How Many Brokerage Companies Are Too Many?

[GetSmarter]

I have assets at three brokerage companies. I like diversification for safety. I like SIPC Insurance. I'm curious if others have multiple brokerage accounts or consolidate into one. Pros/cons?

[FiveK]

We would prefer one for simplicity, but have three for various historical reasons. It seems easier to maintain status quo, so we live with the situation - not that it's so terrible....

[livesoft]

We use 4 major brokerage companies and have a 403(b) at a different major firm. We make very few transactions, so we do not need to login to these accounts except maybe once a year. Now that the 529 plans are zeroed out we actually have fewer accounts than in the past.

As a married couple we are required to have the following financial accounts:
Checking
Joint Brokerage
2 Roth IRA
2 401(k)
1 403(b)
2 or more inherited IRAs
2 HSAs
Donor advised fund
credit cards
e-mail
2 cell phones

There is really very little difference between having things at one institution or multiple institutions since they are all accessed the same way and look the same. Think of it this way: You have to click to see your 401(K) or your Roth IRA whether they are held at the same institution or a different institution. You can also know when one of your financial institutions does something funny. As an example, many people think it is normal for their financial institution to not answer their phones on weekends and holidays nor at night. That's not normal, that's bad.

Another benefit: I don't have to go buy any of those "how to keep your mind sharp" self-help books or exercises.

[familythriftmd]

How about 2? Maybe 3 if you have to have a different one for work.

Even if your brokerage house goes under, which is unlikely if it's Vanguard, Fidelity, Schwab, etc, those assets are still yours.

[sycamore]

Multiple brokerages are okay when you chase new account signup or asset transfer bonuses. It's worth the effort IMO.

[student]

I use multiple brokerage companies.
1) Fidelity because I have 403b with them and I want an ATM card with no fees for international usage.
2) Schwab because of bonuses and another ATM card with no fees for international usage.
3) Chase You Invest because of bonuses.
4) Merrill Edge because of bonuses and preferred reward.

I don't plan to cancel anytime soon.

[JoMoney]

If Vanguard still offered mutual fund only accounts, I'd say even 1 brokerage account is too many
There are a few big share registrar and transfer companies that many companies use for their stock that will allow you to buy and sell stocks directly, so if you owned individual stocks you could still go without any brokerage, but I wouldn't recommend it.
Having 1 brokerage account at one of the major firms should be enough for most situations.

[MikeG62]

I have assets at three brokerage companies. I like diversification for safety. I like SIPC Insurance. I'm curious if others have multiple brokerage accounts or consolidate into one. Pros/cons?

If my situation permitted it, I would have one (and it would be Fidelity). However, I have a multi-decade relationship with a guy at UBS where I have historically bought my muni bonds. So I need both. This year I added two more. One is Merrill Edge with just enough in assets to secure Platinum Honor level status at BofA (for their premium rewards CC) and the other is JPM (for a brokerage transfer bonus I am in the process of earning). Shortly after that bonus posts, I will either move the funds to another broker (for another transfer bonus) or move it back to Fidelity.

[GetSmarter]

We use 4 major brokerage companies and have a 403(b) at a different major firm. We make very few transactions, so we do not need to login to these accounts except maybe once a year. Now that the 529 plans are zeroed out we actually have fewer accounts than in the past.

As a married couple we are required to have the following financial accounts:
Checking
Joint Brokerage
2 Roth IRA
2 401(k)
1 403(b)
2 or more inherited IRAs
2 HSAs
Donor advised fund
credit cards
e-mail
2 cell phones

There is really very little difference between having things at one institution or multiple institutions since they are all accessed the same way and look the same. Think of it this way: You have to click to see your 401(K) or your Roth IRA whether they are held at the same institution or a different institution. You can also know when one of your financial institutions does something funny. As an example, many people think it is normal for their financial institution to not answer their phones on weekends and holidays nor at night. That's not normal, that's bad.

Another benefit: I don't have to go buy any of those "how to keep your mind sharp" self-help books or exercises.

Very funny, LIvesoft! Good way to keep mind sharp, minding multiple brokerages. Thanks for your response!

