Should I go all in with Vanguard or "diversify" with Fidelity?

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renegade06
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Should I go all in with Vanguard or "diversify" with Fidelity?

Post by renegade06 » Sun Mar 10, 2019 10:39 am

Hello all - I have most of my non-retirement funds with Vanguard. It is a managed account and is split between Vanguard Total Stock Market (60%) and Vanguard Total International Stock market (40%) ETFs. I am looking to invest about $200k. Should I continue go "all in with Vanguard" or is there wisdom to open another account with Fidelity, Schwab, etc? My investments would largely be the same, so I'm not sure if there are advantages to split these between two companies. Thoughts? Thanks!

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by retiredjg » Sun Mar 10, 2019 10:42 am

Either way is fine. This is mostly personal preference.

Some people like to split just in case one has a disaster or massive computer malfunction and cannot be accessed for awhile.

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by whodidntante » Sun Mar 10, 2019 10:51 am

Brokers and mutual funds/ETFs are heavily regulated, so I don't think you need to worry about a collapse in your broker's business eating your money. Here are some reasons that I have multiple accounts, however.

Security threats. If an adversary, perhaps one that is really pretty, gains access to your accounts, converts the loot to bitcoins, and moves to Thailand, it could be determined that you are at fault and you lose every penny. Losing 200k is better than losing 2 million.
Bonuses. Some brokers will pay you to transfer significant assets to their platform in the hopes that you'll behave like an idiot highly profitable lifelong customer.
Access. Some funds, some benefits, and some products are only available at certain brokers. For example, Fidelity has a cash management account, HSA, free outgoing wire transfers, free TurboTax, and Fidelity ZERO funds. Vanguard has none of those things.
Security lockouts. I've had Fidelity shut my accounts off twice because I accessed them from overseas.
Trading platform problems. Although I do not have an account at Vanguard, I've seen several reports here on bogleheads.org that "Vanguard is down."

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ruralavalon
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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by ruralavalon » Sun Mar 10, 2019 11:02 am

renegade06 wrote:
Sun Mar 10, 2019 10:39 am
Hello all - I have most of my non-retirement funds with Vanguard. It is a managed account and is split between Vanguard Total Stock Market (60%) and Vanguard Total International Stock market (40%) ETFs. I am looking to invest about $200k. Should I continue go "all in with Vanguard" or is there wisdom to open another account with Fidelity, Schwab, etc? My investments would largely be the same, so I'm not sure if there are advantages to split these between two companies. Thoughts? Thanks!
My own personal preference is to have all accounts at one location for simplicity.

All of our accounts are at Vanguard, and all our investments are Vanguard mutual funds.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by dbr » Sun Mar 10, 2019 11:03 am

I am one of those who likes to not have everything at one institution for reasons of not having all assets disrupted at the same time by a security glitch or IT failure.

I might be more concerned why you are paying for a managed account. Do you mean VPAS?

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by yogesh » Sun Mar 10, 2019 11:10 am

We are at Fidelity with Vanguard, Blackrock and Fidelity funds :-) not by choice but largely because employer 401k lands there so it’s convenient to have taxable there.
Emergency: FDIC | Taxable: VTMFX | Retirement: TR2040

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by dacalo » Sun Mar 10, 2019 11:47 am

My 401k is with Fidelity and we use Fidelity’s CMA. We also use Vanguard for our Roths and taxable accounts.

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by pyld76 » Sun Mar 10, 2019 12:25 pm

Leave it. You aren't buying anything except complexity.

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by bondsr4me » Sun Mar 10, 2019 1:29 pm

There’s nothing wrong with leaving everything with VG and there’s also nothing wrong with splitting up your assets with VG and Fido ( or Schwab).

It’s really a personal preference.

Have you had issues with VG?
Has VG’s customer service caused you issues?
Has VG’s website caused you problems?

Good Luck with your choice!

Either way you will be just fine.

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by essbeer » Sun Mar 10, 2019 1:36 pm

I leave a substantial amount in a second account in case I need to pay a lawyer to sue for access to my primary account. I wouldn't really be comfortable with only one account that would leave me financially strapped if it ever got shutdown for some reason.


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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by renegade06 » Mon Mar 11, 2019 8:44 am

Thanks, everyone!

