From a conversation on Sunday. Should they use more than one brokerage for any good reason(s)?
The direct question was whether to use Fidelity or MS/E-Trade, OR both? I also expressed that although Fidelity is a private organization; any serious market or economic conditions to the 'large negative' should not impact Fidelity anymore than the other large retail investor companies.
I'm fully biased as we've used Fidelity since 1978. But, we have stayed abreast of those here using other organizations and the pros and cons.
I expressed Fidelity as my choice for decent customer service, more investment choices than would ever be needed for the 'regular person', low or no fees for some investments; which includes very low ER's for just about everything and a decent 'online' interface. They would also have an investment office about 20 minutes from their home.
To the best of my knowledge, the initial new accounts would be for 'rollover' of 401k's to IRA's.
Thank you for your thoughts,
Catch
Comments
If that nonsense can be avoided at Fidelity, that would be a plus.
I DID NOT enjoy Schwab's website at the start, especially. Everything you might need is mis-named, mis-located, disguised or hidden behind something else. Now I'm used to it.
But when deciding whether to go with Schwab or Fidelity, I found Fidelity's website to be simply abominable. So, there's THAT.
We rollover our 401(K) to Fidelity. They make the 3-way phone call arrangement ahead of time, where the process is completed over the phone. The rollover took about 5-7 business days to complete, and Fidelity will keep you informed along the way.
Unless there's a service that you can't get at your main brokerage, I don't think there's a big need (perhaps reliability?) to use multiple brokerages. For simplicity in the future (when RMDs kick in) we've consolidated T-IRAs at Fidelity. But we have Roths (that we typically leave alone) spread out for other benefits.
E*Trade sells all its fund offerings no-load & NTF (except for three RE funds with loads) and they offer a good selection of third party MMFs like VUSXX and WMPXX. So E*Trade has its distinctive plusses.
https://www.etrade.wallst.com/Research/Screener/MutualFund
Even at Fidelity, you have to move deposited money from "checking" (core fund) into other funds manually. In this sense, the other MMFs are not different from, say, WCPNX. If you deposit money in person, you can instruct Fidelity to make a fund purchase rather than put the money into "checking".
I don't find walking into a brokerage office of any value - the rep just calls the back office anyway to get answers to my questions. But for others a physical presence is important.
My situation with office locations is similar to others', at least if one takes my warped perspective. There's a Schwab office four blocks (1/4 mile) from me. But there's no Fidelity office in the county where I live, the most populous in the state, nor in the adjoining county, second most populous in the state. Instead, I have to travel to a rinky-dink 23 sq mile island that has seven, count 'em, seven(!) Fidelity offices.
Originally called Manhatta (or some similar variant), that island is now known as Manhattan, where MS is headquartered. And we've come full circle.
Unfortunately, Schwab doesn't offer m-mkt fund as core, so money have to be shifted as T+1. Fido offers SPAXX as core, Vanguard VMFXX as core.
@Sven, those 3-way calls are standard for transfers/rollovers from 401k/403b. But IRA transfers/rollovers don't require them and the target broker can take care of all of the paperwork - and there has been some stories about fraudulent transfers.
I have multiple brokerage a/c - Schwab, Fido, Vanguard. Among these, I like Vanguard the least. In fact, I was quite happy with Vanguard mutual fund only account, but a few years ago, it forced me to change to brokerage.
Fido and Schwab compare well, both have physical offices nearby.
Each brokerage has some aspects that you can complain about, but things are vastly better than before the discount brokerage revolution was launched by Charles Schwab (yes, the same old fellow that you may see on TV). I had BAD experiences in that old era too. US brokerages are also much better than those overseas.
Thank you for the keen eye.
@yogibearbull "I do recurring transfers at Schwab."
Do you mean recurring transfers from your Schwab bank account to another bank? I'm thinking of setting up a 'clean' Schwab bank account to receive my DD and then establish monthly transfers to my current bank where all my autopays are made from.
I think it's better that way from a risk management perspective and also b/c I can use Schwab ATM card when overseas to get cash in local currency w/o getting my face ripped off doing it at a retail currency exchange site.
Looking for more info notes that Schwab has a 'cash assets' when moving monies into an account. It is is indicated that the 'cash assets' also pays a 'yield' until action is taken to move the monies to another investment.
There was one problem that I (and maybe others) complained about and they fixed it.
When money transfer date was a holiday or over a weekend, Schwab would move the transfer date forward. I told them that is fine for Bill Pay but not for money transfers - because some expected deposits or dividends may be delayed. So. they now move the money transfer date back, not forward.
To the OP - If younger I would spread holdings around more (2-3 brokerages). At late middle age I don’t think that’s as critical. Only, I think, from the standpoint of some extra security. In terms of functionality, Fido can do most anything needed. Easy to link to outside accounts for money transfer.
Are you printing your cash needs?
Do you feel your local bank is more secure for paying bills.
Money is transferred from the broker to my credit union where Bill Pay is configured.
Using separate institutions for investing and paying bills has long been my preference.
Cash == ATM's that have been around forever at local business like grocery store, gas station once every 6 months or so, even less now. I guess you could call an ATM at 7-11 or Lowe's Food a bank.
The biggest downside of Schwab is that the MMF cannot be used as a core fund, there's always manual MMF trading required when one is buying/selling investments. I have never stepped into the offices of any brokerage in 25+ years.
Schwab has excellent customer service, better than Fidelity or Vanguard by a long stretch. Fidelity has a solid website. Vanguard lowest ER's for sure but sub-par website and customer service.
The 500K SIPC limit reason for splitting across multiple brokerages and accounts makes intuitive sense but at some point it becomes unwieldy to manage. Honestly, if any of these three brokerages melt down, it will pretty much be beans and bunker time so I wouldn't worry about the 500K thingy.
Main reason is I do not like having all my assets at one place. what if they get hacked and are down for several days?
Schwab has better customer service, at least with my AUM I get a dedicated dude I can email. The original fellow got too busy to respond but has an associate who is very useful.
We have an Investment advisor who uses Schwab so that is another reason.
Big disadvantage is Schwab does not have a sweep account and you have to buy and sell MMF yourself or leave cash sitting with no return.
Fidelity has been less responsive and never offered a dedicated rep, even when I asked and wanted to talk to someone about investment advisors. I was surprised they really didn't seem interested in my money. I am a little leery of their status as a purely private firm but I doubt you would get much warning from Schwab that things were really crashing either.
We went ahead with an independent firm that uses Fidelity but it seems the sweep function for MMF is now turned into "FCASH" that pays minimal amounts.
Even the Advisor ( with $110 Billion at Fidelity) has to do nighttime buys and sells of MMF.
If I had to pick one it would be Schwab
One accidental benefit of "you have to buy and sell MMF yourself or leave cash sitting with no return" is that I take a look at the Schwab account every day, because I never know when cash is going to show up from some CD or T-bill interest.
So while I'm there I check the bank balance every day to make certain that there is just enough in it to cover all outstanding checks, and also provide a sense of security because I can see that there's not been any "funny stuff" happening with any of the accounts.