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Fund Expenses vs Asset Distribution
Old 03-28-2014, 12:26 PM   #1
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Fund Expenses vs Asset Distribution

Currently have vast majority of my assets spread fairly evenly between Vanguard and Fidelity, but I'm considering moving all assets to Vanguard, since Vanguard's expenses are always a little lower than Fidelity's.

Of course if I do that the risk is that I then have all of my assets in one company.

Anyone else here faced that issue? Comments?
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Old 03-28-2014, 01:12 PM   #2
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I like to have assets at more than one financial institution. I do this so that I do not have to worry about free-riding, frequent trading, cyber-hacking, and general stupidity of customer service reps.

However, I don't see Vanguard any cheaper than owning Vanguard ETFs at TDAmeritrade and WellsFargo. Indeed, Vanguard's poor excuse for a brokerage is a minus and not a plus. Also Vanguard ALWAYS has less than timely updates of the assets I own there.

Nor is Vanguard cheaper than owning Fidelity Spartan Advantage Index funds at Fidelity. For example, FUSVX has an expense ratio of 0.05% while the equivalent Vanguard fund VFIAX has an expense ratio of 0.05%, too.

I think all financial institutions probably have something that can annoy one, so it is best to spread the money around.

Bottom line: Free Vanguard ETF trades at Vanguard, TDAmeritrade, WellsFargo. Free index funds at Fidelity and Vanguard. Costs are essentially zero at all these places for things I want to buy, so expenses don't factor into my decision. I look for real-time updating and even presentation of pending trades as more important.
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Old 03-28-2014, 02:47 PM   #3
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Our assets are split between Vanguard and Fido. I'd like to have everything at Vanguard (best choice of low-cost mutual funds--bar none--which is important to me), but I set up my solo 401K at Fido before VGD offered them and I just haven't taken the time to transfer everything.
IMO, there's no significant advantage in security by spreading assets around with various brokers, it exposes my info/accounts to hacking from more insiders and provides more potential network vulnerabilities. I can see the advantage of having a few months worth of spending money at a completely separate institution (bank, S&L, CU) so you could keep food on the table and the rent paid if there was a serious breach of security and it took awhile to get things figured out.
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Old 03-28-2014, 02:51 PM   #4
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I don't mind having most of my funds in one place, but I like having maybe 10% somewhere else just in case. That way I have some money accessible if my main brokerage screws up their servers or something.
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Old 03-28-2014, 03:05 PM   #5
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I like to have assets at more than one financial institution. I do this so that I do not have to worry about free-riding, frequent trading, cyber-hacking, and general stupidity of customer service reps.

However, I don't see Vanguard any cheaper than owning Vanguard ETFs at TDAmeritrade and WellsFargo. Indeed, Vanguard's poor excuse for a brokerage is a minus and not a plus. Also Vanguard ALWAYS has less than timely updates of the assets I own there.

Nor is Vanguard cheaper than owning Fidelity Spartan Advantage Index funds at Fidelity. For example, FUSVX has an expense ratio of 0.05% while the equivalent Vanguard fund VFIAX has an expense ratio of 0.05%, too.

I think all financial institutions probably have something that can annoy one, so it is best to spread the money around.

Bottom line: Free Vanguard ETF trades at Vanguard, TDAmeritrade, WellsFargo. Free index funds at Fidelity and Vanguard. Costs are essentially zero at all these places for things I want to buy, so expenses don't factor into my decision. I look for real-time updating and even presentation of pending trades as more important.

I agree on S&P 500 index, but expense ratios are different on many other index funds.

For example Small Cap Blend: VSMAX = .1 vs FSSVX = .19%
or Intermediate term bond index: VFIDX =.1 vs FBIDX = .22

I think I'm comparing apples to apples, but if I'm missing something please let me know, but these are pretty big spreads in my opinion.
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Old 03-28-2014, 03:38 PM   #6
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Fidelity has great customer service, while Vanguard's has been terrible (for me -- I know some people are very happy with it).

