Brokerage Diversification

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ThisDinosaur
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Brokerage Diversification

Post by ThisDinosaur » Mon Nov 05, 2018 10:56 am

I dont want all my eggs in one basket, but most of my liquidity is at vanguard right now. Essentially no trading costs for ETFs and mutual funds, which is how I invest.

What online broker should I open a new account with? Do any others offer no-commission trading of low cost funds?

jacob
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Re: Brokerage Diversification

Post by jacob » Mon Nov 05, 2018 11:06 am

A quick google reveals: https://www.nerdwallet.com/blog/investi ... investors/

I suppose if you don't care about "full service" services (like research, routing, advanced orders, etc.) and just want to buy and hold a bunch of ETFs with the occasional rebalance, then any of the free options would work. Broker accounts are FDIC insured to some level(?). If your worries go beyond that, then you have to look into how solid these companies really are. This is not something I have bothered with. This does not mean you shouldn't.

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Chris
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Re: Brokerage Diversification

Post by Chris » Mon Nov 05, 2018 11:28 am

ThisDinosaur wrote:
Mon Nov 05, 2018 10:56 am
Do any others offer no-commission trading of low cost funds?
All the biggies (ETrade, Ameritrade, Fidelity, Schwab) offer commission-free ETFs. Of course, you would need to factor-in the expense ratio of those ETFs when deciding where to put your money. The expense ratios aren't awful, but for significant amounts of money over longer periods of time, the commission cost (< $7) is immaterial.

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unemployable
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Re: Brokerage Diversification

Post by unemployable » Mon Nov 05, 2018 11:53 am

jacob wrote:
Mon Nov 05, 2018 11:06 am
Broker accounts are FDIC insured to some level(?). If your worries go beyond that, then you have to look into how solid these companies really are. This is not something I have bothered with. This does not mean you shouldn't.

SIPC, not FDIC. You're protected from the brokerage firm going under, but not from market losses. I'm not sure how cash balances would work, for example if they're swept into a bank account (as TD Ameritrade does) those probably have separate FDIC protection.

If a broker goes under it is extremely likely the Feds will step in and orchestrate a takeover by a larger, more solvent broker, as happened with Bear, Lehman and Merrill, and also happened on the banking side with Wachovia and WaMu.

Re the original question, if you're looking to move in excess of $100k, check out Schwab. If you're near a larger city they will probably have a physical office nearby, which may be nice to have, for example if you frequently deposit checks. If these are longer-term investments, such as retirement accounts I would look into investing directly with the mutual fund company (more reliable good customer service, maybe lower fees).

I would stay with Vanguard if leaving means you'd have less than $500k with them -- in fact I'd consolidate everything into Vanguard if doing so would put you over that amount.

arcyallen
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Re: Brokerage Diversification

Post by arcyallen » Tue Nov 06, 2018 10:56 am

I think spreading your accounts to different firms, aside from different research opinions, is generally not beneficial. The firm itself isn't the risk - it's the investments. If you're self managing, it complicates managing accounts a bit. If it's full service firms then it's a train wreck for advising - one hand won't know what the other is doing.

The Old Man
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Re: Brokerage Diversification

Post by The Old Man » Tue Nov 06, 2018 1:12 pm

What is the risk that you are trying to mitigate? Brokerage firms are insured by SIPC. Some firms take out additional insurance in addition to that provided by SIPC. You only need to consider brokerage failure if your balances exceed the insurance limit.
https://investor.vanguard.com/investing ... protection

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