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Number of Accounts and Institutions
Old 05-23-2009, 09:48 AM   #1
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Number of Accounts and Institutions

I have started consolidating my various, scattered accounts using Wells Fargo; but, now I am starting to worry about too much consolidation.

Theoretically, I could consolidate everything into four or five accounts at WF:
  • Checking account (very short term cash for bill paying, etc.)
  • Savings account (slightly longer term cash, not sure this is needed)
  • Normal taxable investment account
  • IRA funded with pre-tax contributions including numerous 401(k) rollovers
  • IRA funded with after-tax contributions (separate IRA for tax reporting simplicity)

I am interested in your thoughts about whether this would be too concentrated.
  • While I consider WF relatively safe and stable, recent events have forced me to realize that few, if any, institutions rock solid. I know that I would eventually get my money in the accounts described above if WF went down; but, things could theoretically be frozen for quite some time.
  • I am also concerned that consolidating everything with one institution might make me more vulnerable to identity theft, hacking, etc. (If someone found a way to access my WF accounts, they would have access to my entire net worth.)
  • General hassles if WF finds unusual patterns of activity and freezes access to my accounts for a period of time.
  • Will my access to credit, etc. (pre-RE) be impacted by closing checking and savings accounts with other institutions which have been open for many years?

I would appreciate any feedback about how others handle this and am especially interested in approaches, safeguards, etc. taken by those who travel extensively (sailing, boon docking, Fourth World travel, etc.) with extended periods of little or no access to the Internet.

Am I just over thinking this and looking for things to worry about? (I do tend to be a belt and suspenders type in some circumstances.)
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Old 05-23-2009, 09:59 AM   #2
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I have multiple accounts at one (highly stable) bank but I keep my corporate investments elsewhere, because I think you should never have all your eggs in one basket. Both institutions have a big enough chunk of my portfolio to provide me with excellent customer service, and they know full well that they need to continue to earn my loyalty. I feel I get the best of both worlds.
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Old 05-23-2009, 10:23 AM   #3
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We have consolidated all our major accounts down to 3 institutions. In additiona, we have 401(k), 403(b), and 529 plans elsewhere as well as a never-used checking account at USAA (needed for 0% loans).

We have several accounts at Vanguard. They are old IRAs and a taxable account with just 1 fund in set-and-forget mode on autopilot that receive no new contributions.

We have a brokerage account at TDAmeritrade. It is also set-and-forget unless doing some tax-loss-harvesting.

At WellsFargo we have 8 accounts including all the ones you mentioned. We can walk into the local branches and raise havoc if need be.

I am not worried about "lock-up" because it happened to me before at Bank of America where I had an account for just 3 weeks before switching to WF. At BoA they changed an initial deposit to a withdrawal accidently and caused a $200,000 shift in my account balances. It took them 3 weeks to fix their error. In the meantime all our checks bounced, the ATM wouldn't work for us and all auto-billpay bounced. Our direct-deposited paychecks were simply added to the huge erroneous deficit in our account and didn't make a dent on it. We were able to use credit cards as usual to pay daily living expenses. BoA paid all returned check charges related to their error, but nothing for my time that was spent straightening out their problem.

So I'm not saying nothing can go wrong at WF, but your "out" is to use your credit cards. I guess that if my WF account was compromised, I would be in deep doo-doo since it is our daily workhorse and holds about 1/6th of all our assets.
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Old 05-23-2009, 10:26 AM   #4
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We're still working, but we have assets in one bank (checking and savings), one credit union (small $ checking and savings that we don't really use), Vanguard, and T Rowe Price (taxable and Roth accounts with both). We also have $ in the TSP.

DH and I feel a little better having multiple ways to access our $, although we agree the chances of any of them collapsing are slim. I don't really expect to consolidate further, but I wouldn't add another institution either.
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Old 05-23-2009, 10:29 AM   #5
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For much the same reasons you listed, I keep multiple accounts at different institutions. I wouldn't be comfortable with fewer than 2-3 institutions, depending on net worth. Why arrange my finances with a single point of failure, when it's not much effort to ameliorate this?

As for being without internet access for awhile, I don't see many issues that wouldn't also come up if you had accounts at a single institution. I'd try to log in or call and check my account balances/activity at least once a month. Does fourth world travel mean no cell or landline phone access? If possible, I'd carry a securely configured mini-laptop and use the wireless/wired connectivity at Net cafes. For extra security, some institutions (etrade for instance) can set up your account so you need a keyfob with a constantly changing key on it to log in online. (I think BofA also offers this at least for their credit cards.)
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Old 05-23-2009, 10:29 AM   #6
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Mine is similar to yours - E*trade and Vanguard - I think it is OK.
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Old 05-23-2009, 10:38 AM   #7
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Don't forget the FDIC policy on accounts. As of today, each ACCOUNT HOLDER is insured up to $250k. In addition, your IRA's are insured up to $250k. I am over extended at one bank and hope the FDIC will continue its' current policy. If they go back to the $100k insurance policy on accounts other than IRA's, I'm going to do something different.
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Old 05-23-2009, 10:56 AM   #8
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All my investment accounts (taxable and tax deferred) are with Fidelity, including a cash management account. My wife's IRA is with Vanguard & she she has a checking account with Chase. That's it.
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Old 05-23-2009, 11:20 AM   #9
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I have never read anything saying that a person shouldn't have all their accounts with one institution. But it only makes sense to me to NOT do that.

