Quantity of places to hold assets
Quantity of places to hold assets
Currently ending my relationship with an investment management service and transferring my assets elsewhere. I was discussing putting the assets at Vanguard where I have about 200k in individual stocks and my 403b. My father warned, through an article cited from Harvard Business, that it was unwise to hold all of one's assets at a single institution, even if they are diversified according to one's needs.
I would like to know what others do?/think?
Also you think there is added safety by having more than one brokerage house hold your assets?
Lastly, does anyone think that these systems could be hacked and if so, what happens to us?
Thank you,
APD
Heres a link to the article about unforeseen strains that caused 1/5 of all brokerages to collapse.
https://hbswk.hbs.edu/archive/the-remak ... 67-to-1971
I would like to know what others do?/think?
Also you think there is added safety by having more than one brokerage house hold your assets?
Lastly, does anyone think that these systems could be hacked and if so, what happens to us?
Thank you,
APD
Heres a link to the article about unforeseen strains that caused 1/5 of all brokerages to collapse.
https://hbswk.hbs.edu/archive/the-remak ... 67-to-1971
- peterinjapan
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Re: Quantity of places to hold assets
A brokerage is not a bank, and you don’t lose what you own if they have financial trouble, so it should be fine to go with one company. Vanguard is excellent, and the preferred place here, but I’ll suggest Fidelity, who has really impressed me on all fronts. The one downside with them is, you can’t trade Vanguard mutual funds through Fidelity easily (it costs $75 per trade). So go with Fidelity equivalents or ETFs. (Personally I am an all ETF guy.)
- Sandtrap
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Re: Quantity of places to hold assets
Many on this forum are all in or have substantial assets in Vanguard. To say they are "informed" is understated.
According to Morningstar, Vanguard has approx 4.5 TRILLION in assets under management. And, six out of the 10 largest mutual funds by asset size belong to Vanguard, with the largest, Vanguard Total Stock Market Index, now weighing in at $465 billion.
Vanguard has a large family of mutual funds and costs nothing to trade its own funds vs Schwab has a small bundle of its own funds and costs money to trade outside funds within it. Same for other brokerages. Only you can to ascertain whether the expenses of that and also added complexity of maintaining a multiple brokerage portfolio works for you.
If a "better sleep factor" can be had by splitting your assets between Vanguard and Schwab, or other, then that is what you should do, too.
Suggest "googleing" the forum archives and read the threads because this discussion had come up often.
j
According to Morningstar, Vanguard has approx 4.5 TRILLION in assets under management. And, six out of the 10 largest mutual funds by asset size belong to Vanguard, with the largest, Vanguard Total Stock Market Index, now weighing in at $465 billion.
Vanguard has a large family of mutual funds and costs nothing to trade its own funds vs Schwab has a small bundle of its own funds and costs money to trade outside funds within it. Same for other brokerages. Only you can to ascertain whether the expenses of that and also added complexity of maintaining a multiple brokerage portfolio works for you.
If a "better sleep factor" can be had by splitting your assets between Vanguard and Schwab, or other, then that is what you should do, too.
Suggest "googleing" the forum archives and read the threads because this discussion had come up often.
j
Last edited by Sandtrap on Tue Dec 12, 2017 10:15 am, edited 1 time in total.
Re: Quantity of places to hold assets
I don't think I would ever hold all my financial resources at one company. This is not because there is a serious chance of losing the money but because there is a serious chance of a glitch in accessing money due to an IT issue, some sort of hacking, or some other temporary discontinuity. In reality it would be difficult for most people to actually manage to put everything in one place.
Re: Quantity of places to hold assets
We hold our assets at several places. I don't think the main reason is for safety. For us, different places have different features that we like and make use of. Also, we can get around any restrictions imposed by the financial institution. For example, if Vanguard tells me I cannot buy back into a bond fund that i sold yesterday, then I just buy into a bond fund at Fidelity instead.
Years ago, we were locked out of our Bank of America account because of a mistake that a teller made. It was 3 weeks before we could get any of our money out of our checking account. It was not more than an annoyance because we had redundant accounts elsewhere.
I don't think one would travel overseas with a single credit card or even a single ATM card. In the same way, we won't have a single brokerage account.
Years ago, we were locked out of our Bank of America account because of a mistake that a teller made. It was 3 weeks before we could get any of our money out of our checking account. It was not more than an annoyance because we had redundant accounts elsewhere.
I don't think one would travel overseas with a single credit card or even a single ATM card. In the same way, we won't have a single brokerage account.
Re: Quantity of places to hold assets
I agree there's safety in numbers. We feel very safe with Vanguard!Sandtrap wrote: ↑Mon Dec 11, 2017 10:37 pm Many on this forum are all in or have substantial assets in Vanguard. To say they are "informed" is understated.
