Who feels it necessary to keep their securities distributed among several brokerages?

[manaboutown]

Recently I picked up a book by Charles Schwab, 'Invested'.

To say it was an eye opener is an understatement. It starts with why and how he got into discount brokerage as one of its pioneers. It then goes on to report the ups, downs and very scary times his company went through. I had no idea!

I know many people, particularly those who trade a lot, use Schwab. Although I have kept a small account at Schwab for years I rarely used it. Then last year and earlier this year I sold a couple commercial real estate properties and deposited the proceeds into Schwab, primarily because I wanted to put it into T-bills. Schwab allows a retail investor to buy and sell them whereas the other two brokerages where I have historically kept most of my securities do not.

Then, surprise, surprise, I started getting phone calls from a Schwab 'Advisor' which I ignored for a time. Eventually I returned a call just to let him know I existed. When he discovered I was not a newbie and had other accounts he urged, just short of insisted, I transfer them to Schwab. I declined and told him I had a pretty good memory and remember Lehman Bros. and others which he seemed to grasp. I thereafter discovered Schwab at that time held some long term treasuries which were destined to go down as interest were rising so I still feel a little skittish about it all.

Anyway after reading this book to sleep at night I feel I need to continue to keep my securities distributed among several wirehouses and wonder if others feel the same.

[Nell57]

I’ve been wondering about this, too.
Hope there is some good discussion….

[retiredguy123]

I use Vanguard Investments and Fidelity Investments. Stock, bond, and money market mutual funds. No individual stocks or bonds.

[manaboutown]

I use Vanguard Investments and Fidelity Investments. Stock, bond, and money market mutual funds. No individual stocks or bonds.

I use Vanguard, too. For both historic and recent reasons I will not use Fidelity. I use Ameriprise too because I have had several entity accounts with them going back to their 1980s days as Olde Discount. They charge a small brokerage fee but I rarely buy or sell.

The book I cited reveals how ridiculously high various fees were charged retail customers before May Day 1975 when discount brokers started to come into the picture.

[Stu from NYC]

Looking for good performing funds we use several families

[retiredguy123]

Looking for good performing funds we use several families
Go with index funds. They are cheap and effective. Vanguard S&P 500 Stock Index fund, Vanguard Short Term Bond Index fund, and Vanguard Total Bond Market fund. I also have some money in the Vanguard High Yield Corporate Bond fund.

[Smalley]

I use Vanguard Investments and Fidelity Investments. Stock, bond, and money market mutual funds. No individual stocks or bonds.

Fidelity and Vanguard are our companies as well.

[Pugchief]

For both historic and recent reasons I will not use Fidelity.

Care to elaborate?

I find Fidelity superior to Vanguard in just about every metric except expense ratios on money market funds (which leads to sightly lower yields).

[Ecuadog]

We have been with Vanguard. Not too long ago. we opened some accounts at Fidelity. I was getting concerned about the SIPC insurance covering our accounts or "separate capacities" at Vanguard. I was also interested in sending international bank transfers, for which Fidelity doesn't charge.

I like Fidelity's platform much more than Vanguard's, but the sweep accounts and money market funds earn more at Vanguard. I also favor a couple of Vanguard's funds.

I don't know if it's still true, but I found that Vanguard will not let you designate beneficiaries for a joint account, while Fidelity allows it.

[tophcfa]

I use Vanguard Investments and Fidelity Investments. Stock, bond, and money market mutual funds. No individual stocks or bonds.

Same here

[spinner1001]

Anyway after reading this book to sleep at night I feel I need to continue to keep my securities distributed among several wirehouses and wonder if others feel the same.

Objectively, the probability of Schwab, a large NYSE listed firm, failing to make its investment account holders whole is very remote.

First, in the hierarchy of who suffers losses, stockholders loose first. Investment account holders like you loose only after stockholders.

Second, practically speaking, the U.S. government and Federal Reserve would not let the account holders loose for policy reasons because Schwab’s failure would cause a global financial crisis like we have never seen.

Third, Schwab has about $512 billion in assets as of June 30, 2023 (latest data available) and the market value of its common stock today is about $110 billion. Of the $512 billion in assets, $73 billion is cash and equivalents and $295 billion are in investments. Those investments would need to fall in value by roughly 1/3 (very unlikely) to take out the stockholders first and then get to account holders.

Psychologically, if you feel much better diversifying your assets across multiple financial institutions, then do it. If you can’t sleep at night and excessively worry over having your investments in one place, diversify.

[mdmurrell]

Recently I picked up a book by Charles Schwab, 'Invested'.

To say it was an eye opener is an understatement. It starts with why and how he got into discount brokerage as one of its pioneers. It then goes on to report the ups, downs and very scary times his company went through. I had no idea!

I know many people, particularly those who trade a lot, use Schwab. Although I have kept a small account at Schwab for years I rarely used it. Then last year and earlier this year I sold a couple commercial real estate properties and deposited the proceeds into Schwab, primarily because I wanted to put it into T-bills. Schwab allows a retail investor to buy and sell them whereas the other two brokerages where I have historically kept most of my securities do not.

Then, surprise, surprise, I started getting phone calls from a Schwab 'Advisor' which I ignored for a time. Eventually I returned a call just to let him know I existed. When he discovered I was not a newbie and had other accounts he urged, just short of insisted, I transfer them to Schwab. I declined and told him I had a pretty good memory and remember Lehman Bros. and others which he seemed to grasp. I thereafter discovered Schwab at that time held some long term treasuries which were destined to go down as interest were rising so I still feel a little skittish about it all.