[GetSmarter]

I have assets at three brokerage companies. I like diversification for safety. I like SIPC Insurance. I'm curious if others have multiple brokerage accounts or consolidate into one. Pros/cons?

Thanks everyone for responding to my post. Interesting answers!

[Elva]

I use 5 brokerage accounts (Vanguard, Merrill Edge, Fidelity, Prudential and TDAmeritrade) because some of them are through work like for my 401k, HSA money and Employee stock and I use Merrill Edge to take advantage of the platinum rewards program and Vanguard for their ETFs and index funds. It's a hassle to juggle and manage but I don't want to go through the hassle to consolidate either.

[Blue456]

I have assets at three brokerage companies. I like diversification for safety. I like SIPC Insurance. I'm curious if others have multiple brokerage accounts or consolidate into one. Pros/cons?

Up to you. Personally I like having as few accounts as possible. This is partially because I am OCD and partially because I don’t want to monitor too many accounts for fraud.

[daacrusher2001]

I was using Schwab, TD Ameritrade, Vanguard, and Fidelity at one time...plus Credit Union, TD Bank, Ally Bank. It's a pain keeping track of them all. I've dropped only TD so far, but will likely drop Fidelity when I stop working (401K).

I like at least two...less worried about default than I am about access in the event of a cyber attack. The company I work for went through a nation state attack and we couldn't access anything for awhile. That could happen to any of these guys...so, good to have at least two!

[HawkeyePierce]

I have four and I wish I didn't.

• Vanguard - 401k and taxable
• TD Ameritrade - 401k brokerage window. Why my VG 401k's brokerage window isn't simply at VG I will never understand
• Schwab - taxable and IRAs (planning to consolidate VG taxable here eventually)
• M1 Finance - love the pies features and I look forward to the rest of the industry ripping it off

Since Schwab is also my primary bank I would love to get this down to just two with Schwab as my one-stop-shop.

[Broken Man 1999]

I have two, Vanguard, and Fidelity.

The bulk of my, and all DW's investments are at Vanguard. My Fidelity brokerage account was opened to invest $1.00 in each of Fidelity's "zero" funds in August of 2018. Currently my holdings have grown to $1.01, and $1.17. Quick, which amount is Fidelity's International zero ER fund?

The Fidelity account gives me a bolthole to use if my relationship takes a bad turn at Vanguard. Easy to transfer as most of our investments are ETFs, and the remaining mutual funds are being converted along the way.

Broken Man 1999

[pasadena]

I have two, down from three.

Vanguard, my first, where I have my "index" brokerage account and first Roth IRA.
Fidelity, because that's where my 401(k) is. Opened a second Roth IRA with them for Mega Backdoor, and a HSA. I transferred my "fun money" stocks from Schwab to Fidelity since I had to have a brokerage account there anyway for ESPP and RSU.

I'm kind of going back and forth whether this was a good idea or not. I like having all my stuff in the same place in theory, but the end result is that I'm looking at my fun money stuff way too often now. It used to be "out of sight, out of mind" at Schwab.

[GetSmarter]

I have two, Vanguard, and Fidelity.

The bulk of my, and all DW's investments are at Vanguard. My Fidelity brokerage account was opened to invest $1.00 in each of Fidelity's "zero" funds in August of 2018. Currently my holdings have grown to $1.01, and $1.17. Quick, which amount is Fidelity's International zero ER fund?

The Fidelity account gives me a bolthole to use if my relationship takes a bad turn at Vanguard. Easy to transfer as most of our investments are ETFs, and the remaining mutual funds are being converted along the way.

Broken Man 1999

$1.01 goes to International. I guess.

[rich126]

That depends on what you use them for and why you have them. I don't like to have everything with any one company so I prefer a couple. Depending on how you count them I have 3 or 4 (the 4th is really the government's TSP so not really a broker).

I will most likely go to two brokers - TD and Fidelity (this one came about due to my current job and they seem pretty solid). Previously I had ThinkorSwim and Scottrade but TD bought those 2.

