where to open a secondary brokerage account?

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longlife
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where to open a secondary brokerage account?

Post by longlife »

I am a happy Fidelity customer. Right now I have all my assets -- literally everything I have in my life, in my Fidelity account.

However, I was told "don't put all your eggs in one basket", so I am thinking about having a secondary brokerage account somewhere else. Just in case someday my Fidelity account gets hacked, or something goes wrong from Fidelity's side (who knows?), I still have something left.

I am probably spoiled by Fidelity, because I look around a few other options my friends use (Vanguard, Merrill Edge, Charles Schwab) and feel none of them really interests me. What I like about Fidelity the most are:
(correct me if I am wrong about the other 3 brokers, as I only use Fidelity)

1. Good MMFs that can serve as an auto-sweep fund basically like cash, while still offering good yields:
Vanguard is actually better on this point with VMFXX, which is an auto-sweep fund.
Merrill Edge offers better MMFs but they can’t be auto-swept, meaning you have to manually sell them and wait for a day if you need them for cash or to invest. Otherwise your cash is parked in a bank deposit which gives 0 yield.
Charles Schwab doesn’t have good MMFs as auto-sweep options either and only uses a bank account for cash.

2. The ability to buy new issued T-bills with auto roll service. It seems Fidelity is the only one that offers this.
Vanguard and Charles Schwab can buy new T-bills but can’t auto roll.
Merrill Edge can only buy secondary bills (at least online, or you have to call to buy with a fee).

3. (Optional) Brokerage account can be used like a checking account (debit card, check writing, bill pay).
I think Fidelity, Merrill Edge and Charles Schwab can all do that.
Vanguard is the only place that doesn’t offer these features.

Are there any other brokerage accounts that have the above 3 things I am looking for? Or at least the first two? It seems the second point is the most unique service Fidelity offers.
Thanks.
aristotelian
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Re: where to open a secondary brokerage account?

Post by aristotelian »

I would stay at Fidelity for the brokerage account. Their cash management options are second to none.

If looking to diversify custodians, move an IRA to Merrill Edge. Combined with BofA credit card, the rewards boost is one of the best perks in the space plus they often have good transfer bonus offers.
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William Million
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Re: where to open a secondary brokerage account?

Post by William Million »

As a broker, Vanguard is mediocre.

Based on service, I would consider Schwab or Chase/JP Morgan Self-Directed. If you keep 150k in Chase, you can become a private client with no fees.
gotoparks
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Re: where to open a secondary brokerage account?

Post by gotoparks »

Seems you have a good handle on brokerages. The three most recommended brokerages you have listed. You might want to look at secondary places like M1. I use Vanguard and I can see they are not for you unless you are really into money market funds.
123
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Re: where to open a secondary brokerage account?

Post by 123 »

With two brokerages accounts you will likely find that you mostly use one and the other is mostly dormant. If you've got some positions that are "hold forever" (like VTSAX, VTI, etc) you can just scoot those over to just about any other brokerage and let them be. I would discourage having two very active accounts, in time it's easy to confuse what purchase lots are where if you mirror your holdings in each account.
The closest helping hand is at the end of your own arm.
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typical.investor
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Re: where to open a secondary brokerage account?

Post by typical.investor »

longlife wrote: Fri Jun 09, 2023 9:23 pm
1. Good MMFs that can serve as an auto-sweep fund basically like cash, while still offering good yields:
Charles Schwab doesn’t have good MMFs as auto-sweep options either and only uses a bank account for cash.
I'd still recommend Schwab as your secondary account. Do you trading and main use in Fidelity and only keep a static amount (VTI and maybe a purchase money fund) there is case something happens like someone tries to access your Fidelity account and it gets frozen for a security review.
longlife wrote: Fri Jun 09, 2023 9:23 pm 2. The ability to buy new issued T-bills with auto roll service. It seems Fidelity is the only one that offers this.
Vanguard and Charles Schwab can buy new T-bills but can’t auto roll.
Merrill Edge can only buy secondary bills (at least online, or you have to call to buy with a fee).
I don't do it, but believe you can auto roll at Schwab.

viewtopic.php?t=387959

https://www.schwab.com/fixed-income/cd- ... y-rollover
The following fixed income investments are eligible for rollover:

New-issue Treasuries bought at auction
They can be rolled into 4-, 8-, 13-, 17-, and 26-week bills at auction.
longlife wrote: Fri Jun 09, 2023 9:23 pm 3. (Optional) Brokerage account can be used like a checking account (debit card, check writing, bill pay).
I think Fidelity, Merrill Edge and Charles Schwab can all do that.
Vanguard is the only place that doesn’t offer these features.
I use Schwab Bank for that. Brokerage account cash will serve as an overdraft account, but cash only and not purchased money funds. You can use margin for overdraft but I have no need for that so don't know what kind of limits you could set.
LookinAround
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Re: where to open a secondary brokerage account?