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by Artsdoctor » Mon Mar 11, 2019 9:05 am

With Vanguard phasing out their Advantage program, I've come to the conclusion that diversification across institutions isn't a bad thing. I would have preferred to have everything in one place and I'm NOT concerned about one institution "going down." However, as much as I disliked Vanguard's decision to phase out their Advantage program, it's been easier than expected to move things around to use our Fidelity brokerage account for similar features. Granted, one can easily open up a Fidelity account, but having everything in place with bank transfers and titling is making the transition OK.

There are certain things Vanguard does better than others. And there are other things that Vanguard is inferior in orchestrating. I've come to the conclusion that diversification is a good thing in personal finance and that diversifying across institutional lines is also a decent undertaking. However, it may not be to everyone's advantage if their finances are reasonably straightforward.
Last edited by Artsdoctor on Mon Mar 11, 2019 6:19 pm, edited 1 time in total.

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by ruralavalon » Mon Mar 11, 2019 9:24 am

All of our investments are Vanguard funds, in accounts with Vanguard.

We have all banking functions (credit card, debit card, and joint checking account) with a bank branch near our home.
Last edited by ruralavalon on Mon Mar 11, 2019 9:56 am, edited 1 time in total.
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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by MikeG62 » Mon Mar 11, 2019 9:34 am

pyld76 wrote:
Sun Mar 10, 2019 12:25 pm
Leave it. You aren't buying anything except complexity.
I agree with this.

Another thread discussing this same concern:

viewtopic.php?f=1&t=253915&p=4021078&hi ... r#p4021078
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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by frankmorris » Mon Mar 11, 2019 10:12 am

I watched Mr. Robot and opened more accounts. Diversifies risk.

Also, a main concern for me as a long-term investor with taxable accounts is the idea of liquidation of an account, forcing me to take massive capital gains. In 30 years, if for somer reason Vanguard decides to close and all of my funds are there, I'll have to pay capital gains on all of those "profits" even if I decide to simply reinvest the proceeds in an identical fund somewhere else.

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by ohai » Mon Mar 11, 2019 11:41 am

I think it's worth diversifying to some extent, simply because you don't know the experience of investing on another platform. Who knows? Maybe you will like Fidelity better and end up investing more with them in the long run.

I doubt that forced capital gains will arise if Vanguard shuts down. They will almost definitely find someone to take over their mutual funds and not have a liquidation event.

Platform risk seems like an issue - i.e. Vanguard could get hacked or something, or their servers might just have a technical issue, making your funds inaccessible for some time.

Altogether, I think some limited diversification is good. 2-3 different accounts seems fine.

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by TheDDC » Mon Mar 11, 2019 11:51 am

I'm with Vanguard and Fido though not because of diversification but because of cost. My workplace 403(b) costs less at Fidelity ($20/yr. compared to $60/yr. with Vanguard) and I can invest in Fidelity's low cost mutual funds and am pining for an option to exchange into the zero funds one day. If it weren't for that, I'd probably be 100% Vanguard. If you're talking taxable accounts I see fewer reasons to diversity to Fidelity or Schwab simply because their treasury MM funds aren't as lucrative, but that's just me.

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by FrugalInvestor » Mon Mar 11, 2019 12:37 pm

ruralavalon wrote:
Sun Mar 10, 2019 11:02 am
renegade06 wrote:
Sun Mar 10, 2019 10:39 am
Hello all - I have most of my non-retirement funds with Vanguard. It is a managed account and is split between Vanguard Total Stock Market (60%) and Vanguard Total International Stock market (40%) ETFs. I am looking to invest about $200k. Should I continue go "all in with Vanguard" or is there wisdom to open another account with Fidelity, Schwab, etc? My investments would largely be the same, so I'm not sure if there are advantages to split these between two companies. Thoughts? Thanks!
My own personal preference is to have all accounts at one location for simplicity.

All of our accounts are at Vanguard, and all our investments are Vanguard mutual funds.
Same here, "keep it simple" is my mantra (along with "ignore the noise"). There was a point that I had investments elsewhere and over the years I ended up consolidating to Vanguard and to fewer funds. It has streamlined my financial life considerably and will likely make it much easier for my wife in future years as well.
IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

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Taylor Larimore
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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by Taylor Larimore » Mon Mar 11, 2019 12:48 pm