Anyway after reading this book to sleep at night I feel I need to continue to keep my securities distributed among several wirehouses and wonder if others feel the same.

I have some investments in Schwab but prefer Vanguard as my primary. I follow Dan Weiner as an investment advisor. He is smart, knows alot about Vanguard and doesn't charge much.

[Mrfriendly]

Prior to China virus I interviewed Vanguard, Trowe Price, Fidelity and American Century to discuss consolidating my accounts I had with each. Went to the Big V mostly due to their low expenses and plenty of solid funds both Bonds and Stocks. Now holding on for a new US administration and market upturn

[itsanne]

I have just been transferred to Schwab from TD Ameritrade as of September 1st. So, no experience with them yet. I will keep roughly 50/50 between them and Fidelity. No institution is big enough not to fail as we have seen in the past.

[Blackbird45]

My view has always been that even though it is good to get advice from others, when it come to your finances, no one is going to track your money as well as you will. The only advice I would give is to sit down and decide what type of return you want from your investments.

[ridge]

I use two brokerage firms. I would never feel comfortable having all funds in just one. Little inconvenient but you never know what could happen with a given firm. Even if it doesn't have financial issues, it could get hacked. Glad you asked this question. Looking forward to the replies.

[retiredguy123]

I have just been transferred to Schwab from TD Ameritrade as of September 1st. So, no experience with them yet. I will keep roughly 50/50 between them and Fidelity. No institution is big enough not to fail as we have seen in the past.
True, but in theory, if Vanguard or Fidelity were to go bankrupt, the mutual fund shareholders would not lose money. That is because the shareholders are the actual owners of the stocks and bonds that make up the mutual fund. Vanguard and Fidelity are just managing the assets, they don't own them. Note that this is not true for insurance companies that sell annuities.

[MidWestIA]

Why? You want more than one adviser, that is if you like them that much, or tools they have. Thinking of getting tipranks - just have Fidelity but use Morningstar & yahoo finance tools more

[Nell57]

Objectively, the probability of Schwab, a large NYSE listed firm, failing to make its investment account holders whole is very remote.

First, in the hierarchy of who suffers losses, stockholders loose first. Investment account holders like you loose only after stockholders.

Second, practically speaking, the U.S. government and Federal Reserve would not let the account holders loose for policy reasons because Schwab’s failure would cause a global financial crisis like we have never seen.

Third, Schwab has about $512 billion in assets as of June 30, 2023 (latest data available) and the market value of its common stock today is about $110 billion. Of the $512 billion in assets, $73 billion is cash and equivalents and $295 billion are in investments. Those investments would need to fall in value by roughly 1/3 (very unlikely) to take out the stockholders first and then get to account holders.

Psychologically, if you feel much better diversifying your assets across multiple financial institutions, then do it. If you can’t sleep at night and excessively worry over having your investments in one place, diversify.

Thanks Spinner1001 for this explanation of Schwabs situation.
My financial advisor invests my funds through Schwab. I am really happy with him, but have been uncomfortable with some of the things I’ve been reading about Schwab.
They’ve tied up billions in some long term investments that are now suffering.
Your explanation put those $$ in perspective.

[Caymus]

I have Schwab accounts, but never actually open one. Decades ago, they bought the deep discounter I was using and recently they bought TD Ameritrade. I'm trying to decide if I want to convert my Fidelity 401K to an IRA for more flexibility. If I do, I may keep that with Fidelity.

[retiredguy123]

I have Schwab accounts, but never actually open one. Decades ago, they bought the deep discounter I was using and recently they bought TD Ameritrade. I'm trying to decide if I want to convert my Fidelity 401K to an IRA for more flexibility. If I do, I may keep that with Fidelity.
It is a good idea to convert the 401K to an IRA. That is the first thing I did when I retired. Lower fees and more control and flexibility.

[Kvanpera]

I have 3 different financial firms. I never talk to Schwab ( not a lot $ never touch it), the other two Wells Fargo and Morgan Stanley do periodically try to get me to consolidate with them. Won’t do, remember Madoff?

[FredJacobs]

There are a few reasons why you should spread your investments across different brokers. Among these are whether the broker handles/specializes in the type of securities you want to invest in, such as municipal tax free bonds or the broker who is handling your account seems to have more knowledge in the areas you invest in. Individual brokers within a firm increase their status by the size of their book - how much money they have under management.

Protection against bankruptcy or money missing from your account is insured by the SIPC - the SEC's equivalent of banking's FDIC.

[rsmurano]

This thread is confusing and most don’t get it. The OP was talking about Schwab as a brokerage, nothing to do about the thousands of stocks/funds/etf’s you can buy from any brokerage. Some posters believe they have to join vanguard to purchase vanguard funds, or fidelity to buy fidelity funds, which is not true. Most of my holdings are vanguard index funds which I purchased thru Schwab.

When has anybody investigated how their monies/funds are protected if a disaster hit the brokerage? I did years ago, and the way Schwab has developed their way of doing business protects us investors just in case something happens to them. I’d advise people to inquire each of the brokerage houses to see which 1 in their eyes provides the most security for your money/investments.

I have been with many brokerage firms because of 401k’s, ira’s, rollovers for decades and the tools at Schwab are 1 of the best for doing my investing, I don’t use anybody to invest for me, I do everything myself. Years ago, I rolled everything into multiple accounts under Schwab and couldn’t be happier.