While one would be nice, I'm not comfortable doing that. Weird things can happen and while your money is unlikely to be lost, things could be delayed/tied up and that always seems to happen at the worst possible time. I've seen and had things occur where I was glad I had backup plans.

[GetSmarter]

That depends on what you use them for and why you have them. I don't like to have everything with any one company so I prefer a couple. Depending on how you count them I have 3 or 4 (the 4th is really the government's TSP so not really a broker).

I will most likely go to two brokers - TD and Fidelity (this one came about due to my current job and they seem pretty solid). Previously I had ThinkorSwim and Scottrade but TD bought those 2.

While one would be nice, I'm not comfortable doing that. Weird things can happen and while your money is unlikely to be lost, things could be delayed/tied up and that always seems to happen at the worst possible time. I've seen and had things occur where I was glad I had backup plans.

Thanks for sharing!

[SmileyFace]

I have three (Vanguard - although only Mutual Fund account; Fidelity; and Schwab) and I want no more nor any less. I don't want more because I don't want to worry about additional statements/1099's/etc. I don't want less because, while of limited value these days to me, I like going to three different places for a little research; enjoy each's email newsletters; etc. My Etrade account from the late 90's is still alive but there hasn't been anything in it for a long time (I finally logged back in and unlinked my bank accounts recently just for security reasons) - if I decided to get back into individual stocks (no plans to do so but ...) - might be another source of information.
I also have 3 online banks with accounts open - good when any of the three offer "new money" Bonuses - I feel like I spend my time just shifting my money between the three to get the bonuses. Their interest rates are all about the same and I am not married to any of them.

[GetSmarter]

Thank you for your reply!

[topper1296]

I have 3 for the same reason I don't have everything invested in one asset class. I don't want all of my eggs in one basket. Simple as that for me.

[mptfan]

Three.

[lws]

Six.
Each one serves a purpose.

[iamblessed]

One boglehead on here has one brokerage and one credit union. I like his idea.

[SmileyFace]

Regarding consolidation - it seems like every week someone has a story whereby things go wrong. It would make me weary to ever do so. I might decide to put all my "New" money into one of the 3 - but something would have to be really bad with one of the 3 I have for me to move out.
Today's story: viewtopic.php?f=2&t=326187

[illumination]

I think having multiple brokerages purely for the purpose of "what if brokerage X is all a big scam" is silly and just extra paperwork and time on your taxes every year. Everything I've read on this subject there's plenty of safety and regulation provided. Multiple brokerages I think offer less safety because it's more things to keep an eye on.

Also, I know helping some family members with their financial investments, lots of accounts tends to mean lots of dumb mistakes. Probably not as much an issue for people that hang out here, but for instance, I have a relative that has a "forgotten" Roth IRA at a different brokerage than his "main" one that had like $80k cash (zero investments) for the last nearly 20 years. Something tells me if that was in the same account as the rest, it wouldn't have happened. I've also seen it with people that "thought" their dividends were being reinvested, etc.

[GetSmarter]

Regarding consolidation - it seems like every week someone has a story whereby things go wrong. It would make me weary to ever do so. I might decide to put all my "New" money into one of the 3 - but something would have to be really bad with one of the 3 I have for me to move out.
Today's story: viewtopic.php?f=2&t=326187

Thanks that was interesting, as I also had a problem with Charles Schwab

[ruralavalon]

I have assets at three brokerage companies. I like diversification for safety. I like SIPC Insurance. I'm curious if others have multiple brokerage accounts or consolidate into one. Pros/cons?

We have all our investment accounts at Vanguard. We have a joint taxable brokerage account, 2 Roth IRAs, and my rollover IRA. I prefer the convenience of all investing accounts at a single location. We use a nearby bank branch for our joint checking account and debit cards.

[123]

We have brokerge/IRA/Roth/Inherited IRA accounts spread among three different brokerages, Vanguard, Fidelity, and Schwab. It all just seemed to work out that way over time. We could likely consolidate to two brokerages and still be happy but we wouldn't be happy with only one. It really doesn't matter where accounts with little activity reside if you only get a statement every 3 months.

