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Broker Issues for Investment Clubs
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Many clubs in the BetterInvesting universe used Folio Investing as a broker. Folio stopped its self-directed accounts. If a customer did not transfer to a different broker their Folio account was to be transferred to Interactive Brokers. Many clubs are having a difficult time with the transfer to Interactive Brokers. The delay in transfer has been delayed more with GameStop trading issues on the Interactive Brokers platform. If your club is one of those dealing with the Folio to Interactive Brokers transfer, you are not alone. What are your alternatives?
When the transfer is complete you may want to consider moving to a larger broker. Fidelity and TDAmeritrade have good reviews among clubs. The ICLUBcentral support team has heard the fewest complaints from Fidelity customers. TDAmeritrade (TDA) has a bit of uncertainty regarding investment club accounts. Schwab recently completed a merger with TDA. Schwab also announced they would no longer open investment partnership accounts with less than $250,000 in assets. It is unknown to me as I write this if that new policy will apply to TDA when full integration with Schwab is completed in the future. Of course, Fidelity and TDA are not the only choices.
I was informed BetterInvesting management is actively talking to other brokerage firms about a relationship similar to the previous one with Folio Investing. That is the extent of my knowledge of the talks.
Russell Malley
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Rank: Administration
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BetterInvesting recently announced a new offer for members and investment clubs with the brokerage firm Muriel Siebert & Co. BI members and investment clubs can open an account with Siebert with the following features/benefits: - No fee account opening minimums
- Commission-free stock trading on accounts, individuals or groups affiliated with BetterInvesting
- Fractional share investing allowable
- Free checking/free transfer of cash in and out of account (within AML/Banking rules and regulations requirements and standards)
- A defined process to change main account holder/administrator of an investment club account
- Inbound EFT/checks into club accounts from multiple people
- Read-only user access to Investment Club accounts and related reports
- Multiple ways to easily fund your account
- Dedicated, comprehensive financial planning and support to help you manage your assets
- Free portfolio review
- Ability to combine a wide variety of investment options into a single account allowing you to see your investment performance in a single statement
At ICLUBentral, we are working to add Siebert to our supported BrokerSync brokerages in myICLUB.com right now. For more info and to access the link to open your account, see https://www.betterinvest...ion-partnerships/siebert
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Rank: Administration
Posts: 280
Thanks: 3 times
Was thanked: 47 time(s) in 42 post(s)
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Today, I received an email from TD Ameritrade regarding the move of an investment club account to Schwab. Quoting from that email, "Investment Club accounts are not permitted to distribute payments to third parties. Cash and stocks will no longer be allowed to be distributed to any account not registered in the name of your Investment Club."
If this policy holds, this means investment clubs with accounts at Schwab will not be able to pay a withdrawal by transferring shares to the withdrawing member. Schwab will not allow such transfers.
Transferring appreciated shares is the most tax efficient way to fund a full withdrawal. It benefits both the club and the withdrawing member. Taking that option away will make Schwab accounts less attractive for investment clubs.
Russell Malley
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Broker Issues for Investment Clubs
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