[melpetezrinski]

Recently I picked up a book by Charles Schwab, 'Invested'.

To say it was an eye opener is an understatement. It starts with why and how he got into discount brokerage as one of its pioneers. It then goes on to report the ups, downs and very scary times his company went through. I had no idea!

I know many people, particularly those who trade a lot, use Schwab. Although I have kept a small account at Schwab for years I rarely used it. Then last year and earlier this year I sold a couple commercial real estate properties and deposited the proceeds into Schwab, primarily because I wanted to put it into T-bills. Schwab allows a retail investor to buy and sell them whereas the other two brokerages where I have historically kept most of my securities do not.

Then, surprise, surprise, I started getting phone calls from a Schwab 'Advisor' which I ignored for a time. Eventually I returned a call just to let him know I existed. When he discovered I was not a newbie and had other accounts he urged, just short of insisted, I transfer them to Schwab. I declined and told him I had a pretty good memory and remember Lehman Bros. and others which he seemed to grasp. I thereafter discovered Schwab at that time held some long term treasuries which were destined to go down as interest were rising so I still feel a little skittish about it all.

Anyway after reading this book to sleep at night I feel I need to continue to keep my securities distributed among several wirehouses and wonder if others feel the same.

I wouldn't worry about keeping your investments distributed among Vanguard, Fidelity and Schwab. You are insured up to $500k (250k cash) per account (IRA, individual, joint) and in virtually all cases if a brokerage firm ceases to operate, customer assets are safe and usually just transferred to another registered brokerage firm.

[Caymus]

It is a good idea to convert the 401K to an IRA. That is the first thing I did when I retired. Lower fees and more control and flexibility.

The fees would not be much lower in my case.

I reason I stay is that I read that a 401K offers more legal protection than an IRA would. I hope someone will correct me if I am wrong on that aspect.

[Lisanp@aol.com]

Isn’t insurance per institution not account type?

FDIC: Your Insured Deposits (https://www.fdic.gov/resources/deposit-insurance/brochures/insured-deposits/#:~:text=The%20standard%20deposit%20insurance%20am ount,another%20separately%20chartered%20insured%20 bank).

[manaboutown]

I like the Schwab trading platform the best among those I have used. I have been buying T-bills since interest rates have risen and used only Schwab for that. Nonetheless Schwab's book, mentioned in the OP, was an eye opener about the treacherous path the wirehouse has led since its founding. Most recently it was caught holding low interest long term treasuries when the Fed started raising its interest rate.

"Longer-Term Bond Holdings
Schwab has been caught in the crossfire of the current banking crisis because of its large holdings of longer-term bonds. The concern is Schwab might be forced to sell them at a loss to try to cover client withdrawals, a scenario that led to the collapse of Silicon Valley Bank."

From: Charles Schwab Shares Slump (https://www.investopedia.com/charles-schwab-shares-slump-7254918#:~:text=Longer%2DTerm%20Bond%20Holdings,co llapse%20of%20Silicon%20Valley%20Bank).

"Pain can be a powerful teacher. In one poignant section of the book, Schwab tells the story of a perilous client, Teddy Wang, a Hong Kong real estate tycoon, whose overextended accounts nearly sank Schwab’s company during the stock market crash of 1987. At the nadir, Wang owed the firm $126 million, according to Schwab. (The two parties eventually reached a $67 million settlement.) After that trial by fire, Schwab put in place controls that would be invaluable when the dotcom and housing bubbles burst years later. “So much of what the Charles Schwab Corporation has since become I trace to what we learned from that singular event,” Schwab says."

From: Charles Schwab on the Lessons He’s Learned Over a Lifetime of Investing | The WealthAdvisor (https://www.thewealthadvisor.com/article/charles-schwab-lessons-hes-learned-over-lifetime-investing)

[manaboutown]

Anyone else remember Drexel Burnham Lambert? Drexel Burnham Lambert - Wikipedia (https://en.wikipedia.org/wiki/Drexel_Burnham_Lambert)

or Salomon Brothers? Salomon Brothers: History of the Investment Bank (https://www.investopedia.com/terms/s/salomon-brothers.asp)

and as cited in the OP, Lehman Brothers. The Collapse of Lehman Brothers: A Case Study (https://www.investopedia.com/articles/economics/09/lehman-brothers-collapse.asp)

I personally got stung by this outfit trading commodity options. Fortunately I made it back trading commodities for a brief period and got out, having learned my lesson. Goldstein, Samuelson, Inc - Wikipedia (https://en.wikipedia.org/wiki/Goldstein,_Samuelson,_Inc).

[spinner1001]

Anyone else remember Drexel Burnham Lambert? Drexel Burnham Lambert - Wikipedia (https://en.wikipedia.org/wiki/Drexel_Burnham_Lambert)

or Salomon Brothers? Salomon Brothers: History of the Investment Bank (https://www.investopedia.com/terms/s/salomon-brothers.asp)

and as cited in the OP, Lehman Brothers. The Collapse of Lehman Brothers: A Case Study (https://www.investopedia.com/articles/economics/09/lehman-brothers-collapse.asp)

I personally got stung by this outfit trading commodity options. Fortunately I made it back trading commodities for a brief period and got out, having learned my lesson. Goldstein, Samuelson, Inc - Wikipedia (https://en.wikipedia.org/wiki/Goldstein,_Samuelson,_Inc).

The first three organizations in your post were investment banks. Schwab isn’t.

The fourth organization main business was options trading. Schwab isn’t.

