In my own investing for over 40 years and working with financial coaching clients as an AFC (Accredited Financial Counselor), I know the complexity that can come with having multiple investment accounts at different places vs the simplicity of using one brokerage firm.
Should all investments be in one place? Benefits of having all your investments in one place include access to better services for customers with higher account values, convenience, and simplicity. A big benefit of having investments in more than one place, however, is less risk exposure in the unlikely event the investment firm you’re using has cyber security or financial problems.
All investors like better service and organizational ease, but we also want to protect our money as much as possible. There are many factors to consider as addressed in this post.
MOVE: Organization is one of my favorite wealth management tips for financial coaching clients and this often requires streamlining investments.
Note that throughout this post, I’ll use all these terms to refer to the place that you have selected for the important task of safekeeping your money; brokerage firms, investment companies, mutual fund providers, or banks. The exact terms change over the years with financial regulations and subsequent mergers. There are also many different types of places to invest your money, as well as different types of accounts.
Why Have Multiple Brokerage Accounts?
Your investments may already be in several places if you have been investing for many years. Investors can easily end up with multiple brokerage accounts without deliberate intention.
For example, if you currently, or did in the past, work with one or more financial advisors, you probably have investments at the brokerage firm they prefer, most likely in an institutional account.
You may also have current or past employment related retirement accounts at different places.
Like income taxes, having too many investment accounts in different places is inherently a good problem, but it can get messy.
You’ll want to consider that brokerage firms vary in what they offer to their clients as outlined below. You may find you need multiple brokerage accounts to meet your needs.
Online Services Offered by Investment Firms
Some firms provide every imaginable online service, while other firms lag in the cyber world.
What are your priorities with this? Do you like to manage your money or invest with an app on your phone or are you a little more comfortable investing from your computer, like me?
Now, many investment firms are better suited to phone investors vs personal computer investors. Think about what investment style works best for you, mobile vs office, and choose accordingly.
Higher Level of Wealth Management Services
In general, the more money you have with an investment firm the better level of service you get.
Meeting the minimum client amount for a higher level of service can save money in wealth management fees and make life easier.
I have definitely found it worthwhile to reach and maintain a good level of service at my primary investment firm.
This has resulted in getting a special phone number for faster communication, better customer service, lower fees, free financial advisors, and better overall service.
Different services for different customer levels are not always advertised. Call the place where you keep your investments (or any place you are considering) and ask the various levels of service for each level of wealth held with them.
Based on your needs, it may make sense to consolidate some of your investments to maintain a higher level of service at one firm.
Financial Advisory Services
Maybe the biggest benefit of having all your investments in one place for investors who don’t DIY invest is gaining access to free or low cost financial advisors.
Nowadays, many investment firms offer in-house financial advisors.
Even Vanguard, long known for its low cost index funds geared toward self directed investors, has added financial advisory services for accounts that meet certain criteria. Their website shows, for example, that investors with $50,000 or more can access their Vanguard Personal Advisor Services with a very low financial advisor fee. Note that retirement accounts such as 401k’s are ineligible for Vanguard’s financial advice in this program.
There is also a Schwab Private Client program providing investment advice to high net worth investors. In this program, fees start at .80% for a million dollar portfolio and decrease for accounts with more than one million dollars.
The Schwab Advisor Network will refer you to a financial advisor for free if you have $500,000 or more, making it much easier for you to choose a financial advisor. Financial advisor fees are paid to the selected advisor, of course.
Most banks and investment firms have various financial advisor programs for high net worth investors. These examples of advisory services at Vanguard and Schwab will give you a good idea of what is available so you can decide if you need to have more of your investments in one place to access such services based on your own needs.
♦ Wealth Building Tip – Avoid situations where there may be an incentive for a financial advisor to promote particular products to their clients.
♦ Wealth Building Tip – For some reason, investors hesitate to ask a lot of questions of financial advisors, but you’ll want to ask many.
Some brokerage firms offer more sophisticated trading platforms than others. This may be a consideration for you if you like charting or are a proactive investor, covered call writer, or even swing trader.
Some of the older more established firms have purchased small brokerage firms that specialized in trading, thus allowing them to provide superior trading platforms for traders. Before such consolidations, an investor may have needed a trading focused brokerage firm and a different, more traditional investment firm.
A perfect example is T.D. Ameritrade’s purchase of ThinkorSwim, a brokerage platform that specializes in proactive investing and options trading. This allows traders or even investors who wish to be more proactive to have more assets under one umbrella.
Your own investment strategy will help you decide if it’s best to keep all your assets at one brokerage firm or have multiple brokerage firms.
If your strategy is working with a financial advisor, for example, you may want access to free advisory services, as addressed earlier, so you may want to have most of your assets in one place.
On the other hand, if you’re a proactive investor, you may want some bells and whistles on the trading platform so you can manage your own portfolio better. In this case, customer service, data, and the brokerage platform may be driving factors.