Even though there are indeed logical arguments that this attitude is overly cautious, I feel more comfortable knowing that my money is spread between three organizations instead of just one.
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Old 05-23-2009, 12:26 PM   #10
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The Economist says that Credit Suisse and JPMorgan Chase are the best banks in the world.

The world's best banks: A short list | The Economist

I find it somewhat reassuring to read this about my own bank:

Scotia among world's top 10 stable banks

Recently I was considering a savings account at ING, but news of bailouts helped me decide that the extra couple of basis points were not worth the risk. They are welcome to my mortgage, though!
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Old 05-23-2009, 01:48 PM   #11
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I'm in the process of consolidating our accounts as we have them spread far and wide. In the US we will be restricting ourselves to Wells Fargo for our checking, trading and SEPP. Fidelity has our 401ks and Vanguard our mutual funds. I had accounts with ING and Emigrant Direct which we are closing. My experience with moving is it is a real pain in the butt having to do all the changes of addresses. We also have approx. 10 DRIP funds which I am going to transfer to Wells Trade.

In Australia, where we hold the majority of our cash, I am actually going to diversify our holdings between ANZ and a credit union. I am going to close our ING account and consolidate our mutual fund holdings which are over 3 institutions.

I actually believe my life will be easier with the consolidation and I think if you pick the institutions you favour wisely, everything will be ok. The institutions I use are listed as being part of the World's 50 Safest Banks.

The World's 50 Safest Banks in 2009 -- Seeking Alpha
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Old 05-23-2009, 02:35 PM   #12
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The institutions I use are listed as being part of the World's 50 Safest Banks.

The World's 50 Safest Banks in 2009 -- Seeking Alpha
Thanks DM, I'm going to bookmark that list. The Australian banks appear to be pretty safe.

Isn't it interesting that Societe Generale is on the list, just 16 months after a rogue trader defrauded it of billions? And poor IT security was one of the contributing factors:

Poor IT security to blame in Société Générale fraud | Security Central - InfoWorld

It makes you wonder about the methodology used in these rankings. The Economist, of course, completely ignored "the world" other than Europe and the US.
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Old 05-23-2009, 06:57 PM   #13
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Quote:
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...Recently I was considering a savings account at ING, but news of bailouts helped me decide that the extra couple of basis points were not worth the risk. They are welcome to my mortgage, though!
What's the trouble with ING?
I haven't heard anything, but you're making me worried now.
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Old 05-23-2009, 07:13 PM   #14
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Savings/checking - local credit union
Fixed Immediate Annuity - MetLife
Pension - Uncle Sam
Govt bonds - Treasury Direct
Major long term retirement portfolio - TD Ameritrade (collection of VG and Dodge & Cox funds)
Minor short to medium term portfolio - Vanguard, American directly
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Old 05-23-2009, 08:24 PM   #15
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What's the trouble with ING?
I haven't heard anything, but you're making me worried now.
The Dutch government had to give ING a 10 billion Euro bailout last fall...

Financial crisis: ING’s €10bn bailout - Telegraph

and it is still losing money (800 million Euros this Quarter).

ING posts $1 bln loss, UniCredit profit falls 58 percent
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Old 05-24-2009, 12:23 AM   #16
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Let's see.....

Checking account and cd's at one local bank
Money market account at another local bank
IRA with Hartford (I think I'm going to change to Vanguard)
401K, IRA, Annuity (yeah I know) and pension distribution (administered) with Fidelity
Stocks with LPL Financial Services

I figure with the above diversification, we could get money out of at least one of them in turbulent times.
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Old 05-24-2009, 01:52 AM   #17
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I have my money spread between 3 institutions. I will leave it like this at least until I reach $250,000 in any givin account then I may diversify further but that will be many more years from now. I have complete confidence in all 3 institutions so i'll probably stick with just these three:

JP Morgan Chase
401K
Rollover IRA
Vanguard
Roth IRA
Taxable Account
Local Credit Union(been with since I was 16)
Savings/MM
Checking
CD'S
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Old 05-24-2009, 02:26 AM   #18
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IRA and MF at Fidelity
401K and MF at VG
CDs Metlife and GMAC (Ally now, i think)
Considering putting more money in GMC but will surpass 250K FDIC, just asked in another thread if my wife could be the primary account holder to insure up to 500K.
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Old 05-24-2009, 08:08 AM   #19
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I have several accounts:

Taxable investment and IRAs: e*trade
Taxable investment: Vanguard
iBonds: TreasuryDirect
FX: Everbank
401(k) Fido

Thats about the best I can do. My employer is an investment bank, and they make you hold stocks only in certain brokerages with which they have arrangements to monitor your trading activity. My employer has only one discount broker to choose from, and thats etrade.

The bank doesn't care about mutual fund or FX purchases so the VG and everbank accounts aren't a problem.
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Old 05-24-2009, 01:23 PM   #20
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I have my banking activity with a brick/mortar bank that I have dealt with for 20+ years, but all of my investments are in various Vanguard funds that are connected to the bank account via ACH. I consider it one big account even though it's with 2 institutions.

My small account with Mellon Investment Services is out of the loop, but does not account for much anyway though they ACH my dividends to the checking account quarterly.
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