1 Broker or 2

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reason-logic
Posts: 117
Joined: Sun Mar 17, 2013 8:22 pm

1 Broker or 2

Post by reason-logic »

I am using Vanguard for all of my mutual fund needs. I am also using Vanguard Brokerage Services for all of my individual stock and bond holdings. I also have a brokerage account at Wells Fargo Advisors with a portfolio of individual muni bonds, which I am closing.

Question, when I close the Wells Fargo Advisor broker account, should I move these assets to another broker (I.e., Fidelity) or put all my assets with Vanguard? I guess I am concerned about a Black Swan event at Vanguard that could end up with all my non cash assets tied up in one place.

I have a total of $18 million in mutual funds, individual stocks and bonds.

Should I split these between 2 firms or consolidate all with Vanguard?
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ofcmetz
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Location: Louisiana

Re: 1 Broker or 2

Post by ofcmetz »

How comfortable are you having all your money in one place? If it causes you some worry then what is the problem with continuing to use two? I don't think it's hurting anything, and I don't think there is a definitive right answer. A lot of people just feel better having part of their wealth split between two firms.
Never underestimate the power of the force of low cost index funds.
livesoft
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Joined: Thu Mar 01, 2007 7:00 pm

Re: 1 Broker or 2

Post by livesoft »

We have our accounts at a few brokers. I prefer that because I use the best things that each broker offers, plus I avoid any restrictions imposed by any individual broker. That is, if I somehow get restricted at Vanguard, I can do the same thing at WellsTrade. Also, I feel that if one broker is the subject of a cyberattack, that I will not be impacted because I can just use another broker.

I want to point that WellsTrade (the no-advisor, low-cost online broker at WellsFargo) is my best broker (they give me free trades, so it is no cost to me). That is followed by TDAmeritrade, then Fidelity, then Vanguard.
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Bradley
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Joined: Tue May 01, 2007 2:41 pm

Re: 1 Broker or 2

Post by Bradley »

I have one advisor. All funds are held by a single and separate custodian . I'am comfortable with this arrangement. Having funds at more than one location would only increase your odds of a black swan event IMO. Single advisor/custodian is simple and efficient.
You can sum up any active fund manager’s presentation at an investor conference in one sentence: “We’re doing well, all things considered.”
Red35
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Joined: Sun Aug 21, 2011 11:17 pm

Re: 1 Broker or 2

Post by Red35 »

What is a "Black Swan" event?
MN Finance
Posts: 1926
Joined: Sat Dec 22, 2012 9:46 am

Re: 1 Broker or 2

Post by MN Finance »

Any perceived diversification is for emotional reasons. In a practical sense you have no risk in a brokerage account (unless you believe VG, Fidelity, or WF are printing statements in someone's basement and they've made off with your actual money). Something like a bankruptcy or an account freeze is theoretically possible, but would amount to an administrative issue, not one that would cause a financial loss. Having a substantial enough emergency fund in the credit union down the street usually alleviates any potential risk of a month long web outage or something. I suppose the custodial banks actually holding the money could also commit fraud, but also seems unlikely. That said, as mentioned, having a couple accounts may simply make you feel better and there's really little downside to that arrangement as well, except another account for your estate to settle in the event of death (or manage in the even of incapacity).
Default User BR
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Joined: Mon Dec 17, 2007 6:32 pm

Re: 1 Broker or 2

Post by Default User BR »

I currently have accounts at five brokerages (not counting the 401(k)). That's a result of my project over the Christmas break to see how much in brokerage bonuses I could garner. The answer was, $2,150.00.

Next December I'll probably move everything again for more more more bonus money. Bwa-ha-ha-ha!


Brian
tibbitts
Posts: 23728
Joined: Tue Feb 27, 2007 5:50 pm

Re: 1 Broker or 2

Post by tibbitts »

reason-logic wrote:I am using Vanguard for all of my mutual fund needs. I am also using Vanguard Brokerage Services for all of my individual stock and bond holdings. I also have a brokerage account at Wells Fargo Advisors with a portfolio of individual muni bonds, which I am closing.

Question, when I close the Wells Fargo Advisor broker account, should I move these assets to another broker (I.e., Fidelity) or put all my assets with Vanguard? I guess I am concerned about a Black Swan event at Vanguard that could end up with all my non cash assets tied up in one place.

I have a total of $18 million in mutual funds, individual stocks and bonds.

Should I split these between 2 firms or consolidate all with Vanguard?
With that much money, I'd keep funds at two institutions, or possibly even more. Even with much, much less money, I have money in several places: about half at VG, and the rest divided among several other institutions (partly for historical reasons, and partly to access investments not available through VG.)

Obviously, if you double the number of locations for your assets, you double the odds of losing all the money that's at any one location, but with as much money as you have, even a loss of half your investments shouldn't be fatal.

Paul
Elbowman
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Joined: Tue Apr 03, 2012 2:25 pm

Re: 1 Broker or 2

Post by Elbowman »

Red35 wrote:What is a "Black Swan" event?
http://en.wikipedia.org/wiki/Black_swan_theory
Cash
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Joined: Wed Mar 10, 2010 9:52 am

Re: 1 Broker or 2

Post by Cash »

Default User BR wrote:I currently have accounts at five brokerages (not counting the 401(k)). That's a result of my project over the Christmas break to see how much in brokerage bonuses I could garner. The answer was, $2,150.00.

Next December I'll probably move everything again for more more more bonus money. Bwa-ha-ha-ha!


Brian
Haha, I also did a round of brokerage bonuses, though I made a bit less than you. However, I'm going to take my winnings and reconsolidate...keeping track of the various accounts is annoying.
Default User BR
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Joined: Mon Dec 17, 2007 6:32 pm

Re: 1 Broker or 2

Post by Default User BR »

Cash wrote:Haha, I also did a round of brokerage bonuses, though I made a bit less than you. However, I'm going to take my winnings and reconsolidate...keeping track of the various accounts is annoying.
That's what the big spreadsheet is for. Yes, there are a few extra account downloads to do now, but those take no appreciable time, and I don't do it that often anyway. The Big Spreadsheet collates all the information and presents it for me.


Brian
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