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.
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.
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