Schwab is regulated, operated, and financed differently from those four so account-holder risks are not comparable. Schwab is a very different kind of company than those four others.

[spinner1001]

Anyone who wants to learn more about the different kinds of financial services companies and kinds of risk each one has might read the outline at the link below, which is pretty good overall.

Moral of the story: Don’t compare apples and turnips. It’s complicate.

Financial Services Risks (https://chat.openai.com/share/a9756d29-6cc5-4ccd-988d-841b3c7a4aee)

[manaboutown]

The first three organizations in your post were investment banks. Schwab isn’t.

The fourth organization main business was options trading. Schwab isn’t.

Schwab is regulated, operated, and financed differently from those four so account-holder risks are not comparable. Schwab is a very different kind of company than those four others.

That is comforting, I hope... however from reading about the ups and downs his company has experienced since its beginning as revealed by Charles Schwab himself in his book I prefer to keep my securities spread among several wirehouses (including Schwab). I am sure every brokerage company has a history of ups and downs. After all, black swans and other unexpected events do occur from time to time.

[manaboutown]

The first three organizations in your post were investment banks. Schwab isn’t.

The fourth organization main business was options trading. Schwab isn’t.

Schwab is regulated, operated, and financed differently from those four so account-holder risks are not comparable. Schwab is a very different kind of company than those four others.

Teddy Wang was trading naked puts at Schwab.

Online Options Trading | Charles Schwab (https://www.schwab.com/options)

[hdanielblank]

We have been with Vanguard. Not too long ago. we opened some accounts at Fidelity. I was getting concerned about the SIPC insurance covering our accounts or "separate capacities" at Vanguard. I was also interested in sending international bank transfers, for which Fidelity doesn't charge.

I like Fidelity's platform much more than Vanguard's, but the sweep accounts and money market funds earn more at Vanguard. I also favor a couple of Vanguard's funds.

I don't know if it's still true, but I found that Vanguard will not let you designate beneficiaries for a joint account, while Fidelity allows it.

---
I concur completely. Fidelity's systems and flexibility with trading orders make it far superior to Vanguard. Vanguard has a few less expensive and broader index options but FIdelity has been quite competitive in this category. As a plug to Schwab, I have all three and find Schwab and Fidelity basically tied in almost all categories. Do NOT accept Schwab's fee-based Robo-Adviser program. They recently had to pay a fine for providing advice not in the customer's best interest. It's not that complicated to do yourself. For most client needs, set your allocation, then come back annually to see whether it's still in balance. Switch some from stocks to cash or bonds if Stocks become more than 5% more than target allocation. Do the reverse after a major selloff, invest some cash to buy stock. Holding lowest-cost index funds is definitely the best way to go.

[collie1228]

Over the years I've had an investment account with Schwab, a separate IRA account with Schwab, and another investment account with TD Ameritrade. Schwab recently bought out TD Ameritrade, so now I have all my eggs in one basket again. Guess I'll start looking for another alternative.

[zuidemab]

I have just been transferred to Schwab from TD Ameritrade as of September 1st. So, no experience with them yet. I will keep roughly 50/50 between them and Fidelity. No institution is big enough not to fail as we have seen in the past.

I agree no institution is too big nor too solid to fail. Using more than one well regarded investment institution (but not necessarily many) seems prudent. As does reading the ongoing ratings and reviews for yours and other institutions. Adjust as needed. Even Schaub gets some negative mentions. Long on T bill is one.

Beyond that diversification is about various types of investments not necessarily the differing institutions. That mix is personal and certainly ebbs and flows with the economy. No one (not even WB) is likely to get it right all the time. Good luck and reasonable ROI!

[dbrooks]

We have been with Schwab for years and really think they are one of the best. We can use online or talk with our personal or any adviser. They have always been very good with their advise depending on our needs. I would recommend them.

[melpetezrinski]

Isn’t insurance per institution not account type?

FDIC: Your Insured Deposits (https://www.fdic.gov/resources/deposit-insurance/brochures/insured-deposits/#:~:text=The%20standard%20deposit%20insurance%20am ount,another%20separately%20chartered%20insured%20 bank).

If you read the information in your link, you would have found the answer. I took the time to find the appropriate example in your link. Go to example 7; it's almost at the end.

[melpetezrinski]

Isn’t insurance per institution not account type?

FDIC: Your Insured Deposits (https://www.fdic.gov/resources/deposit-insurance/brochures/insured-deposits/#:~:text=The%20standard%20deposit%20insurance%20am ount,another%20separately%20chartered%20insured%20 bank).


This link will help explain your question and many of the other posts in this thread.

If a Brokerage Firm Closes Its Doors | FINRA.org (https://www.finra.org/investors/insights/if-brokerage-firm-closes-its-doors)

[spinner1001]

Teddy Wang was trading naked puts at Schwab.

Online Options Trading | Charles Schwab (https://www.schwab.com/options)

I believe the Teddy Wang story with Schwab occurred in 1987 during the big October market crash unless there was another event.

I know that regulators have greatly increased oversight and regulation since the 1987 crash. Larger financial institutions now have risk management departments and risk management is even an established profession which is quite technical.

Regardless, diversify holdings across financial institutions if concerned.

[biscuitgirl]

The fees would not be much lower in my case.

I reason I stay is that I read that a 401K offers more legal protection than an IRA would. I hope someone will correct me if I am wrong on that aspect.

The laws vary by state, so you should do some more research if what you read wasn’t specific to FL. I think you’ll find that the laws here protect both types of accounts in most situations.