[arf30]

Two - Vanguard for mutual funds in a taxable brokerage, Fidelity for everything else. Once they make ETFs more convenient I'll probably convert the Vanguard funds and transfer them to Fidelity.

[SmileyFace]

Two - Vanguard for mutual funds in a taxable brokerage, Fidelity for everything else. Once they make ETFs more convenient I'll probably convert the Vanguard funds and transfer them to Fidelity.

What is inconvenient about ETFs that you would like to see changed?

[Steelersfan]

One is plenty for me. Even if something happened at Vanguard I know my securities are secure at the custody bank that holds them.

Besides that, I have a checking account at a local bank that would hold me for more than a month and a CD at an online bank that would hold me for another six months.

[nisiprius]

It's entirely personal. At one point, for historical reasons, I had approximately three--Vanguard, Fidelity, and TIAA-CREF which wasn't exactly a brokerage. I struggled over a period of nearly a decade to get that whittled down to one. I now have everything at Vanguard--it was tough deciding between Vanguard and Fidelity, close to a coin flip.

All of the single-brokerage risks are in black-swan territory, where it is really impossible to make any accurate judgement about them.

I think it's important to recognize that there are costs and risks involved with multiple brokerages as well, so all the weight isn't on one side of the scale. The costs involve spending more time in tracking spreadsheets. The risks also involve meaningful cybersecurity risks if you choose to deal with the problem by disclosing your account passwords to services like Mint--or Vanguard--in order to get consolidated views. The risks involve "losing the picture" if you don't spend enough time reviewing what is going on in all of your accounts. The risks involve nuisances and possible penalties if you accidentally screw up a tax chore like an RMD that depends on totaling across everything. If you die unexpectedly, even a moderately complicated situation imposes a burden on your executor or family to locate all the assets and figure everything out, as well as a risk of overlooking some.

Three seems manageable but if you are asking I sense that you are finding it burdensome. Or perhaps it is the kind of chore you rather enjoy doing--I felt that way for many years.

It did seem as if every time I had gotten things down to a system, Vanguard would do something like change the sort order of the accounts when you downloaded them as a .CSV file, so the twenty-minute chore of downloading stuff and copying it into the master spreadsheet would suddenly involve an extra hour of work.

A few times a year I ask my wife to name, from memory, the names of every financial institution that we have accounts at, including brokerages, physical banks, Internet banks, and insurance companies. I figure that's the bare minimum--the institution and my Social Security number are probably enough to locate the assets. What I don't do--because I hate it and she hates it--but I really should do, is have her test, annually, whether she is able to log in to those accounts. But as a matter of fact, one of the reasons I closed our Treasury Direct accounts was that not only could she not log into her account (I'd been faithfully giving her "transact" rights on everything in my account), but she realized that several of her accounts were tied to an old email address of hers that no longer existed. There are ways to recover from that situation, but the point is that accounts that you don't log into several times a year are at some risk of becoming difficult to access. Not impossible, but difficult as in customer service, recovery procedures, mailed paperwork, and so forth.

[MikeG62]

A few times a year I ask my wife to name, from memory, the names of every financial institution that we have accounts at, including brokerages, physical banks, Internet banks, and insurance companies. I figure that's the bare minimum--the institution and my Social Security number are probably enough to locate the assets. What I don't do--because I hate it and she hates it--but I really should do, is have her test, annually, whether she is able to log in to those accounts.

That’s a great idea.

Sadly, if I asked my DW to name from memory the financial institutions we do business with her reaction/response would likely make me wish I had not asked. Every time I establish a new financial relationship (mostly chasing promo CD rates or more recently brokerage or bank transfer bonuses) she rolls her eyes and says “make sure you add it to the list”. The list is a word document with a comprehensive list of all our financial accounts and a “what to do should something bad happen to me” set of instructions. At least she has read the word document a number of times (maybe once every few years). While I wish she’d take more interest in our family finances, I’ve come to accept that it is what it is. That’s the reason the word document exists in the first place.

[backpacker61]

There are ways to recover from that situation, but the point is that accounts that you don't log into several times a year are at some risk of becoming difficult to access. Not impossible, but difficult as in customer service, recovery procedures, mailed paperwork, and so forth.

