The Joy of Using Transfer Agents Instead Of Brokers

Isn’t that an odd statement? That primarily using transfer agents to own stock has some advantages over using brokers. Read on…

Slow vs. Fast
Transactions using a broker are usually immediate. Within a few seconds, you can transact shares: buy or sell, assuming your broker has this functionality. This is a double edge sword. It becomes very tempting to do something. When the market goes wild, it is hard to sit there and do nothing.

On The Other Hand
Transactions via a transfer agent are not instantaneous. It takes several days for a transaction to complete when using a transfer agent. One does not know the exact price one pays until the transaction completes. This is a double edge sword. If you need to have something happen immediately, transfer agents are not the best approach.

I consider the slowness of transfer agent generally a good thing. I cannot buy or sell within a day. So when the market goes wild, and if I am tempted to buy today, deciding to use a transfer agent is the wrong way to go. This condition forces me to consider the long-term prospects of the company I am interested in, not the immediate turbulence of the stock market.

Vote Sign. 2020.
Vote Sign. 2020.

For dividend investors, using a transfer agent is close to ideal. Many, if not most, transfer agents allow dividend reinvestment. Most allow automated monthly dollar cost averaging purchases.

Overall
There is a place, in my view, for both transfer agents and brokers. I use both, although I have more assets at transfer agents than I do at my broker.

Have you considered or use transfer agents? Comment here.

The Vote sign is in Alameda, CA. In smaller letters under “Vote” it says “#itactuallymatters”.

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