[BowlTurner]

[QUOTE=manaboutown;2255821]Recently I picked up a book by Charles Schwab, 'Invested'.

To say it was an eye opener is an understatement. It starts with why and how he got into discount brokerage as one of its pioneers. It then goes on to report the ups, downs and very scary times his company went through. I had no idea!

I know many people, particularly those who trade a lot, use Schwab. Although I have kept a small account at Schwab for years I rarely used it. Then last year and earlier this year I sold a couple commercial real estate properties and deposited the proceeds into Schwab, primarily because I wanted to put it into T-bills. Schwab allows a retail investor to buy and sell them whereas the other two brokerages where I have historically kept most of my securities do not.

Then, surprise, surprise, I started getting phone calls from a Schwab 'Advisor' which I ignored for a time. Eventually I returned a call just to let him know I existed. When he discovered I was not a newbie and had other accounts he urged, just short of insisted, I transfer them to Schwab. I declined and told him I had a pretty good memory and remember Lehman Bros. and others which he seemed to grasp. I thereafter discovered Schwab at that time held some long term treasuries which were destined to go down as interest were rising so I still feel a little skittish about it all.

Anyway after reading this book to sleep at night I feel I need to continue to keep my securities distributed among several wirehouses and wonder if others feel the same.[/QUOTE

Given all the big corporate hacks, and the risk of getting locked out of a single company, I decided to pull 20 percent of my savings at Vanguard and move them to Schwab. Not that I love Schwab. Both companies are fine. I just want to make sure I can get money out when I need it.

[rsmurano]

People don’t realize and a lot of posters here are confused thinking you have sign up to vanguard to purchase vanguard funds, same for fidelity. This is not true. There might be unique funds at vanguard, fidelity, Schwab, and other brokerage houses that you might not be able to buy if you don’t have an account with that broker. I’m sure you can buy a like fund with the brokerage house you belong too.

Instead of worrying about if your funds are safe, read how each broker handles each fund for ownership. In my Schwab money market fund, Schwab doesn’t actually own it, a 3rd party does so if Schwab would go under, my funds would still be accessible by me

[retiredguy123]

The fees would not be much lower in my case.

I reason I stay is that I read that a 401K offers more legal protection than an IRA would. I hope someone will correct me if I am wrong on that aspect.
You are correct that it could more difficult for a creditor to seize 401K assets than IRA assets, depending on which state you live in.
But that wouldn't be the determining factor for me. Being able to manage my own assets in an IRA is more important.

[Janie123]

It is a good idea to convert the 401K to an IRA. That is the first thing I did when I retired. Lower fees and more control and flexibility.
there is a feature in most 401s that allow you to pull money out after age 55 if you meet certain criteria (leave company after turning 55, 401k supports a 55+ withdrawal).We do have friends in TV that left and are at age 56 and are using their 401k $$$ to live off of.

https://money.usnews.com/money/retirement/401ks/articles/how-to-use-the-rule-of-55-to-take-early-401k-withdrawals

Also, if you have Roth 401k and have not opened up and contributed to a Roth IRA, the growth of the money in the Roth IRA will not be able to withdrawn for 5 years without penalty.

[retiredguy123]

there is a feature in most 401s that allow you to pull money out after age 55 if you meet certain criteria (leave company after turning 55, 401k supports a 55+ withdrawal).We do have friends in TV that left and are at age 56 and are using their 401k $$$ to live off of.

https://money.usnews.com/money/retirement/401ks/articles/how-to-use-the-rule-of-55-to-take-early-401k-withdrawals

Also, if you have Roth 401k and have not opened up and contributed to a Roth IRA, the growth of the money in the Roth IRA will not be able to withdrawn for 5 years without penalty.
My 401K was the Federal Government's Thrift Savings Plan (TSP). Congress has been borrowing money from that fund. I transferred my entire balance into an IRA within a few days after my retirement. I don't know what the rules are for a private employer to tap into a 401K fund, but I like having control of my own money.

[Caymus]

You are correct that it could more difficult for a creditor to seize 401K assets than IRA assets, depending on which state you live in.
But that wouldn't be the determining factor for me. Being able to manage my own assets in an IRA is more important.

Depending on what life brings, I could end up in a "colder" state.

As of now. I have numerous low-cost options plus access to Fidelity BrokerageLink(which I have not explored yet).

Also, according to the NetBenefits website, I have the option to make partial rollovers to an IRA.

I find to fully understand the options, I need to call them a few times and take an "average" of their responses.;)

[retiredguy123]

Depending on what life brings, I could end up in a "colder" state.

As of now. I have numerous low-cost options plus access to Fidelity BrokerageLink(which I have not explored yet).

Also, according to the NetBenefits website, I have the option to make partial rollovers to an IRA.

I find to fully understand the options, I need to call them a few times and take an "average" of their responses.;)
I never use a tax-deferred account to invest in stocks, only bonds. That is because any stock market gains will eventually be taxed as ordinary income with no captial gains benefits.

[roadrnnr]

Just curious why no one Mentions Using TROWE PRICE?

[saninva]

Prior to China virus I interviewed Vanguard, Trowe Price, Fidelity and American Century to discuss consolidating my accounts I had with each. Went to the Big V mostly due to their low expenses and plenty of solid funds both Bonds and Stocks. Now holding on for a new US administration and market upturn

Dow high of 36,799 on 1/4/22

[manaboutown]

Just curious why no one Mentions Using TROWE PRICE?