According to Morningstar, Vanguard has approx 4.5 Billion in assets under management. And, six out of the 10 largest mutual funds by asset size belong to Vanguard, with the largest, Vanguard Total Stock Market Index, now weighing in at $465 billion.
It's 4.5 Trillion AUM at Vanguard. https://about.vanguard.com/who-we-are/fast-facts/
- Sandtrap
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Re: Quantity of places to hold assets
Oops.goingup wrote: ↑Tue Dec 12, 2017 9:59 amI agree there's safety in numbers. We feel very safe with Vanguard!Sandtrap wrote: ↑Mon Dec 11, 2017 10:37 pm Many on this forum are all in or have substantial assets in Vanguard. To say they are "informed" is understated.
According to Morningstar, Vanguard has approx 4.5 Billion in assets under management. And, six out of the 10 largest mutual funds by asset size belong to Vanguard, with the largest, Vanguard Total Stock Market Index, now weighing in at $465 billion.
It's 4.5 Trillion AUM at Vanguard. https://about.vanguard.com/who-we-are/fast-facts/
Brain fart typo.
Yes. . . Trilllions. . . . (Austin Powers: "Yeah, baby, yeah!")
Re: Quantity of places to hold assets
We've ended up with Fidelity, Schwab, and Vanguard for our various accounts. We also use Ally Bank for a couple of CDs. We see two reasons to hold accounts at multiple firms, one is to avoid a total loss of access should one firm have "cyber troubles" and the other is that we like the privacy afforded by dividing things up, no one firm has knowledge of our total assets/portfolio. When I was growing up I had an aunt who had separate accounts at what seemed to be every bank in her town. Each bank may have looked at her as a small depositor but when you put them all together quite a different picture emerged. She didn't want to be seen as a financial target for anything.
The closest helping hand is at the end of your own arm.
Re: Quantity of places to hold assets
Taylor has a list of reasons he feels are beneficial to holding assets at one administrator. Some of the reasons are:
Easier to manage
Easier for heirs to manage
Benefits are afforded to biggest customers
Usually lower ERs, trading costs
Fewer tax forms to organize
I'm in favor of keeping the number of institutions we deal with to a low number. I appreciate the simplicity.
Easier to manage
Easier for heirs to manage
Benefits are afforded to biggest customers
Usually lower ERs, trading costs
Fewer tax forms to organize
I'm in favor of keeping the number of institutions we deal with to a low number. I appreciate the simplicity.
Re: Quantity of places to hold assets
I'm in this camp for the reasons stated. I place a high value on simplicity as I get older both for my benefit and for the potential headaches that complicated investment strategies can cause my heirs. I have my investments at Vanguard and a brick and mortar bank for checking, savings(emergency fund) and safety deposit box. Should either have a glitch or lock-up, I can access money in the other until resolved.
"The greatest enemy of a good plan is the dream of a perfect plan" - Carl Von Clausewitz
Re: Quantity of places to hold assets
goingup wrote: ↑Wed Dec 13, 2017 9:58 am Taylor has a list of reasons he feels are beneficial to holding assets at one administrator. Some of the reasons are:
Easier to manage
Easier for heirs to manage
Benefits are afforded to biggest customers
Usually lower ERs, trading costs
Fewer tax forms to organize
I'm in favor of keeping the number of institutions we deal with to a low number. I appreciate the simplicity.
I have one reason to have multiple custodians: Risk
It might be a highly unlikely scenario but considering how many years it takes us to accumulate those assets I don't feel comfortable putting 100% of my trust in 1 custodian. I've worked at a major bank and in 2 financial services companies what manage trillions of dollars worth of assets and I am astounded sometimes that things actually work with all the complexity, IT infrastructure and moving parts. Just to understand how to implement a new requirement, you have to involve an army of people and it sometimes takes weeks to make sense of things. Some of finanacial transactions are still settled in mainframes and replicated back and forth to modern databases. You're trying to track down and get a grumpy old dog mainframe programmer who might be employed but is effectively retired; and you need him to understand the change/impact on the mainframe system. Maybe you won't lose your money but even in a scenario where you have a mixup or systems issues that might take weeks or months to resolve, I'd be more comfortable in retirement knowing I have different institutions I can rely on to withdraw assets so I can pay the bills.
Re: Quantity of places to hold assets
+1 dbr
I don't think I would ever hold all my financial resources at one company. This is not because there is a serious chance of losing the money but because there is a serious chance of a glitch in accessing money due to an IT issue, some sort of hacking, or some other temporary discontinuity. In reality it would be difficult for most people to actually manage to put everything in one place.
The mightiest Oak is just a nut who stayed the course.