Post by LookinAround »

longlife wrote: Fri Jun 09, 2023 9:23 pm 2. The ability to buy new issued T-bills with auto roll service. It seems Fidelity is the only one that offers this.
Vanguard and Charles Schwab can buy new T-bills but can’t auto roll.
Merrill Edge can only buy secondary bills (at least online, or you have to call to buy with a fee).
Auto roll IS available at Schwab BUT it doesn't work the same way as at Fidelity.
  • Fidelity auto roll will lock up the treasury towards maturity so its proceeds on the day it matures are used to buy another treasury of same maturity on the day of issue.
  • Schwab auto roll takes you out of the market for the time between maturity and the issue date of the new treasury it auto buys to replace it. The shorter duration of the treasury you're buying the more it costs you in treasury yield since you're out of the market more often.
  • One downside of Fidelity auto roll: Even though they lock up the treasury (so funds are guaranteed available) they ALSO lockup the funds in your core position. Giving headaches in managing your money if it's also your CMA account (withdrawals might bounce) and trading (funds not available to trade). Read on r/fidelityinvestments on Reddit, people who use Fidelity for treasuries often keep separate accounts for buying treasuries, brokerage and their CMA account
Lastrun
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Re: where to open a secondary brokerage account?

Post by Lastrun »

I would look at Merrill or Chase:

1. To get some credit card and other benefits
2. To also have a back up brick and mortar bank
3. Pretty large footprint in terms of geography and services

Otherwise Schwab seems the obvious choice to me.
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KingRiggs
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Re: where to open a secondary brokerage account?

Post by KingRiggs »

The chances of a catastrophic "all-of-my-accounts-are-gone" loss at Fidelity are almost nil. I would not open an account at another broker for that reason alone.

The odds that they might have a TEMPORARY outage and you might not be able to access your funds for a short time is larger, but still not huge. To protect against this, I keep my cash emergency fund in an online bank that I can access in a day (Ally, in my case) and some funds in a brick-and-mortar local bank that I can access instantly.
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bltn
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Re: where to open a secondary brokerage account?

Post by bltn »

I have felt better having two brokerage accounts in case some unpredictable event causes a temporary shutdown of one of the two brokerage firms. My firms are Vanguard and Fidelity. In addition I have liquid emergency money at a local credit union and a checking account at a local bank.

In your position, I would consider putting a modest portion of my money with Vanguard. Vanguard pays the best rates on fixed income funds, bond funds as well as money market funds, due to lower expenses. In addition, I ve experienced fewer capital gains distributions on my stock index funds with Vanguard compared with the equivalent index funds at Fidelity, allowing me more control of my income and taxes.

As for the idea that Vanguard is a mediocre brokerage, I ve found that that is all I need. They don t pressure you to buy higher fee products like other brokerages do. They provide me with fine personal service when I infrequently need it. And they were the ones that pressured most of brokerage industry into the low fee model.
backpacker61
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Re: where to open a secondary brokerage account?

Post by backpacker61 »

I use Fidelity and Vanguard as my two investment services providers, coupled with a checking and savings account at a local bank.

I like the collection of actively managed tax exempt municipal bonds funds at Vanguard, and their money market mutual funds pay a notch more than Fidelity's for the level of risk assumed (the main differentiator being the lower expense). Vanguard also has a good set of state-specific tax exempt municipal bond funds at very low cost.

Following the death of the last of my parents, I consolidated their securities into their trust brokerage account at Vanguard before having the assets divided among the beneficiaries. I had a lot of interaction with the Vanguard trust services staff during that time and they were always very helpful.

Over the years, I also transferred a number of directly-owned mutual fund accounts that I had at various firms (Franklin-Templeton, Neuberger Berman, etc.) into my Vanguard brokerage account to reduce the number of accounts I had to deal with and minimize the number of 1099's I receive at tax time. Directly held no-load mutual fund accounts were a popular low cost way to invest before index funds became popular and ETF's were introduced (1980's-1990's). Brokerage commissions were high in that era (~$50/trade was pretty common).
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