I used them long, long ago but they dropped off my radar. Thank you, I'll check them out!

[Ecuadog]

People don’t realize and a lot of posters here are confused thinking you have sign up to vanguard to purchase vanguard funds, same for fidelity. This is not true. There might be unique funds at vanguard, fidelity, Schwab, and other brokerage houses that you might not be able to buy if you don’t have an account with that broker. I’m sure you can buy a like fund with the brokerage house you belong too.

...

I moved some money from Vanguard to Fidelity just because of the SIPC limits.

Fidelity considers one of my Vanguard funds a Transaction Fee (TF) fund. In this case, the usual online TF purchase fee of $49.95 has been raised to $75.00.

Fidelity considers another "not available for retail trading."

No confusion here. With the money that was moved to Fidelity, I chose to go with a something similar.

[jimjamuser]

Objectively, the probability of Schwab, a large NYSE listed firm, failing to make its investment account holders whole is very remote.

First, in the hierarchy of who suffers losses, stockholders loose first. Investment account holders like you loose only after stockholders.

Second, practically speaking, the U.S. government and Federal Reserve would not let the account holders loose for policy reasons because Schwab’s failure would cause a global financial crisis like we have never seen.

Third, Schwab has about $512 billion in assets as of June 30, 2023 (latest data available) and the market value of its common stock today is about $110 billion. Of the $512 billion in assets, $73 billion is cash and equivalents and $295 billion are in investments. Those investments would need to fall in value by roughly 1/3 (very unlikely) to take out the stockholders first and then get to account holders.

Psychologically, if you feel much better diversifying your assets across multiple financial institutions, then do it. If you can’t sleep at night and excessively worry over having your investments in one place, diversify.
Just as a Personal courtesy and not to be a smart a__, I would humbly suggest the spelling of lose (as in to lose) as l-o-s-e and NOT any other way.

[jimjamuser]

My view has always been that even though it is good to get advice from others, when it come to your finances, no one is going to track your money as well as you will. The only advice I would give is to sit down and decide what type of return you want from your investments.
As a general statement, I would say that return depends on risk. The more the risk, the more one should be compensated with reward. So, an investor should determine how much risk their personality can take. With the long-ago advent of ETFs, an investor can easily get an average return with an average (or even less) risk. Just buy the ETF for the S and P, which is (SPY). Pretty simple........you get an average (good) return with average to low risk due to high amounts of diversification. Thank me very much (and please send me 1/4 of 1% of all your gains each year....for good advice)!

[jimjamuser]

Thanks Spinner1001 for this explanation of Schwabs situation.
My financial advisor invests my funds through Schwab. I am really happy with him, but have been uncomfortable with some of the things I’ve been reading about Schwab.
They’ve tied up billions in some long term investments that are now suffering.
Your explanation put those $$ in perspective.
I would NOT blame Schwab for "long-term investments that are now suffering". I assume it is like many banks that lent out money at say 3 or 4 % (when inflation was like 1%) and then the FED (which was late to react) pushed up interest (to prevent out-of-control inflation) to about 9%. I guess that you could say that things are stabilizing now.
........note: Russia and Saudi Arabia have done the US no favors by driving oil (therefore gas) upwards.

[jimjamuser]

I use two brokerage firms. I would never feel comfortable having all funds in just one. Little inconvenient but you never know what could happen with a given firm. Even if it doesn't have financial issues, it could get hacked. Glad you asked this question. Looking forward to the replies.
They COULD get hacked. But, do they carry insurance against that?

[Pugchief]

I moved some money from Vanguard to Fidelity just because of the SIPC limits.




From Fidelity's website:
What is SIPC?
The Securities Investor Protection Corporation (SIPC) is a nonprofit organization that protects stocks, bonds, and other securities in case a brokerage firm goes bankrupt and assets are missing.

The SIPC will cover up to $500,000 in securities, including a $250,000 limit for cash held in a brokerage account.

What Fidelity accounts are covered?
All Fidelity brokerage accounts are covered by SIPC. This includes money market funds held in a brokerage account since they are considered securities. Learn more about SIPC coverage at www.sipc.orgOpens in a new window.

Excess of SIPC
In addition to SIPC protection, Fidelity provides its brokerage customers with additional "excess of SIPC" coverage through Lloyd's of London. The excess coverage would only be used when SIPC coverage is exhausted. Like SIPC, excess protection does not cover investment losses in customer accounts, including losses due to market fluctuation. For example, fraud claims would not be covered if the brokerage firm was still in operation. Total aggregate excess of SIPC coverage available through Fidelity's excess of SIPC policy is $1 billion. Within Fidelity's excess of SIPC coverage, there is no per customer dollar limit on coverage of securities, but there is a per customer limit of $1.9 million on coverage of cash awaiting investment. This is the maximum excess of SIPC protection currently available in the brokerage industry.

Both SIPC and excess of SIPC coverage is limited to securities held in brokerage positions, including mutual funds if held in your brokerage account and securities held in book entry form.

Investment assets not covered by SIPC
Certain assets are not eligible for SIPC protection. Among the assets typically not eligible for SIPC protection are commodity futures contracts, precious metals, as well as investment contracts (such as limited partnerships), and fixed annuity contracts that are not registered with the U.S. Securities and Exchange Commission under the Securities Act of 1933.

[Ecuadog]

From Fidelity's website:
What is SIPC?
The Securities Investor Protection Corporation (SIPC) is a nonprofit organization that protects stocks, bonds, and other securities in case a brokerage firm goes bankrupt and assets are missing.

