The Account Features That Do Not Carry in ACATS: Margin, Options, Discretion, and Standing Instructions
ACATS moves your clients' positions and cash, but it does not move account features. Margin borrowing, options approval, discretionary trading authority, and standing instructions like dividend reinvestment do not carry to the receiving firm. Each requires new paperwork and approval at the new firm, and missing them freezes trading capability on day one of the new relationship.
Transition teams plan carefully for which assets move through ACATS and how long the transfer takes. Far fewer plan for the fact that an account can arrive fully funded and still be unable to trade the way the client expects, because the permissions that governed the old account were firm-specific and did not travel with the positions. This is one of the quietest sources of day-one client frustration in a transition, and it is entirely preventable.
What ACATS moves, and what it leaves behind
The Automated Customer Account Transfer Service standardizes the movement of account assets between firms, a process FINRA outlines for investors and governs through its customer account transfer rules. It transfers many asset types: equities, bonds, most mutual funds, options positions, and cash. What it does not transfer is the set of firm-granted capabilities and instructions attached to the old account. Those were agreements between the client and the delivering firm, and they end when the account leaves.
This is a different problem from the one covered in the assets that never move through ACATS, which is about asset types like annuities and alternatives that travel on separate tracks. Here the assets arrive fine. It is the account's ability to do things, borrow, trade options, be traded on a discretionary basis, reinvest dividends, that has to be rebuilt from scratch at the receiving firm.
The four features that do not carry
| Feature | Why it stops at the move | What re-establishes it at the new firm |
|---|---|---|
| Margin | The margin agreement was with the old firm | A new margin agreement and the firm's margin approval |
| Options approval | Options trading level was granted by the old firm | A new options agreement, disclosure delivery, and principal approval |
| Discretionary authority | The trading authorization named the old account | A new discretionary agreement or limited power of attorney |
| Standing instructions | DRIP, recurring buys, and rebalancing are account settings | Re-establishing each instruction on the new account |
Margin
A margin account is governed by a margin agreement between the client and the firm. When the account transfers, the new firm requires its own signed margin agreement before extending margin, and it applies its own approval standards. Two practical wrinkles matter during a transition. First, if the transferring account carries a margin debit or borrowed positions, the delivering firm may reject or delay the transfer until that is resolved. Second, until the new margin agreement is in place, the account behaves like a cash account, which can block a client who trades actively on margin.
Options approval
Options are the sharpest example because the requirements are specific and time-bound. Even though existing options positions can transfer through ACATS, the client's ability to place new options trades depends on the new firm approving them for options, which involves a new options agreement, delivery of the options disclosure document, and approval by an options-qualified principal, with the signed agreement typically returned within a set window. An account can therefore hold option positions it cannot adjust until the new firm completes its own options approval. For a client running spreads or covered calls, that gap is not academic.
Discretionary authority
If the advisor traded the old account on a discretionary basis, that authority rested on a trading authorization tied to the old firm and account. It does not transfer. The new firm needs its own signed discretionary agreement or limited power of attorney before the advisor can place a single trade without contacting the client first. In a book built on discretionary management, this is the feature most likely to freeze the advisor's normal workflow on day one, because every account needs the authorization re-signed before business as usual resumes.
Standing instructions
Standing instructions are the easy-to-forget category: automatic dividend reinvestment, recurring contributions, systematic withdrawals, and automated rebalancing. These are account settings, not portable assets. In fact, guidance on ACATS transfers generally recommends disabling recurring investments and dividend reinvestment before initiating a transfer, because active automation can interfere with the transfer itself. On the receiving side, if dividend and distribution instructions are not specified, the default is often to reinvest, which may not match what the client had. Every standing instruction has to be re-created deliberately on the new account, or the client's cash flows silently change.
Why this freezes the book on day one
Stack these four together and the risk becomes clear. An advisor resigns, the accounts fund through ACATS, and the advisor sits down to manage the book, only to find that the discretionary authority is not in place, margin is not active, options cannot be traded, and a batch of clients' dividends are now reinvesting when they used to pay out as income. The positions are there. The ability to manage them the way the client hired the advisor to is not.
