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.
Maintaining organization is one of my favorite wealth management tips for financial coaching clients and this often requires streamlining investments.
Is It Safe to Have All My Investments in One Place?
Aside from convenience and extra services addressed in this post, the real question is whether it is safe to have all investments in one place. Only you can decide what’s best for you but here is my approach.
I like to keep a good amount of “cash” in a money market account at a brokerage firm different from our primary brokerage firm “just in case” of a very unlikely default or a cyber security issue at our primary broker. I figure I may as well. This amount is most of our “emergency fund” so it’s easy to just keep this money in a money market fund vs buying other securities, although I could if I wanted. It’s set up so that the money is easy to transfer to our bank after selling the money market fund if we need it.
There is a very high probability we would get all our investments back should our primary brokerage firm collapse as explained in more detail below. I suspect, however, there could be some time delay and inconveniences. For this reason, I keep our investment money in more than one place.
This posts addresses the other reasons you might have investments in more than one place or why you may choose to keep your money in only one place.
Why Have Multiple Brokerage Accounts?
Your investments may already be in several places if you have been investing for many years. The reality is that 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 custodial brokerage firm they prefer to use.
You may also have current or past employment related retirement accounts at different places.
If you’re married or share funds with a partner, you can two times the retirement account locations.
And those who have been fortunate enough to inherit money may have investments in yet another place.
Like income taxes, having too many investment accounts in different places is inherently a good problem, but it can be hard to track how your assets are allocated into different asset classes, such as stocks and bonds. One solution, of course, is to use an online app to track your total investments. I tend to avoid linking multiple accounts to my broker, however, unless it’s absolutely necessary.
Given this, you’ll want to consider that brokerage firms vary in what they offer to their clients as outlined below. You may find you need to use multiple brokerage firms to meet your needs, thereby leading to having your investments in more than one place.
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 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 your brokerage firm 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 leading me to have most of our investments in one place.
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 place.
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.
At another brokerage firm, free financial advice is provided in the Schwab Financial Consultant 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 by you 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 at one place.
Your own investing method will help you decide if it’s best to keep all your investments at one place or have or use more than on brokerage firm.
If your preferred strategy is working with a financial advisor, for example, you may want access to free advisory services, as addressed earlier, you may want to have most of your assets in one place to access a free advisor.
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 using a broker.
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 ETF or stock positions to sell covered calls. This necessity leads me to have more assets at fewer brokerage firms so I can concentrate stock or ETF positions.
Maybe you’re both an investor and a busy small business owner with one or more side hustles, like many today. In this case, you might want to have your investments at an investment firm affiliated with the bank that handles your small business banking transactions. An example of this is Merrill Lynch and Bank of America. This strategy 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
Many firms now have their own in house 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 now 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 a little 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 depending on the type of financial firm it is.
You’ll want to check the insurance coverage for investment firms or products you are considering for both the insurer and the amount. 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 I cannot find it on the website, 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.
Who Insures My Investments?
This is an excellent question to ask. An important distinction is whether your investment money is at a bank or a brokerage firm.
Here are the general rules about who insures your investments.
FDIC (Federal Deposit Insurance Corp) insures bank and savings association deposits up to $250,000 for individual accounts or for each person in joint accounts.
Note that the FDIC doesn’t cover stock, bonds, mutual fund investments even when purchased at the bank.
SIPC (Securities Investor Protection Corp) insures brokerage firms. In the event of default, the your investments are transferred to another broker. SIPC pays up to $500,000 from its own funds, per account with a max of $250,000 in cash.
Many investors always hold a set asset allocation into stocks and bonds with little cash, while others increase cash when the stock market has higher risk. I do this myself with the guidance of professionally developed portfolios as explained in my Allocate Smartly review so I can manage risk better while still being invested most of the time.
Times of high risk are just the time to be more cautious about bank or brokerage firm failures so I roll portfolio cash right into a high quality money market fund for that extra protection when my portfolio increases cash.
Should You Have More Than $500,000 at One Brokerage Firm?
I personally wouldn’t have more than $500,000 cash at one brokerage firm unless I knew for sure there was insurance coverage for cash beyond the $250,000 per person SIPC insurance.
What about funds?
Most funds at firms such as Fidelity, Vanguard and Schwab should be and are managed by a custodian. If Schwab ran into financial problems, for example, collectors couldn’t go after investor’s money in a Schwab money market fund because the fund money is kept seperate from Schwab’s money by the use of a fund custodian.
You can find the custodian for a fund in the fund’s prospectus and the Statement of Additional Information. This is further explained in Rob Berger’s excellent video What Happens to Our Investments if Schwab, Fidelity, or Vanguard Collapse?
Note that funds and assets such as stocks would be transferred to another investment firm in the event of default by a brokerage firm.
Note that most broker’s also have extra insurance beyond SIPC coverage. I found this to be the case when I check with Schwab.
♦ Wealth Building Tip – You’ll want to check the amount of insurance coverage for any cash set aside for investing and stay within the coverage limits. You may want to keep investment cash in more than one place, although most investors use money market funds vs cash to get higher interest.
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, assuming the brokerage firm appears to be financially safe.
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 advanced investors seeking to invest their own money.
In general, the more money you have at any one brokerage firm the greater your ability to access lower fees if you’re an investor with over $500,000 at a brokerage firm. If lower fees aren’t offered upfront, you can often negotiate for lower fees.
Now, commission free trades are the norm, however, but there may be other fees you can negotiate if you have a large account. For example, a brokerage firm may allow for a certain amount of free fund transfers for clients with a high amount of investments at the firm. Based on my pwn experience with both Schwab and Vanguard, other perks may include benefits such as:
- Better access to a higher level of customer service
- A specialized wealth management team
- Financial advisor services
- Other free services that assist with retirement planning
- Assistance with solo 401k for small business owners
How to Change Brokerage Firms
Should you decide you want your investments in more than one place, you can simply transfer investments from one broker to another. This is often called in-kind or ACAT transfers in financial lingo.
Set up an account at the new broker with matching information, such as name and social security number. This process has become very simple online.
Once you get the transfer in motion, everything happens by the 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:
Summary for Keeping All Investments in One Place
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.
Most of all, make sure you keep your money safe by checking insurance limits.
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.