Eggs in one basket

[kevink]

I have most of our money at Vanguard. Safety is the only real reason I'd spread our money, and I have been considering moving all our tax deferred and tax free accounts to Fidelity (which would be substantial) - this (below) is the only thing that gives me some reservations...

Well Vanguard certainly touts their unique ownership structure (and uses it as an excuse for their lousy customer service and laughably bad website), but they are anything but transparent with their fund shareholders-cum-"owners" about pretty obvious stuff like executive compensation, voting on shareholder issues and so on. So the "you own us" thing doesn't translate into any real-world advantages (and I say this with regrets, as both a great admirer of Jack Bogle and as someone who invested only at Vanguard for many years and would have preferred to continue to do so).

We still have mostly Vanguard funds and ETFs but long since moved custody over to Schwab, which has vastly superior customer service, an excellent website, a bank that pays decent rates AND offers a debit card that reimburses ATM fees worldwide and - last not least - has real brick-and-mortar offices that DW (who is far less interested in investing but likely to outlive me) can visit at any time for help. Vanguard as the only one of the "big three" without physical offices has no excuse for not being excellent at the few things they do offer, but IMHO the only thing they do well is run mutual funds and ETFs and one need not hold those funds at Vanguard.

I think Fido and Schwab are equally good choices to diversify custody for a Vanguard investor. We also appreciate the value of having immediate local access to cash at a credit union. On the other hand we liquidated our holdings at Treasury Direct after experiencing their buggy website and reading numerous nightmare stories about surviving spouses trying to access funds held there. Easy enough to buy T Bills at auction at Schwab or Fido and set them to auto-roll on the cash side (a "roll-your-own" Treasury MM fund with a 0% ER), while buying regular bonds or TIPS is much easier at a brokerage than through TD.

 

[Koolau]

For me, it's

90% Vanguard (taxable and Roth)
6% TSP (401K equivalent for federal employees and retirees, administered by Uncle Sam)
4% bricks'n'mortar bank (OK, waste of money, but I don't care. Such a luxury to always have plenty at hand for the unexpected).

I am the absolute worst worry-wart in the universe, and I admit that I do worry about what would happen if Vanguard died for some reason. But, if that happened I surely wouldn't be the only one in trouble, plus I have my SS and mini-pension deposits each month.

Heaven help me, but I still like to walk into a bank and deposit a check or get some cash. I haven't used a "machine" in years. I too like a small chunk of my total money near where I live and where people know me by sight.



I still recall in the early 50s walking into "our" bank with my dad. There were brass spittoons in the lobby (yech!), marble pillars, teller windows with the lattice covering that said "next teller, please," Beautiful women in professional clothes waiting on customers and bank managers sitting at huge desks. It was like another world. A world of opulence and, dare I say it, fabulous wealth (with all the trappings.) All that is gone now. I like our branch which is in a shopping center, but it doesn't even hint at what banks used to be. YMMV



If SS ever reports me dead prematurely, the folks at the bank will at least question that when I walk up to the teller's booth. AND since DW and I have joint checking, she can get money form the account if need be. Heh, heh, I knew DW would come in handy some day.

 

[jazz4cash]

Go to reddit sometime and read about the folks who have had accounts locked for much longer periods.

.

How do you find these? I only found 3. Two were new accounts with 1-3k balances. A
The third was an inherited account that was probably not released because poster was not a beneficiary. I maybe don’t have enough patience for Reddit.

 

[youbet]

In the past ~10 years I've gone from 8 or 9 financial institutions to 3 and one of them is Schwab. Now I'm seriously considering moving everything to Schwab except for a small amount (maybe 50 to 100k) that I'll keep in a local B&M bank.

A huge reason for this is simplification for the DW in case something happens to me. Plus, Schwab has everything I want in an investment firm.

No worries here.

+1

Similar to what we're doing. Schwab has our main FIRE brokerage account and our TIRA's and Roth IRA's. A local bank has our checking account (with pension and SS direct deposit) savings account and a couple CD's. I guess the split is approximately 95% - 5%. If there were some catastrophy where we couldn't access the Schwab holdings, the bank stash plus recurring retirement income would cover us for over a year.

We don't worry about this situation from a risk standpoint and enjoy the simplicity of just two institutions to deal with.

 

[Jeb-NY]

I reduced the number of baskets over the years and think I have reached the number I'm happy with.

My IRA/Roth & joint Taxable accounts - Vanguard ~75%
Wife's IRAs/Roth - Fidelity ~ 20%
Joint account at local bank and home safe - ~5%

Living mostly off SS, we waited till we were 70, except for large capital purchases.

 

[retire48in2018]

I concur with having at least 2 entities.

