Custodian Comparison & FAQ

The following comparison table and Frequently Asked Questions are provided solely for informational purposes to assist you in choosing a custodian. You should also carefully review our Brochure (Form ADV Part 2A), which contains important additional information about these custodians, their services and potential conflicts of interest.

Frequently Asked Questions

1. What fees should I expect when moving my existing account from IB to Schwab?

IB does not charge any fees associated with transferring or closing your account. If we need to sell holdings in your IB account as part of the transfer, those sales would be subject to the normal transaction fees at IB.

Once your account is open at Schwab, there would be a fee of $50 if you subsequently decide to close your account there.

Most money movement at Schwab is free of charge, with the exception of wires out of your account ($25 per transfer; $15 if transferred online). A full schedule of fees can be found HERE.

2. In what ways will the investing and/or trading in my managed account be different at Schwab?

The most notable difference in how your account is managed at Schwab will be the lack of fractional share functionality that we currently have at IB. As a result, your account will only hold full shares of the stocks and ETFs held in our Model Portfolios and may hold more cash than if you were to maintain your account at IB. As we describe in our Brochure, holding significant amounts of cash may be inconsistent with your account’s investment strategies and result in deviations (perhaps materially) from our Model Portfolios. In addition, our management fee will accrue and be payable with respect to cash balances held in your account.

Prior to December 22, 2023, to keep Client accounts held at Schwab fully invested to the extent practicable, MFWM invested excess cash in ETFs that we believe offer comparable exposure to the desired asset class (“Replacement ETFs”).

Beginning December 22, 2023, we will no longer add Replacement ETFs to Client accounts held at Schwab. Accounts currently holding Replacement ETFs will be rebalanced over an approximately 13-month period, resulting in the removal of the Replacement ETFs. Clients may in some instances hold the Replacement ETFs for a period longer than the anticipated 13-months. Clients may have their accounts rebalanced out of the Replacement ETFs sooner than their next scheduled annual rebalance by contacting us. As a result of this rebalancing, as well as Schwab’s inability to hold fractional shares, accounts custodied at Schwab may hold higher cash balances.

At this time, Schwab’s trading platform does not support the trading of options or hedging strategies in advisor-managed accounts. Therefore, we are unable to support our Hedged Equity (HEQ) strategy at Schwab. We will monitor our ability to offer this option in the future.

3. How long will it take to move my account from IB to Schwab?

Your account will be moved in-kind via the ACATS process, which transfers the whole shares of equities in your account to your new account at Schwab. The ACATS process typically takes about a week. Note that it is common to see assets leave the originating account and not arrive in the receiving account for multiple days.

The fractional shares left in your account will be liquidated and transferred to your new account in cash automatically, along with any interest or dividends that your account receives. This may occur over multiple transactions and takes approximately an additional one to two weeks generally.

Once all transfers are complete, our traders will implement your trading plan.

4. Will my investment plan change if I move my account from IB to Schwab?

Unless you instruct us otherwise, we want to avoid making any changes to your account during the process of moving it, which is why you’ll be asked to review your allocations prior to the account transfer. As always, we strongly encourage you to periodically review your allocations and notify us of any changes with respect to your risk tolerance, needs or goals.

The first step of the transfer process is the receipt of a DocuSign packet for your e-signature. At the point of sending this packet, we will pause any updates to your account for the duration of the transfer.

When our traders implement your trading plan at Schwab, they will rebalance to your target allocation and catch your account up for any interim trade orders from our portfolio managers.

If you want to make a change to your account’s positioning, it would be best to speak with one of our Wealth Advisors before beginning the transfer process.

5. Why are minimums different between brokers?

Due to our inability to trade fractional shares, there may be a larger than expected cash drag in accounts below a certain threshold. The threshold is dependent on the investment plan in each account. For this reason, we are unable to support smaller accounts at Schwab in our stock-based strategies. Additionally, if you expect to take a withdrawal that could push your account below this threshold, migration may not be recommended. Each investor’s situation is different and we recommend speaking with an advisor if you are unsure which option would best fit your investment goals.

6. Will there be tax consequences of moving my account from IB to Schwab?

If you are moving a retirement account such as IRA, Roth IRA, SEP-IRA, or employer retirement plan to Schwab, there are no tax consequences as it will be treated as a trustee-to-trustee transfer.

If you are moving a taxable account such as Individual Brokerage, Joint Brokerage, Trust, or Custodial accounts, there will be capital gains/losses associated with the sale of fractional shares at IB, and potential sales of holdings upon rebalancing the account at Schwab.

7. What are some reasons I might want to leave my account as-is with Interactive Brokers?

Fractional Shares. Interactive Brokers offers a highly efficient trading platform that facilitates trading in fractional shares. By investing in fractional shares we are able to more closely track the target investment plan.

Margin Rates. We generally believe that margin loans are appropriate only for a small portion of our client base, but if you utilize a margin loan Interactive Brokers has some of the lowest margin rates available.

Hedged Equity. If you are currently invested in our Hedged Equity strategy, we will not be able to move those assets to Schwab.

Expected Large Withdrawals. If you expect to take a large withdrawal, please discuss your options with an advisor. The limitations caused by our inability to trade fractional shares, also have an impact on the minimum account balance we can carry, without higher cash holdings or changes in investment strategy.

Resistant to Change. If you just like to let sleeping dogs lie, that’s fine too.

8. What are some reasons I might want to move my account to Schwab?

Platform Familiarity. If you already have accounts at Schwab (such as other brokerage accounts or your employer retirement plan) you’ll be able to see your MFWM account under the same login.

App-Supported Account Administration. Schwab offers a smartphone app (Schwab Mobile) to review your account information. The app also supports changes such as approving new accounts, updating email address, updating mailing address, and approving money movement via smartphone app.

Commission-Free Trades for Stocks/ETF’s. Schwab does not charge commissions for electronic trades of stocks and ETF’s.

While we have thoroughly vetted Charles Schwab for inclusion as a custodian on our Personal Portfolio program, and we also may provide guidance (through our financial planners) regarding the differences in custodians, the choice regarding which custodian to select is ultimately our clients’ decision.

Access to Motley Fool Wealth Management (“MFWM”) is only available to clients pursuant to an Investment Advisory Agreement and acceptance of MFWM's Client Relationship Summary (PDF) and Brochure (PDF - 204 KB). Important information regarding Charles Schwab is included in our Brochure, and you are encouraged to read these documents carefully. All investments involve risk and may lose money. MFWM does not guarantee the results of any of its advice or account management. Clients should be aware that their individual account results may not exactly match the performance of any of our Model Portfolios. Past performance is no guarantee of future results. Each Personal Portfolio is subject to an account minimum, which varies based on the strategies included in the portfolio. MFWM retains the right to revise or modify portfolios and strategies if it believes such modifications would be in the best interests of its clients.

During discussions with our Certified Financial Planners, they may provide advice with respect to 401(k) and IRA rollovers into accounts that are managed by MFWM. Such recommendations pose potential conflicts of interest in that rolling retirement savings into a MFWM managed account will generate ongoing asset-based fees for MFWM that it would not otherwise receive.

MFWM, an affiliate of The Motley Fool, LLC (“TMF”), is an investment adviser registered with the U.S. Securities and Exchange Commission. MFWM is a separate entity, and all financial planning and investment advisory services are provided independently by the certified financial planners and asset managers at MFWM. No TMF analysts are involved in the investment decision-making or daily operations of MFWM. MFWM does not attempt to track any TMF services.