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Wisdom/Risk of Using 1 Investment Company?
Old 01-22-2013, 01:41 PM   #1
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Wisdom/Risk of Using 1 Investment Company?

We have our assets split between 2 Fund Families. In considering moving it all into one, the question of safety/wisdom came up -- is there any danger or risk in doing this? Assets would still be split among different funds, but within the same family. Thanks.

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Old 01-22-2013, 01:53 PM   #2
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Even though you current have two fund companies, they may use the same custody for the fund(s). There are only of handful of large custodians in the US. They are JPM, BONY, SS, and Citi. And since each fund goes through an annual audit and fund companies reconcile the NAV daily against the custodian's record, there shouldn't be any concern. Besides, I seriously doubt the gov't will let another one of these institutions fail given what happened after Lehman. So you are save with one.
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Old 01-22-2013, 02:03 PM   #3
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Companies like VG, FIDO, TRP, etc. don't handle their own funds?
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Old 01-22-2013, 02:07 PM   #4
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They all have to use a custodian to save keep the assets. Read the fund's annual report and you will see who that custodian is. I think Vanguard uses JPM and Fidelity uses StateStreet or BONY.
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Old 01-22-2013, 02:17 PM   #5
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Per the Bogleheads Wiki on Vanguard safety:

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...Vanguard (and every other US-regulated mutual fund company) must custody their assets with a third party. All of the funds managed by Vanguard have their assets held with JPMorgan Chase
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Old 01-22-2013, 02:24 PM   #6
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I like have at least some funds at a second company. Less chance of a single computer or natural disaster freezing everything up.
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Old 01-22-2013, 02:41 PM   #7
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I like have at least some funds at a second company. Less chance of a single computer or natural disaster freezing everything up.
It is highly unlikely that anything mission critical is exposed to a single point of failure.
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Old 01-22-2013, 03:45 PM   #8
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I think two can't hurt, but three gets too complicated to manage. Actually, even with two, I view one exactly in the way Animorph suggested... if I need something quick, and the primary company is having a bad week systems-wise, it is nice to have a second company to pull assets from. So maybe 90% in the primary - to secure from then superior, attentive customer service - and 10% in the secondary.
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Old 01-22-2013, 04:23 PM   #9
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Lots of good responses in this thread on the subject: Bogleheads • View topic - Diversifying across mutual fund companies?

In particular, we know that many places are under cyberattack, so maybe, just maybe, spreading assets around is helpful.
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Old 01-22-2013, 04:32 PM   #10
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I don't lose any sleep having all the funds with a place like VG. The way I look at the situation, I've been there for about 25 years without a problem. 25 more years and I may not be around. I'll take my chances and enjoy the simplicity of only one family.

If the waves get rougher and risk more real, I'll wait until then to adjust, but not now.
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Old 01-22-2013, 05:32 PM   #11
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I limit the amount of funds to any one account according to the SIPC maximum coverage----500k. When I reach that limit I open another account. Also no more than two accounts per broker, just to play it safe.

I hope having too many accounts will be may future problem.
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Old 01-22-2013, 05:39 PM   #12
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We have two accounts, Fidelity and vanguard. Even though it shouldn't, it it helps me sleep better. The recent regulatory changes on cost basis tracking removes the last real obstacle to combining them.

I also keep a strict limit of how much money we will have in any one account, the current cutoff is $100M.
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Old 01-22-2013, 06:01 PM   #13
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100 M? Really?
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Old 01-22-2013, 07:00 PM   #14
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Has MichealB won the lottery ? :-)
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Originally Posted by MDJO
100 M? Really?
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Old 01-22-2013, 07:28 PM   #15
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Agree with having accts at 2-3 investment firms. But 7-10 tends to get too complicated. Don't ask me how I know that
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Old 01-22-2013, 08:13 PM   #16
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Old 01-22-2013, 09:04 PM   #17
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Keep cash/cash reserves under $250k per registration to maintain SIPC coverage in full.

Registration should not exceed $500k total.

Here's a link:

http://www.sipc.org/Portals/0/PDF/HSPY_English_2011.pdf
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Old 01-22-2013, 09:27 PM   #18
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I have investments in Vanguard, and in the TSP.

I am not too worried about Vanguard. Between the TSP, Social Security (which I have not claimed yet), and my teeny-tiny pension, I will be fine even if Vanguard falls into a black hole, never to be seen again.

I am not actually expecting that to happen any time soon.... But, the possibility of failure of any one income stream is why I planned my retirement to depend on multiple income streams, not just one or two.
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Old 01-22-2013, 10:36 PM   #19
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I think the only virtue of using a couple of investment companies is that there MIGHT be a slightly lesser chance of having group think color all the investments (and risks) with the same view
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Old 01-23-2013, 04:54 AM   #20
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Quote:
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100 M? Really?
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Has MichealB won the lottery ? :-)
I never said I had $100M, only that if my account ever reached that amount I'd stop adding to it and open another. I figure I have the same chance of that happening as I do of Scarlett Johansson calling and asking me out for a date, but it's good to have a plan in place just in case it does.
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