You can fund your portfolio with cash, or you can transfer individual whole shares of stocks directly out of an external brokerage, including robo-advisors, and into Frec’s self-managed portfolio without selling them by using ACATS. Most brokerages, like Betterment, allow partial transfers while others, like Wealthfront, require full transfers.
Here’s what happens when you initiate a full transfer:
- All ETFs, stocks, and any other securities in your external account (including mutual funds, fixed income, and options contracts) will be transferred in-kind to Frec’s Self-Managed Portfolio.
- Any cash you transfer over from your external brokerage account will be available as Cash in your Frec account.
- We will also bring over your ETF and stock tax lot information, but this can take 3-5 additional business days once your transfer is received.
When setting up your Frec Direct Indexing portfolio (“DI Portfolio”), you can fund it with cash only or a combination of cash and stocks. You’re only able to fund your DI Portfolio with stock in your self-managed portfolio and only during the initial setup of your strategy.
To fund with stock, you will first need to complete a stock transfer into Frec or purchase stock in your self managed portfolio. Then you continue setting up your DI strategy on the platform. After selecting your index, you’re able to choose how to fund your strategy. You’ll want to select funding by cash & stocks. You will then be prompted to enter an initial portfolio size amount. Once the amount is entered, the stocks that are eligible to transfer will be shown with their respective notional value that can be added to the portfolio. Eligibility of a stock will depend on if the index you have selected (including any changes you have made) includes it. The amount of eligible stock that can be transferred will depend on the portfolio size you set and the target weight assigned by the index.
Once you’ve selected which stocks you want to seed in your DI, you must deposit the remainder in cash (or to get to the $20,000 minimum). Once the cash has settled, we will start investing in your DI strategy.
Keep in mind, if you want to avoid selling when you transfer your stocks, you should only transfer whole shares. Any fractional shares will be sold and transferred as cash, which could result in a capital gain or loss.
Please note - stocks can be seeded to your direct indexing portfolio only at the time of creating it. Once our portfolio has been created, you will not be able to add stocks to it.
You can view your transfer status within your activities page. Select the ACAT transfer in question and you will be shown a status. If your transfer has been pending for over 10 business days, please contact email@example.com.
Other information to note:
- Your external brokerage may charge an outgoing ACAT fee (typically between $50 and $100). Frec does not charge any fees for incoming ACATs.
- To avoid transfer rejections, please ensure the name and type of external brokerage account you transfer from matches your Frec account.
- Frec does not currently offer the ability for customers to trade options contracts, fixed income, OTC securities, penny stocks, or mortgage backed securities. This is what happens if you transfer any of those securities into Frec, you will be able to hold them in your account and complete the following actions:
- OTC or Penny stocks: Submit a sell order to Frec’s support team. You will not be able to purchase additional shares.
- Fixed Income or mortgage-backed securities: You will not be able to make any buy or sell trades. You can transfer them out of Frec or hold to maturity.
- Options: You will not be able to trade them. You can hold them until expiration or transfer them out of Frec.
- Mutual Funds: You will be able to sell any mutual fund brought into Frec and you may be able to purchase additional shares, if your mutual fund is supported for trading. You can find out by reaching out to firstname.lastname@example.org.