Scottrade Exploring Sale Worrying about a brokerage firm going belly up, especially one like Schwab, is not really warranted, Vintage. Your holdings are protected under SIPC, even cash up to a very high amount. The issue I have with the smaller firms (like Scottrade) is they are likely takeover targets, as we are now seeing. They may or may not provide great service to clients, but we should be mindful of the financial disadvantage under which they operate. Each company has some things we might really like and use a lot, but that can change pretty quickly. If, as many expect, a lot of active funds will be biting the dust in the next few years because of performance, lack of dollars, M&A, legal problems, etc., it might be prudent to look at what index funds and ETFs are available at the bigger custodians, not to mention expenses for each, trading costs, trading restrictions, and overall account expenses/fees, and technology available to customers. I am not saying your fears are unjustified. I am suggesting that all investors should understand the ever-smaller margins firms have to deal with and the probable decisions that result from that, especially the smaller custodians that each of us might like. Another factor in all this are the ever-expanding federal regulations forced upon all in the securities industry. Dodd-Frank was a killer, and the newer regs just get more and more numerous, no matter how redundant, unnecessary, and strange many of them are. They all cost firms mega dollars to enact, monitor, and report, not to mention the hundreds of hours and larger and larger compliance staff needed to oversee. Companies have to offset these ever-growing expenses somehow, whether it is higher fees to customers/clients or even deciding a merger/acquisition is a better option.
We deal with client account transfers on a daily basis, and it is still surprising the road blocks different custodians throw at account owners. Fees here, fees there. Fidelity's comment about not waiving a fee is baloney. This is just not true. But think what it means to Fidelity, a $50 fee times many thousands of accounts is a nice chunk of change, and that is just the tip of the iceberg for them.