So I have about ⅔ of my portfolio at FIDO, the rest at VG. You can get a low expense ratio wherever you are, and my total ER is about 0.22% so I'm happy with it.
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Old 03-28-2014, 04:06 PM   #7
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For example Small Cap Blend: VSMAX = .1 vs FSSVX = .19%
or Intermediate term bond index: VFIDX =.1 vs FBIDX = .22
I use FSITX (Fidelity Spartan Advantage US Bond Index fund) with e.r. 0.10% at Fidelity.

I also use the Fidelity Spartan Advantage Extended Market Index fund is a small/mid-cap blend index fund with e.r. 0.07%.

It is true that FSSVX is small-cap blend and has the higher 0.19% e.r.

In any event, when one uses multiple financial institutions, one does not need to have identical funds nor identical asset allocations at each of them. There may be no need for you to have an account at Fidelity, since there are a few other places besides Fidelity and Vanguard. I left out MerrillEdge from my first post in this thread, but that might also be an option for folks who do not want to put everything in one place.
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Old 03-28-2014, 05:13 PM   #8
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I have had all of my investments in VG funds for over a decade. No conflict. No fear that I have all of my eggs in one place. If you understand how MFs work, it's a no brainer.
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Old 03-28-2014, 06:03 PM   #9
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I have had all of my investments in VG funds for over a decade. No conflict. No fear that I have all of my eggs in one place. If you understand how MFs work, it's a no brainer.
+1 coming up on two decades..
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Old 03-28-2014, 07:11 PM   #10
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I don't mind having most of my funds in one place, but I like having maybe 10% somewhere else just in case. That way I have some money accessible if my main brokerage screws up their servers or something.
Whatever makes you feel good. Their "servers" are probably not what you envision. The state of the art for financial installations is fully redundant processing and storage in multiple physical locations. The data is also on fault-tolerant storage devices in multiple locations and is maintained with synchronous remote copy (your "save" is not complete until it happens in all locations). Less important stuff like your name and address may be maintained with asynchronous remote copy (more budget-friendly), and static stuff like copies of your past statements, and prospecti may get the old fashioned treatment.

I know of one brokerage that splits up departments into multiple physical locations (sometimes people work from home at that place) but the general rule is that no department is allowed to have all their staff in the same location at the same time so that there will be at least a few survivors to keep everything running.

I had one customer that was a bank that existed mostly for credit card processing. They had an airplane accidentally crash into their one and only building in the 80's. No fatalities or interruption of service, but the incident prompted a lot of changes.
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Old 03-28-2014, 07:58 PM   #11
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Well as previous posts indicate, the price difference is almost equal today, for the big 3.

You have to compare apples to apples. An important part of your decision is your satisfaction with the quality of service.

As far as security, redundancy etc. I agree with a previous post. You have to come up with some pretty interesting scenarios for most of these systems to completely fail for an extended period. I'm not saying it couldn't happen, but it might be the least of your worries.

Rather than spend time worrying about that, go to the range, bury gold, self defense, tactical classes, silver bullets.........

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Old 03-28-2014, 08:11 PM   #12
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I guess I am worried about a cyber attack after all the probing done on major banks and credit card companies in the past couple of years.

One can say that working with multiple companies exposes one to multiple levels of attack --- they all have to prevent attacks to maintain your accounts. OTOH, if one works with only a single company and that company gets hacked, then you may be SOL.
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Fund Expenses vs Asset Distribution
Old 03-29-2014, 12:33 PM   #13
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Fund Expenses vs Asset Distribution

VG has always provided great and immediate service for me. No problem with them being the only brokerage. No reason for me to own ETFs, either - so that's not an issue. No cost advantage there for me either.

It depends what you want put of a brokerage. For buy and hold indexing VG can't be beat. At $1M plus total in VG accounts there are advantages - free services. If peace of mind is more important, put half your money in Fidelity *shrug*. I confess I'm ignorant of Fidelity funds, but have heard theyre similar to VGs, if slightly more expensive.
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