Excellent point!

The other hazard with this situation is escheatment.

https://www.sec.gov/fast-answers/answersescheathtm.html

I had a parent in her 90's that hadn't contacted (by mail, email, telephone, or web) a mutual fund account for some years; she just had the dividends and capital gains direct deposited into her bank account to help with living expenses.

Eventually, she received a letter from the firm stating that the account appeared to have been abandoned, and threatened to turn assets over to the state unless some form of contact was established (all firms are required to do this by the SEC). If you only have one or two brokerage accounts, it's more likely you'll maintain regular web access to the account, or have regular contact with an account representative of some kind. My mother was just using the account for distributions; somewhat like a variable pension.

This was not one of my parent's primary accounts, but still had a pretty sizable balance in it.

My advice is to consolidate to one or two while you're in your 60's or early 70's. Once you reach your 80's or 90's, the fiddle factor of obtaining the necessary Medallion Signature Guarantees and such to consolidate can get to be a significant burden. It's far easier to open new accounts than it is to transfer assets out and wind them down.

In my case, I have two; Fidelity and Vanguard, plus a regional bank not far from my home for a safety deposit box, checking & ATM access, and signature guarantees. I don't chase signup or account opening bonuses.

I closed out several other mutual fund accounts some years ago, and transferred the assets in kind to Vanguard. I also transfer ESPP and RSU stock to Vanguard as I come into possession of the shares.

[Wiggums]

I have three brokerage accounts, because the company switched 401k vendors three times!

[MillennialFinance19]

I guess we have 5 depending on how you look at it. 401k is with TSP, wife’s 457 and 403 are with TIAA, my HSA is with Fidelity, and Roth IRAs and brokerage accounts are with VG, and we just opened a Schwab account for a bonus on some money we’re using for a short term expense.

Plan in retirement: keep the 403 at TIAA for TRAD, move 457b and TSP to VG or Fidelity, and keep HSA at Fidelity.

We’ll be canceling the Schwab account the bonus criteria is met. At that point, we’ll pursue the Chase You Invest bonus if available.

[HermanMunster]

Has anyone ever considered the possibility that some IT guy might accidentally delete your account? Yes, there will be backups, but how often do companies actually test their backups?

[decapod10]

Has anyone ever considered the possibility that some IT guy might accidentally delete your account? Yes, there will be backups, but how often do companies actually test their backups?

I'm no expert in IT, but I don't think that would ever happen. If I wanted to worry about something, I would be more concerned about fraud.

[Ged]

I have assets at three brokerage companies. I like diversification for safety. I like SIPC Insurance. I'm curious if others have multiple brokerage accounts or consolidate into one. Pros/cons?

We have two accounts, one in my name, one in my wife's name at one broker. Some of the assets in it were inherited. No problems with safety for over 60 years and 2 generations with this company. We do not have more than half a million dollars in each of the separate capacities as defined by SIPC so we should be covered if anything untoward happens.

[Ged]

Has anyone ever considered the possibility that some IT guy might accidentally delete your account? Yes, there will be backups, but how often do companies actually test their backups?

You might find this document interesting:

https://www.fdic.gov/news/financial-ins ... 20003a.pdf

[retire2022]

I have two, 457 (Nationwide They SUCK) and Vanguard.

I can't leave Nationwide because it is part of work plan, their website sucks, so are their choices, I don't like CITs.

I use to have several, Fidelity to Dean Witter Reynolds to Janus to Charles Schwab then back to Janus to Vanguard.

[GetSmarter]

Has anyone ever considered the possibility that some IT guy might accidentally delete your account? Yes, there will be backups, but how often do companies actually test their backups?

You might find this document interesting:

https://www.fdic.gov/news/financial-ins ... 20003a.pdf

Thanks for information. A reminder to download my statements!

[anoop]

2 is too many.

[mptfan]

What I don't do--because I hate it and she hates it--but I really should do, is have her test, annually, whether she is able to log in to those accounts.

In the case of individual accounts in your name only such as IRAs it would not be appropriate for her to log in to those accounts after you are gone.