The SIPC will cover up to $500,000 in securities, including a $250,000 limit for cash held in a brokerage account.

What Fidelity accounts are covered?
All Fidelity brokerage accounts are covered by SIPC. This includes money market funds held in a brokerage account since they are considered securities. Learn more about SIPC coverage at www.sipc.orgOpens in a new window.

Excess of SIPC
In addition to SIPC protection, Fidelity provides its brokerage customers with additional "excess of SIPC" coverage through Lloyd's of London. The excess coverage would only be used when SIPC coverage is exhausted. Like SIPC, excess protection does not cover investment losses in customer accounts, including losses due to market fluctuation. For example, fraud claims would not be covered if the brokerage firm was still in operation. Total aggregate excess of SIPC coverage available through Fidelity's excess of SIPC policy is $1 billion. Within Fidelity's excess of SIPC coverage, there is no per customer dollar limit on coverage of securities, but there is a per customer limit of $1.9 million on coverage of cash awaiting investment. This is the maximum excess of SIPC protection currently available in the brokerage industry.

Both SIPC and excess of SIPC coverage is limited to securities held in brokerage positions, including mutual funds if held in your brokerage account and securities held in book entry form.

Investment assets not covered by SIPC
Certain assets are not eligible for SIPC protection. Among the assets typically not eligible for SIPC protection are commodity futures contracts, precious metals, as well as investment contracts (such as limited partnerships), and fixed annuity contracts that are not registered with the U.S. Securities and Exchange Commission under the Securities Act of 1933.

Yeah. I don't think that Vanguard provides any excess of SIPC coverage.

[manaboutown]

"Yes, in addition to SIPC, Schwab clients receive an extra level of coverage through "excess SIPC" insurance protection for securities and cash. This helps ensure claims will be covered in the event of a brokerage firm failure and funds covered by SIPC protections are exhausted. Schwab's Excess SIPC program has a $600 million aggregate (meaning the most the program will pay for the Excess SIPC portion of the losses). Commodity interests, futures contracts and cash in futures accounts are not protected by SIPC."

"Protected up to US$600 million
The combined total of our SIPC coverage and our "excess SIPC" coverage means Schwab provides protection up to an aggregate of US$600 million, limited to a combined return of US$150 million per customer, up to US$1.15 million of which may be in cash."

Access Denied (https://international.schwab.com/account-protection#:~:text=Protected%20up%20to%20US%24600, which%20may%20be%20in%20cash).

[DAVES]

Recently I picked up a book by Charles Schwab, 'Invested'.

To say it was an eye opener is an understatement. It starts with why and how he got into discount brokerage as one of its pioneers. It then goes on to report the ups, downs and very scary times his company went through. I had no idea!

I know many people, particularly those who trade a lot, use Schwab. Although I have kept a small account at Schwab for years I rarely used it. Then last year and earlier this year I sold a couple commercial real estate properties and deposited the proceeds into Schwab, primarily because I wanted to put it into T-bills. Schwab allows a retail investor to buy and sell them whereas the other two brokerages where I have historically kept most of my securities do not.

Then, surprise, surprise, I started getting phone calls from a Schwab 'Advisor' which I ignored for a time. Eventually I returned a call just to let him know I existed. When he discovered I was not a newbie and had other accounts he urged, just short of insisted, I transfer them to Schwab. I declined and told him I had a pretty good memory and remember Lehman Bros. and others which he seemed to grasp. I thereafter discovered Schwab at that time held some long term treasuries which were destined to go down as interest were rising so I still feel a little skittish about it all.

Anyway after reading this book to sleep at night I feel I need to continue to keep my securities distributed among several wirehouses and wonder if others feel the same.

I've not bought T bills in years. As much as all the brokerages love us they are a business and so are in business to make money. It is simple to set up an account with the treasury and save those fees.

As far as accounts with several brokerages. Competition is good for the consumer. Vanguard has Admiralty shares and for years Fidelity said they do not exist. T Rowe has similar offerings. For us, I like Fidelity. You can call 24 hours a day seven days a week and find a HUMAN to talk too. There people are good. They will, if they don't know tell you so and tell you who you need to speak with and time they are reachable. Also a big plus with forms etc we can drive to their office and find a HUMAN to talk to.

[ithos]

Banking System Is On “Knife’s Edge” As Fed “May Destroy The World” | Chris Whalen
https://www.youtube.com/watch?v=hhV0WtE8jDo&t=1864s

Highly renowned expert on TBTF banks, regional banks, investment bankers and brokers has a great discussion on the financial industry. Has a lot to say about Schwab and just about every other major financial institution. There is no one better.

[Pairadocs]

Recently I picked up a book by Charles Schwab, 'Invested'.

To say it was an eye opener is an understatement. It starts with why and how he got into discount brokerage as one of its pioneers. It then goes on to report the ups, downs and very scary times his company went through. I had no idea!

I know many people, particularly those who trade a lot, use Schwab. Although I have kept a small account at Schwab for years I rarely used it. Then last year and earlier this year I sold a couple commercial real estate properties and deposited the proceeds into Schwab, primarily because I wanted to put it into T-bills. Schwab allows a retail investor to buy and sell them whereas the other two brokerages where I have historically kept most of my securities do not.

