Q: My broker wants to charge me $500 to get a paper stock certificate. Is there a way to get one for free?
A: The financial industry isn't shedding any tears over the slow death of the paper stock certificate.
The rise of electronic stock trading is welcomed by the industry. Not having to track, store and process paper certificates is a big money saver for brokerage firms and companies that issue stock.
Not surprisingly, most financial firms do not make it easy for individual investors to get paper certificates. Brokerage firms can charge hundreds of dollars to provide them. Some brokerages won't help you at all, leaving it up to you.
This is disconcerting for investors who associate security with have a paper stock certificate in their possession. Other investors would like to have a paper stock certificate to present to a grandchild or relative as a gift.
Don't let the difficulties discourage you. You can still, in most cases, get paper stock certificates for free. It just requires some leg work, which requires multiple phone calls. Here's what to do if you want to get a paper stock certificate for free:
Step 1: Get the name of the stock's transfer agent.
A transfer agent is the firm a company hires to track its shareholders and handle share processing. Most large companies hire one of several dominant transfer agents including Computershare or BNY Mellon. Some companies, like Walt Disney, serve as their own transfer agent.
The easiest way to get name of a transfer agent is by looking at the company's annual report. You can access the annual report from most companies' websites. You can also download the annual report, as filed to regulators, from the Securities and Exchange Commission 's website, using these directions.
Step 2: Confirm paper certificates are available.
Contact the transfer agent and ask if the company provides paper certificates. You can only get a paper certificate if a company provides them. Most companies still provide paper certificates. But a growing number of companies don't provide paper certificates, including Chevron (CVX). Intel (INTC). Discover Financial (DFS). Morgan Stanley (MS). RadioShack (RSH) and Visa (V).
Step 3: Transfer your ownership
to direct registration.
When you own stocks through an online brokerage, the shares are listed in the broker's name, not yours. The brokerage then tracks your ownership. This is called "street name" registration. You can read more about this here .
You can only get paper stock certificates if the shares are in your name and listed at the transfer agent. You need to instruct your brokerage to put the shares under direct registration with the transfer agent. Some brokers charge for this, while some others don't.
Step 4: Contact the transfer agent.
Once your shares are listed directly under your name with the transfer agent, you can work with the transfer agent. You'll need to call the transfer agent again and request paper certificates. Neither Computershare nor BNY Mellon charge to issue paper certificates.
Now, time for a huge disclaimer: While paper certificates have allure for some investors, there are gigantic disadvantages you need to be aware of.
First, you're responsible for safeguarding the certificates. If you lose a paper certificate, it's like losing cash, and it's a costly nuisance to replace it. Next, managing a portfolio this way is cumbersome. You'll need to make sure the transfer agent for all your holdings is up to date with your current address to make sure you receive dividends. Your broker will no longer handle address changes when it comes to your paper certificate holdings. And when you move your ownership to the transfer agent, your stock position will no longer be listed at your broker's website.
Finally, when you have paper certificates, expect delays when selling shares. You'll need to mail the certificates when you want to sell stock.
That's why most investment pros discourage investors from holding paper certificates. But if your mind is made up, you now know how to get them for free.
Matt Krantz is a financial markets reporter at USA TODAY and author of Investing Online for Dummies and Fundamental Analysis for Dummies. He answers a different reader question every weekday in his Ask Matt column at money.usatoday.com. To submit a question, e-mail Matt at firstname.lastname@example.org. Click here to see previous Ask Matt columns. Follow Matt on Twitter at: twitter.com/mattkrantz