Morningstar Director of Fund Research, Russ Kinnel, gave Vanguard a nice plug on Morningstar's homepage:
If I had to invest with just one fund company it would definitely be Vanguard. Reason one is indexes. They have got indexes for a wide swath of asset classes and index funds are going to be much less susceptible to any kind of firm view or any kind of firm problems. So, that's the biggest reason. The second reason is on the active side, most of their funds have subadvisors, some of them have multiple subadvisors and that means, one, you're going to have lots of different inputs of alpha, different market biases, so you're better diversified on that front. But also, let's say, there is a problem at one manager at one Vanguard fund, they can fire that entire subadvisor and move to another. So, you don't really have to worry so much about an exodus because Vanguard can fairly quickly act and take care of that. And then of course, we know from Vanguard's overall firm structure, they are not going to be bought or sold, they are not going to be part of a disastrous merger. So, there is some added protection there.
In addition to the advantages mentioned by Mr. Kinnell, there are more:

1. One familiar statement.
2. Less paperwork.
3. Easier tax preparation.
4. Avoidance of low-balance and other small fees.
5. It's much easier to learn only one company's policies, fees, regulations, etc.
6. Vanguard funds are owned by its fund shareholders and are operated at "costs." It is unlikely that another company which must take a part of its investor returns for company stockholders will offer lower costs in the long run.
7. Rebalancing and exchanges are easier.
8. A loyal customer is appreciated and usually treated better.
9. Less chance of errors.
10. Vanguard's fine reputation and low-costs are always working for us.
11. More free time for ourselves.
12. In event of death or disability, it will be much easier for others.

Best wishes
Taylor
Last edited by Taylor Larimore on Mon Mar 11, 2019 12:49 pm, edited 1 time in total.
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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by pward » Mon Mar 11, 2019 12:49 pm

I personally don't trust keeping all my eggs in one basket. Regardless of regulations or likelihood of having issue, it doesn't hurt to have some diversification in brokerage and fund companies to eliminate a bit of counter-party risk. In 2006 nobody thought Bear Stearns or Lehman Brothers would crash and burn and they did. Anything is possible. I don't think that either Fidelity or Vanguard has that kind of risk, but the unexpected does happen from time to time, and I generally tend to keep a healthy dose of skepticism in all things, but especially financial concerns. I sleep better by using both Fidelity and Vanguard just in case. Plus, both companies have different sets of strengths and weaknesses and you can leverage the best of both by having accounts at both.

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by munemaker » Mon Mar 11, 2019 1:02 pm

You read from time to time about people being temporarily locked out of their accounts by the provider due to security problems.

I am not really worried about Vanguard or Fidelity collapsing and losing my money. I am concerned that there is some problem with my account, whether caused by me or a hacker, and I am temporarily locked out while they investigate. So I feel comfortable using both Vanguard and Fidelity so I have access to money to live on if that would happen.

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by Rudedog » Mon Mar 11, 2019 4:55 pm

All in with Vanguard. I've been with them over 20 years, no problems. I do have a TD Ameritrade account that I play around with, it has about $ 100,000 in individual stocks that pay good dividends. I recommended Vanguard to my daughters and in-laws. Its a good company.

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by MikeG62 » Tue Mar 12, 2019 7:57 am

munemaker wrote:
Mon Mar 11, 2019 1:02 pm
You read from time to time about people being temporarily locked out of their accounts by the provider due to security problems.

I am not really worried about Vanguard or Fidelity collapsing and losing my money. I am concerned that there is some problem with my account, whether caused by me or a hacker, and I am temporarily locked out while they investigate. So I feel comfortable using both Vanguard and Fidelity so I have access to money to live on if that would happen.

I think this temporary lock during investigation is the real risk of putting all your eggs in one basket (not the firm’s systems going down and not being recoverable for a very long period of time - after all they have redundant data backup and disaster recovery systems in place). However, to my way of thinking, having credit cards eliminates this risk for all practical intents and purposes.
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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by abuss368 » Tue Mar 12, 2019 8:57 am

Moving our portfolio to Vanguard was the best financial decision we ever made. We consolidated and simplified and have no desire to spread among multiple providers.

I think the benefits to be realized are very good: one statement, one customer service, less tax reporting to be concerned about, easier at RMD time, possibly less cost, qualify for lower cost funds like Admiral shares, and so forth.
John C. Bogle - Two Fund Portfolio: Total Stock & Total Bond. "Simplicity is the master key to financial success."

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by nesdog » Tue Mar 12, 2019 10:26 am

Due to multiple options during our working career, we had accounts with a number of 401k providers. As we hit retirement this year, we are consolidating all to just VG and Fido. We sleep better with two vendors, rather than just one.
Insert clever comment here...