This is a retention problem disguised as an operations problem. A client who watches their account sit frozen or behave unexpectedly in the first week questions whether the move was a good idea, and that doubt is exactly what the old firm is counting on during the dark period after resignation. The features are individually routine. The failure is not catching them all before the client notices.
The pre-move features checklist
The fix is to inventory every account's features before the move and re-paper them in parallel with the transfer, not after. Build a per-account record that captures:
- Margin status. Which accounts use margin, and whether any carry a debit that must be cleared before transfer.
- Options level. Which accounts trade options and at what approval level, so the new options paperwork is ready to submit as the account funds.
- Discretion. Every discretionary account, flagged so the new discretionary agreement is signed as part of the repapering packet, not chased afterward.
- Standing instructions. Each account's dividend, distribution, recurring, and rebalancing settings, captured from statements so they can be re-created exactly on the new account.
The point is sequencing. The new-account paperwork that re-establishes these features should ride along with the repapering documents the client is already signing, so approvals are pending or complete by the time the assets arrive. Chasing them one client at a time after funding is what turns a clean transfer into a frustrating first month. This discipline is core to the advisor transition platform workflow, and it is exactly the kind of per-account detail transition consultants running many moves at once cannot afford to track by memory.
Where automation catches the gap
The features you need to re-establish are recorded in the client's existing statements and agreements. Margin use shows in the account type and balances, options activity shows in positions and history, and standing instructions show in the distribution and reinvestment settings. Reading those details out of source documents is what document intelligence is built for, and it is closely related to how AI reads a brokerage statement to pre-fill account forms and cut NIGO. When the extraction step also flags which features each account uses, the features checklist populates itself, and the paperwork to re-establish margin, options, discretion, and standing instructions gets prepared alongside the core repapering packet instead of being discovered later. A real transition outcome shows the difference between a book that trades on day one and one that does not.
The bottom line
ACATS is very good at moving assets and completely silent on account features. Margin, options approval, discretionary authority, and standing instructions all end with the old account and have to be rebuilt at the new firm through separate paperwork and approvals. Treat them as a parallel repapering workstream, inventory them before the move, and submit the new agreements as the accounts fund. Do that and the client sits down on day one to a book that works. Skip it, and the cleanest ACATS transfer in the world still produces a frozen account and a nervous client.
FAQ
Does ACATS transfer margin and options approval? No. ACATS transfers the account's assets, including existing options positions, but not the firm-granted permissions. The new firm requires its own signed margin agreement before extending margin and its own options approval, which involves a new options agreement, disclosure delivery, and approval by an options-qualified principal, before the client can place new options trades. Until those are in place, the account cannot borrow or trade options even though the positions arrived.
Does discretionary trading authority carry over in a transition? No. Discretionary authority rests on a trading authorization tied to the old firm and account, and it does not transfer through ACATS. The advisor cannot trade the account on a discretionary basis at the new firm until a new discretionary agreement or limited power of attorney is signed. For a discretionary book, re-signing that authorization on every account is usually the single biggest day-one bottleneck.
What happens to dividend reinvestment and recurring investments during a transfer? They do not carry automatically and can interfere with the transfer, so guidance generally recommends disabling recurring investments and dividend reinvestment before initiating ACATS. On the receiving side, if distribution instructions are not specified, the default is often to reinvest, which may differ from what the client had. Every standing instruction should be captured before the move and re-created deliberately on the new account.
Why does an account arrive fully funded but unable to trade normally? Because ACATS moved the positions and cash but not the account's features. Margin, options approval, discretionary authority, and standing instructions all ended with the old account. If the new-account paperwork to re-establish them was not submitted alongside the repapering documents, the account funds but sits with cash-account behavior, no options trading, no discretion, and possibly changed cash-flow settings until each is rebuilt.
How do you avoid a frozen book on day one? Inventory every account's features before the move, capturing margin status, options level, discretion, and standing instructions, then submit the paperwork that re-establishes each feature as part of the repapering packet rather than after funding. Pulling those details from existing statements with document automation lets the features checklist populate itself, so approvals are pending or complete by the time the assets arrive.