We have a local bank/credit union with multiple accounts and debit cards to manage risk/$ effectively.

We use Fidelity for investing and also have a cash management account with a debit card there.

There was a 3-day issue (included a weekend) at the local bank where they struggled with processing debit cards and limited in lobby time. I don’t know if they were hacked, or what. But after those 3 days, a different app, web address, etc were required.

We used cash and had the backup fidelity card during those 3 days.

 

[Midpack]

I have most of our money at Vanguard. Safety is the only real reason I'd spread our money, and I have been considering moving all our tax deferred and tax free accounts to Fidelity (which would be substantial) - this (below) is the only thing that gives me some reservations...

Well Vanguard certainly touts their unique ownership structure (and uses it as an excuse for their lousy customer service and laughably bad website), but they are anything but transparent with their fund shareholders-cum-"owners" about pretty obvious stuff like executive compensation, voting on shareholder issues and so on. So the "you own us" thing doesn't translate into any real-world advantages (and I say this with regrets, as both a great admirer of Jack Bogle and as someone who invested only at Vanguard for many years and would have preferred to continue to do so).

That doesn’t address my only goal - safety. It would be easier for the Johnson family to financially harm Fidelity than the 30 million owners of Vanguard. I’m not saying Fidelity is risky by any means, but they’re not the same. While Vanguard doesn’t disclose the salaries of senior managers, the fees suggest executive salaries are reasonable. Can’t conclude that about the Johnsons…

How the owners of Fidelity get richer at everyday investors’ expense

The billionaire Johnson clan has a private venture capital arm that competes directly for lucrative deals with the Fidelity funds in which millions of Americans put their nest eggs. Corporate governance specialists say the arrangement poses a troubling conflict of interest.

https://www.reuters.com/investigates/special-report/usa-fidelity-family/

 

[Car-Guy]

That doesn’t address my only goal - safety. It would be easier for the Johnson family to financially harm Fidelity than the 30 million owners of Vanguard. I’m not saying Fidelity is risky by any means, but they’re not the same. While Vanguard doesn’t disclose the salaries of senior managers, the fees suggest executive salaries are reasonable.
Quote:
The billionaire Johnson clan has a private venture capital arm that competes directly for lucrative deals with the Fidelity funds in which millions of Americans put their nest eggs. Corporate governance specialists say the arrangement poses a troubling conflict of interest.

Makes you stop and think, since "stuff does happen". Hope they are not the next Sam Bankman Fried or Bernie Madoff.

 

[swakyaby]

I’m one of those who had the experience of being locked out of my IRA account for at least 9 months. No explanation given, just stopped receiving account statements. Several months of me inquiring and complying with all requests for proof of identity, and silent treatment when I asked what is going on with my account. Finally asked another investment institution to assist me in transferring my IRA. It took another 89 days and repeated demands for fund transfer to take place. Glad I don’t keep all my retirement funds in one place.

 

[Koolau]

I’m one of those who had the experience of being locked out of my IRA account for at least 9 months. No explanation given, just stopped receiving account statements. Several months of me inquiring and complying with all requests for proof of identity, and silent treatment when I asked what is going on with my account. Finally asked another investment institution to assist me in transferring my IRA. It took another 89 days and repeated demands for fund transfer to take place. Glad I don’t keep all my retirement funds in one place.

May I ask which investment house "did" this to you?

 

[swakyaby]

Dreyfus, a subsidiary of the Bank of New York Mellon Corporation

 

[MRG]

How do you find these? I only found 3. Two were new accounts with 1-3k balances. A
The third was an inherited account that was probably not released because poster was not a beneficiary. I maybe don’t have enough patience for Reddit.

I've seen bunches on the r/Fidelity sub. You have to see them quickly as they appear to get deleted quickly.

 

[MRG]

Dreyfus, a subsidiary of the Bank of New York Mellon Corporation

What time frame did this occur?

 

[Koolau]

Dreyfus, a subsidiary of the Bank of New York Mellon Corporation

Thanks! One to avoid, I guess. I wonder how their size/business model compares to say, Vanguard or Fidelity... I've heard of Dreyfus, but don't know anything about them. Aloha.

 

[swakyaby]

What time frame did this occur?

A good question. This happened quite a long time ago, at a time when I didn’t have online access and did everything by mail, fax, or phone call. Had just finished medical residency in the mid-90s, and rolled over my retirement account to Dreyfus, a company that did heavy advertising on the west coast in those days . . . I believe their logo back then was a lion. Set and forget, just collecting the quarterly statements until the early 2000s, and the statements stopped coming. I know that was a long time ago, but I remember how upsetting it was that the company locked me out of my account and went silent on me, despite my complying with their every proof of identification demand. I will always have at least 2 financial institutions holding my funds due to the memory of this.