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by Earl Lemongrab » Tue Mar 12, 2019 3:35 pm

I would go with Merrill Edge, get a nice bonus, and free equity trades. Now, if you want mutual funds you'd have to pay some commissions, but ETFs would be free with the Preferred Rewards program. You could also get a BofA credit card and collect more bonus and get good rewards.

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by moneywise3 » Tue Mar 12, 2019 4:15 pm

We recently consolidated from 5 custodians to 3 (Vanguard, Fidelity, TRP). May consolidate to two soon, and to 1 when in retirement.

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by foxfirev5 » Tue Mar 12, 2019 5:37 pm

After a couple of snags with Vanguard regarding IRA rollovers and estate issues I am firmly committed to the two brokerage approach. Overall Fidelity is better in the areas of customer service and equal regarding costs. The only advantage I see with Vanguard are a couple of managed funds and the yield of Prime MM.

As far as being treated better if you're a loyal customer, forget it. Try that approach at your local bank. There's an old saying that (I'll paraphrase in the interest of good manners) you've got to take advantage of your good customers because the bad one's won't let you. Also simplicity for the sake of simplicity is not an adequate justification.

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by bltn » Tue Mar 12, 2019 8:41 pm

I have long standing accounts with both Vanguard and Fidelity. Because of the extremely large capital gains taxes associated with a transfer, I m leaving these accounts in place. But I m instructing my trustee to transfer everything to Vanguard at my demise.

Don t underestimate the value of simplicity. Especially with the opportunity of using a great company like Vanguard.

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by vineviz » Tue Mar 12, 2019 8:46 pm

bltn wrote:
Tue Mar 12, 2019 8:41 pm
I have long standing accounts with both Vanguard and Fidelity. Because of the extremely large capital gains taxes associated with a transfer, I m leaving these accounts in place. But I m instructing my trustee to transfer everything to Vanguard at my demise.
Huh? What funds from either firm can’t be transferred to the other without tax consequences?

Besides Fidelity’s zero fee funds, which are too new to have significant gains.
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by bondsr4me » Wed Mar 13, 2019 5:19 am

Providing VG can/will accept your holdings from Fidelity, there are no tax consequences from doing an “in-kind” transfer.

All you are doing is changing custodians; you are not selling anything.

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by PatrickA5 » Wed Mar 13, 2019 10:38 am

foxfirev5 wrote:
Tue Mar 12, 2019 5:37 pm
Also simplicity for the sake of simplicity is not an adequate justification.
Sure it is.

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by ruralavalon » Wed Mar 13, 2019 12:18 pm

foxfirev5 wrote:
Tue Mar 12, 2019 5:37 pm
. . . . .
. . . Also simplicity for the sake of simplicity is not an adequate justification.
Simplicity for the sake of having few easy to manage investments is a good justification, in my opinion.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by 3funder » Wed Mar 13, 2019 1:48 pm

Keep it all at Vanguard. There's no need to "diversify" with Fidelity. If you want to diversify, do it between/among asset classes.

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by bengal22 » Wed Mar 13, 2019 2:40 pm

I am 2/3 Fidelity, 1/3 Vanguard. I would not feel comfortable with all my eggs in one basket.
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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by bltn » Thu Mar 14, 2019 5:24 am

vineviz wrote:
Tue Mar 12, 2019 8:46 pm
bltn wrote:
Tue Mar 12, 2019 8:41 pm
I have long standing accounts with both Vanguard and Fidelity. Because of the extremely large capital gains taxes associated with a transfer, I m leaving these accounts in place. But I m instructing my trustee to transfer everything to Vanguard at my demise.
Huh? What funds from either firm can’t be transferred to the other without tax consequences?

Besides Fidelity’s zero fee funds, which are too new to have significant gains.
I haven t thought about transferring Fidelity mutual funds to Vanguard to be held intact. That might be possible, but I think I keep my account with Fidelity for now.

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Re: Should I go all in with Vanguard or "diversify" with Fidelity?

Post by dwickenh » Thu Mar 14, 2019 7:05 am

ruralavalon wrote:
Mon Mar 11, 2019 9:24 am
All of our investments are Vanguard funds, in accounts with Vanguard.

We have all banking functions (credit card, debit card, and joint checking account) with a bank branch near our home.
+1, I agree.
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

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