Then, surprise, surprise, I started getting phone calls from a Schwab 'Advisor' which I ignored for a time. Eventually I returned a call just to let him know I existed. When he discovered I was not a newbie and had other accounts he urged, just short of insisted, I transfer them to Schwab. I declined and told him I had a pretty good memory and remember Lehman Bros. and others which he seemed to grasp. I thereafter discovered Schwab at that time held some long term treasuries which were destined to go down as interest were rising so I still feel a little skittish about it all.

Anyway after reading this book to sleep at night I feel I need to continue to keep my securities distributed among several wirehouses and wonder if others feel the same.

Have always used only two, Fidelity and Vanguard, lately "thinking" of adding another, possibly Schwab. I do NOT like the "pushy" tendency they are ALL developing in the last few years, to "advise me". I have always explained, in a pleasant manner, not angry or insulting, but when they tell me they can "assist me" in making good decisions for my money, that they are fiduciaries only interested in doing the best for me, I just explain that might be true, but in my opinion, NO BODY, NO ONE at any brokerage, cares quite as much about ME and my money as I DO. I don't doubt at all they care about doing "right" for me, but they have a lot of customers and they simply CAN NOT care as much a about my portfolio as I do ! So, I always make that clear as they get more and more "intrusive", the word I use for how they have changed in the last few years... btw, ever read the biography of Jessie Livermore by Richard Smitten ?

[Pairadocs]

---
I concur completely. Fidelity's systems and flexibility with trading orders make it far superior to Vanguard. Vanguard has a few less expensive and broader index options but FIdelity has been quite competitive in this category. As a plug to Schwab, I have all three and find Schwab and Fidelity basically tied in almost all categories. Do NOT accept Schwab's fee-based Robo-Adviser program. They recently had to pay a fine for providing advice not in the customer's best interest. It's not that complicated to do yourself. For most client needs, set your allocation, then come back annually to see whether it's still in balance. Switch some from stocks to cash or bonds if Stocks become more than 5% more than target allocation. Do the reverse after a major selloff, invest some cash to buy stock. Holding lowest-cost index funds is definitely the best way to go.

Still have a fair amount of asserts at Vanguard, but lately, say last 8-10 years have not been as enthusiastic about them as I once was. Now have more with Fidelity, and thinking of diversifying to one more (I mentioned thinking of Schwab in a previous post) as a third. All my life when the major indexes fell in any significant manner, and most all of my friends are taking their money out of the market as fast as they could before it went even lower, that's when I have always done my serious buying ! It's worked well for me, that's all I can say, but I don't urge friends to do the same. To me when things really tank, that's my opportunity to do some serious buying compared to the dollar cost averaging in I'd normally do. To me a really BIG fire sale (crash as some call it) is an opportunity; I just jump in fast and buy as much as I can possibly afford. It's not the norm for most people, but it's worked very well for me. I don't "day trade", but again, I know many, including our own adult children, believe that is the way to build generational wealth, we all have our methods of investing is all I can say.

[retiredguy123]

Have always used only two, Fidelity and Vanguard, lately "thinking" of adding another, possibly Schwab. I do NOT like the "pushy" tendency they are ALL developing in the last few years, to "advise me". I have always explained, in a pleasant manner, not angry or insulting, but when they tell me they can "assist me" in making good decisions for my money, that they are fiduciaries only interested in doing the best for me, I just explain that might be true, but in my opinion, NO BODY, NO ONE at any brokerage, cares quite as much about ME and my money as I DO. I don't doubt at all they care about doing "right" for me, but they have a lot of customers and they simply CAN NOT care as much a about my portfolio as I do ! So, I always make that clear as they get more and more "intrusive", the word I use for how they have changed in the last few years... btw, ever read the biography of Jessie Livermore by Richard Smitten ?
My experience exactly, but it doesn't really bother me very much. I am immune to pushy salespeople. I like both Vanguard and Fidelity. Great investment companies.

[ithos]

Banking System Is On “Knife’s Edge” As Fed “May Destroy The World” | Chris Whalen
https://www.youtube.com/watch?v=hhV0WtE8jDo&t=1864s

Highly renowned expert on TBTF banks, regional banks, investment bankers and brokers has a great discussion on the financial industry. Has a lot to say about Schwab and just about every other major financial institution. There is no one better.

The title is a little misleading. Probably the host was trying to maximize the clicks. Not much scare mongering. Primarily it was frank and detailed analysis.

[manaboutown]

Still have a fair amount of asserts at Vanguard, but lately, say last 8-10 years have not been as enthusiastic about them as I once was. Now have more with Fidelity, and thinking of diversifying to one more (I mentioned thinking of Schwab in a previous post) as a third. All my life when the major indexes fell in any significant manner, and most all of my friends are taking their money out of the market as fast as they could before it went even lower, that's when I have always done my serious buying ! It's worked well for me, that's all I can say, but I don't urge friends to do the same. To me when things really tank, that's my opportunity to do some serious buying compared to the dollar cost averaging in I'd normally do. To me a really BIG fire sale (crash as some call it) is an opportunity; I just jump in fast and buy as much as I can possibly afford. It's not the norm for most people, but it's worked very well for me. I don't "day trade", but again, I know many, including our own adult children, believe that is the way to build generational wealth, we all have our methods of investing is all I can say.

Yes, Vanguard has changed over the last several years and not for the better IMHO.

Last I read Schwab's unrealized bond losses now amount to $19.4B.

In my old home city where I still keep my Schwab account the company recently moved its office from a very high end building in the middle of the financial district to a budget building at its edge. This happened after Schwab absorbed TD Ameritrade but still...