For example, even as someone who considers herself a proactive investor and not a trader, I like selling covered calls to add investment income to our stock holdings. For this, I want a firm with a good options trading platform even though covered calls are a very simple option strategy. I often refer to charts when I roll covered calls, so I want the ability to get the charts just the way I like them for evaluation. Also, covered call writers need large stock positions to sell covered calls. This necessity leads me to have more assets at fewer brokerage firms.
Maybe you’re both an investor and a busy small business owner, like many today, with multiple side hustles. In this case, you might want to have your investments at an affiliated or the same bank as your small business banking transactions. This can make it easier to move funds as needed. Personally, I like having investment funds away from banking funds to discourage spending and encourage leaving personal investments to build wealth but someone else may prefer simplicity.
Knowing your own preferred investment strategy will guide you where you keep your investments, and how many financial firms you need to meet your specific needs.
Buying Mutual Funds and ETFs
Most firms now have their own mutual funds or ETFs (Exchange Traded Funds). I remember Fidelity and Vanguard as the first firms that specialized in low cost funds for individual investors. In fact, I bought my first mutual fund, Fidelity Select Utilities, when I was 22 in an IRA.
Much has changed since those days. Because Fidelity and Vanguard dominated the mutual fund business decades ago, mutual funds naturally remain a strong focus for them.
Many investment firms have fund platforms that allow you to buy most mutual funds through their fund platform.
If a fund you want to own is not offered through your brokerage firm’s fund platform, you may need to open an account at another investment firm. I found myself in this situation recently with a particular money market fund that I wanted to place money in when I increased our portfolio cash.
Alternatively, you can buy ETFs (Exchange Traded Funds) through your brokerage account. Vanguard, for example, offers a wide variety of ETFs now. These can be purchased on any brokerage platform, just like you would buy a stock. Not all of Vanguard’s mutual funds, however, have ETFs that match their mutual funds, as I experienced recently.
Alternatively, given the wide variety of funds now available at most investment firms, all your investment needs may be met in just one place. Again, it all goes back to your needs as an investor.
Insurance and Risk Management
For me, it feels safer to have our investments in more than one place. Your investment accounts are insured by different entities and the insured amounts can be different amounts at different places.
You’ll want to check the insurance coverage for investment firms or products you are considering. It’s usually easy to find the insurance coverage amounts for your investments at the broker you use. You can also call and ask, but I do like to get this in some form of writing, if only in an email.
If you have a high level of wealth, you could exceed the insured amount, per account, at one firm. In this case, adding a second investment firm for a portion of your portfolio would be important to lower investment risk.
♦ Wealth Building Tip – Always check the amount of insurance coverage for any investment you make.
Vanguard Vs. Schwab
Many investors compare Vanguard vs. Schwab as primary investment firms. Vanguard offers many services, but they are more of a provider of mutual funds. Schwab, on the other hand, is a brokerage firm, that also provides mutual funds and many other services to investors, as you’ll read more about below.
Vanguard has a unique structure in that it is owned by the investors who buy their funds because the funds own the company. Schwab, on the other hand, is a publicly traded company.
The ownership structure is not as important to me as using an investment firm that meets our needs.
Vanguard and Schwab are two good examples of firms that focus on different services. As addressed earlier, Vanguard specializes in providing a vast array of low cost etf’s and mutual funds for DIY investors, while Schwab leans toward serving investors who want a wider offering of wealth management services.
Often, investors have an older account at Vanguard from when they first began investing with low cost mutual funds, and then they add an account at a traditionally full service investment firm as their wealth grows.
On the other hand, many investors begin with full service wealth management, and later begin investing at a lower cost firm such as Vanguard after they have become more knowledgeable about investing.
In general, the more money you have at any one brokerage firm the lower your fees are. If lower fees aren’t offered upfront, the more money you have at any one firm, the more negotiating power you have.
Of course, now, commission free trades are the norm but there may be other fees you can negotiate if you have a large account.
Also, wealth management fees drop on a percentage basis depending on how much money you have invested with a particular financial advisor.
Of course, the investment costs vary among firms. There is no reason to pay more for services you don’t need or use. If the lowest cost investment firm meets your needs, then why pay more at a higher profile firm?
How to Change Brokerage Firms
Investors can simply transfer investments from one place to another. This is often called in-kind transfers in financial lingo.
Contact the brokerage firm you’re moving assets to and get help if you need it. Once you get the transfer in motion, everything happens by the brokerage firms.
The task for us investors comes in setting up accounts transfers to our bank and such after we change brokerage firms.
There may be a rare time when it is hard to move certain investments from one place to another. For example, you could hold a fund that can only be held at the firm through which you bought it. This could force you to sell the fund in order to change firms, and you could even incur an exit fee if you sell the fund.
Here is a video of this post if you prefer video:
One or Multiple Investment Firms Summary
While most investment firms have overlapping funds and services available to individual investors and institutions, in general, firms tend to cater to a specific demographic. Find the brokerage firm that caters to your specific needs based on your own investment strategy and preferences.
Again, your needs will determine whether you have all investments in one place vs more than one investment firm. As the leader of your wealth, only you can make this call.