, find and open an account at your new broker (and it can be a different broker for each of the discretionary and tax-free accounts). Then when the new accounts are open, contact both the new and the old broker requesting a transfer and they’ll give you forms to fill out.
There will be a fee per share or ETF you hold (the exiting broker will charge this), and the process should take no more than a week. The Tongaat shares can also be included in the transfer.
As an aside, you can donate suspended shares to Computershare South Africa; this is especially relevant for an account that is closed (except for suspended shares) and which is attracting admin fees.
The tax-free account entails the same process (here withdrawing will affect your lifetime limit, which never resets higher as you deposit money every year). However, you may need to sell the holdings if you’re moving to a different product such as from ETFs to a unit trust platform or vice versa.
All in all, the process is painless.