In-specie or cash transfer: what happens to your investments?

Moving an investment account can mean transferring the holdings themselves or selling them and moving cash. These routes have different practical effects, even when the destination account is identical.

Before signing a transfer instruction, establish what will happen to each holding. A request to transfer an account does not guarantee that every investment can move unchanged.

Understand the two routes

An in-specie transfer, also called re-registration, moves supported holdings without first selling them. A cash transfer involves selling investments and transferring the proceeds, which may then need to be reinvested.

Fidelity's transfer information illustrates the distinction and the importance of checking supported assets. Its process is a provider example, not a timetable or promise that applies to every platform.

Ask both firms about the exact fund class, exchange listing and account type. A familiar fund name may be available at the destination while the particular class you hold is not.

Staying invested is different from being able to trade

An in-specie transfer can maintain market exposure, but there may be a period during which dealing instructions are restricted. Confirm whether you can sell, change regular payments or take withdrawals while the transfer is in progress.

If money will be needed on a particular date, tell the providers before starting. A projected completion time is not the same as a guaranteed payment date. Consider how ongoing income, dividends and fees will be handled during the handover.

Keep a list of instructions that need to be restarted or replaced. Do not assume a regular withdrawal mandate automatically follows the investments.

Time out of the market can help or hurt

Suppose investments worth £50,000 are sold for a cash transfer, ignoring all charges. If the same holdings rise by 3% before repurchase, buying the former quantity would now cost £51,500. The cash buys fewer units.

If prices instead fall by 3%, that quantity would cost £48,500. The same cash could buy more. Neither outcome is known when the transfer begins.

These fictional figures show exposure to market movement during the gap. They are not a reason to forecast short-term prices or a claim that an in-specie transfer always produces a better result.

Keep the tax wrapper intact where required

Moving an ISA or pension through the appropriate provider transfer process is different from withdrawing money to your bank and paying it into a new account. Follow the applicable wrapper rules and obtain confirmation of how the transfer will be treated.

For investments outside a tax wrapper, selling to cash may create a disposal requiring a tax calculation. Ask a tax adviser about the actual transaction rather than assuming that a transfer between platforms is always tax-neutral.

Transfers that change ownership introduce further questions. This guide concerns changing provider for your own holdings; it does not establish the tax treatment of gifting assets to someone else.

Identify partial transfers and residual payments

Some holdings may move before others. Income, small cash balances or late adjustments can arrive after the main transfer. Request a final statement from the old provider and reconcile it with the new account.

For a fictional account holding £32,000 in funds, £17,500 in shares and £500 cash, the starting total is £50,000. Compare quantities and transaction records, not just that total, because market values will change while the transfer is underway.

If a holding appears to be missing, establish whether it was sold, converted, excluded or is still awaiting registration. Retain records of any class conversion, including the old and new unit quantities.

Compare the reason for moving

Calculate the expected ongoing saving alongside exit charges, dealing costs, conversion charges and any benefits lost. A short-term promotion should not obscure an expensive long-term arrangement.

If the estimated annual saving is £120 and the one-off cost is £180, the simple break-even period is 18 months, assuming unchanged balances and charges. That arithmetic excludes market effects and service differences, which should be considered separately.

Ask an adviser or the providers to document the proposed route for each holding. A clear transfer plan specifies responsibilities, restrictions and the records needed to confirm completion.

See also total investment costs, pension consolidation and managing your own investments.