In my own investing and working with financial coaching clients, I know the complexity that can come with having multiple investment accounts at different places.
Should all investments be in one place, though? The easy answer is that you should use as many investment firms as you need to meet your needs, including keeping your investments safe if you want added diversification by having your money at one than one firm.
If you have been investing for years, you may already have several investment accounts at different places. This can easily happen.
If you work with one or more financial advisors, for example, you probably have investments at the custodial firm which they recommend. And, if you may have current or past employment related retirement accounts at different places.
Let’s remember that having too many investment accounts can is inherently a good problem, but it can get messy.
Remember, wealth likes order. Streamlining can make sense so you can have more order around your money. Yet, you may not want to have all your money at one investment firm.
Click here to read my post Wealth Management Tips with more on organizing wealth management tasks.
Should All Investments Be in One Place?
There are several factors to consider in deciding whether to have all your investments in more than one place.
Note: I’ll define “place” as brokers, investment firms, mutual fund providers, or banks that provide a place for you to invest. The exact terms change over the years with regulations and subsequent mergers, and, also, there are many different types of places to invest.
I’ll use all these terms to refer to the super important company that you have entrusted with your investments; think of how important this is!
Below are the considerations for having all your investments in one place vs once place.
Different Brokers Have Different Specialties
Brokerage firms vary in what they offer to their clients. Below are some examples of how investment firm services vary.
While you may choose to consolidate your brokerage accounts at one firm, you may be happy to have more than one investment firm because your needs are being met in all the areas below.
Here is a video of this post if you prefer video:
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 want the latest online services, such as texting communication and wealth management apps, or are you a little more comfortable with less cyber activity, like me?
Now, many investment firms function completely online, such as the robo advisors which have grown enormously over the past few years. I continue to read about mainstream investment firms that are adding a robo advisor platform for their clients.
Higher Level of Wealth Management Services
In general, the more money you have with a firm the better level of service you get. While this may trigger a mild annoyance, it actually helps investment firms meet the needs of their clients better while containing expenses.
Meeting the minimum client amount for extra services can save money in fees and make life easier.
Weigh the lower risk from diversification to one or more investment firms to the benefit of having a certain amount of investments at any one place. I have definitely found it worthwhile to reach and maintain a good level of service at my primary broker.
This has resulted in getting a special phone number for faster communication, lower fees and better overall service.
Different services for different levels of wealth are not always advertised since it can breed some resentment among customers. Call the place where you keep your investments (or any place you are considering) and ask the various levels at service for each level of wealth held with them.
You may decide to move some of your investments to maintain a higher level of service at one firm.
Financial Advisory Services
Nowadays, most firms offer in house financial advisors. Even Vanguard, long known for its low cost DIY investing index funds, has added financial advisory services for their high net worth clients.
Financial advisory services may incur a fee for the firm’s advisor, or the fees may be incurred by the fund or wealth manager that the financial advisors recommends. Sometimes, fees are incurred by both the financial advisor and the funds or wealth managers, so you’ll want to watch your total fees, always.
Schwab, for example, offers free financial advisors for their high net worth clients with assets over $500,000 invested with them. This service can help investors choose suitable funds or wealth managers. Then, fees are paid for the funds and wealth managers chosen with the help of Schwab’s in house financial advisors.
♦ Wealth Building Tip – Avoid situations where there may be an incentive for a financial advisor to promote particular products to their clients.
Complications with Changing Investment Firms
You may decide to keep investments in more than one place because it is too difficult or costly to move some of your investments.
Sometimes investors are not able to move certain funds 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.
Or you may have specific requirements related to a retirement or other special type of fund that make it difficult to move your account to a different investment firm.
♦ Wealth Building Tip – For some reason, investors hesitate to ask a lot of questions of investment advisors, but you’ll want to ask many.
Certain investment firms offer more sophisticated trading platforms than others. This may be a consideration for you if you like charting or are a proactive investor or 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 to their clients.
A perfect example is T.D. Ameritrade’s purchase of Think or Swim, a brokerage platform that specializes in proactive investing and options trading. This allows investors who wish to be more active investors or traders for a portion of their portfolio to do so under one umbrella. It’s convenient.
Even as someone who considers herself an investor and not a trader, I like to sell covered calls to add income to our stock holdings. While this is a very conservative, once a month strategy, I want a firm with a good options trading platform.
This is because it gives me the ability to get the charts just the way I want them for evaluation. Also, I think my “trades” will get executed at a good price by a firm that has an arm which specializes in trading, making this specialty a requirement.
In House Mutual Funds and ETFs
Most firms now have their own mutual funds or efts. I recall Fidelity and Vanguard as the first firms that specialized in low cost funds for individual investors. In fact, I bought my first mutual fund (Select Utilities) at Fidelity when I was 22 as soon as I had saved $2000 to invest in an IRA.
Because Fidelity and Vanguard dominated the mutual fund business decades ago, mutual funds are naturally still a strong focus for them. This can make them ideal for the portion of an investors net worth which is allocated toward funds.
Alternatively, a given the wide variety of funds available from primarily mutual fund providers, all your investment needs may be met a just one place. Again, it all goes back to your needs as an investor.
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 awaiting lower overall asset valuations.
Click here to read my post How Much of My Net Worth Should Be in 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 are similar, as I experienced recently.
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 for different amounts at different places.
You’ll want to check the coverage for any investment firm or product 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 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 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 provide 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. Vanguard specializes in providing a vast array of low cost etf’s and mutual funds for DIY investors, while Schwab leans toward those 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 fuller 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 firm that less your fees are. If lower fees aren’t offered up front, the more money you have at any one firm, the more negotiating power you have.
I have been able to negotiate lower commissions on trades. (Now I buy most securities myself.) Also, wealth management services drop on a percentage basis depending on how much money you have invested.
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.
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 firm that caters to your specific needs.
Again, your needs will determine whether you have all investments in once place vs more than one investment firm. As the leader of your wealth, only you can make this call.