 

[Koolau]

will always have at least 2 financial institutions holding my funds due to the memory of this.

Not counting my bank, I think I'm down to four now - if I count DW's stuff in there too. Nice that she is her own "entity" as we share with each other. Unlikely we'd both be frozen out at the same time.

 

[Beachcomber]

I am moving 99% of my liquid investments to Wells Fargo. They have wealth management advisors and if assets exceed $5 MM your brokerage fee is only 50 basis points, or .05%. They also offer private banking options and legal services/advisors for basically no cost. Have been with Wells Fargo banking for 30+ years. They are also their own clearing house.

It will be nice to have 2 local advisors to manage accounts.

 

[target2019]

Beachcomber,

How Much Is 50 Basis Points? 50 basis points are the equivalent of 0.5 percentage points. If the Fed increased interest rates from 4.75% to 5.25%, you could say that interest rates rose 50 basis points. https://www.investopedia.com/ask/answers/what-basis-point-bps/

50 basis points doesn't sound like much, but when you add in the cost for high-expense-ratio funds they put you in, it is substantial.

 

[DrRoy]

About 2/3 is at Fido. The rest in a 401K at Merrill.

 

[Beachcomber]

Beachcomber,

50 basis points doesn't sound like much, but when you add in the cost for high-expense-ratio funds they put you in, it is substantial.

There are no high expense ratio funds. And no mutual funds. We plan to own every stock individually and duplicate any ETF or MF they like.

That was one of the reasons for my decision. I also like the 3% credit card and private banker status.

 

[Montecfo]

Well Vanguard certainly touts their unique ownership structure (and uses it as an excuse for their lousy customer service and laughably bad website), but they are anything but transparent with their fund shareholders-cum-"owners" about pretty obvious stuff like executive compensation, voting on shareholder issues and so on. So the "you own us" thing doesn't translate into any real-world advantages (and I say this with regrets, as both a great admirer of Jack Bogle and as someone who invested only at Vanguard for many years and would have preferred to continue to do so).



We still have mostly Vanguard funds and ETFs but long since moved custody over to Schwab, which has vastly superior customer service, an excellent website, a bank that pays decent rates AND offers a debit card that reimburses ATM fees worldwide and - last not least - has real brick-and-mortar offices that DW (who is far less interested in investing but likely to outlive me) can visit at any time for help. Vanguard as the only one of the "big three" without physical offices has no excuse for not being excellent at the few things they do offer, but IMHO the only thing they do well is run mutual funds and ETFs and one need not hold those funds at Vanguard.



I think Fido and Schwab are equally good choices to diversify custody for a Vanguard investor. We also appreciate the value of having immediate local access to cash at a credit union. On the other hand we liquidated our holdings at Treasury Direct after experiencing their buggy website and reading numerous nightmare stories about surviving spouses trying to access funds held there. Easy enough to buy T Bills at auction at Schwab or Fido and set them to auto-roll on the cash side (a "roll-your-own" Treasury MM fund with a 0% ER), while buying regular bonds or TIPS is much easier at a brokerage than through TD.

If you wish to use brokerage services Vanguard is likely the worst of the bigs. Their roots are in funds and they regularly fail to participate in annual 3rd party evaluations of their services. All the other brokerages participate.

Fidelity, E-Trade, or Schwab would be a better choice in my view.

 

[Montecfo]

I consolidated quite a lot years ago, moving my fund company IRAs to E-Trade with the rest of my brokerage funds.

Consolidating further has hurdles as E-Trade does not offer Donor Advised Funds (Fidelity) and my HSA was at HSA Bank and TDA ( now Schwab). I guess I could move the HSA to Fidelity.

Otherwise I have a local B&M bank for checking and a high yield B&M bank for savings (yielding 5.3%).

So I have some alternative choices for funds if there is some problem.

 

[target2019]

There are no high expense ratio funds. And no mutual funds. We plan to own every stock individually and duplicate any ETF or MF they like.

That was one of the reasons for my decision. I also like the 3% credit card and private banker status.

Very interesting!

What benchmark are you using? All stock?

For example, I use RLBGX (active managed 50/50 fund). For your portfolio I guess you might compare it to an S&P 500 fund?

My total expense ratio on passive index funds and stocks is 0.15%.

 

[Beachcomber]

Very interesting!

What benchmark are you using? All stock?

For example, I use RLBGX (active managed 50/50 fund). For your portfolio I guess you might compare it to an S&P 500 fund?

My total expense ratio on passive index funds and stocks is 0.15%.

I am 47% equities in these inflationary times.

Depending on the etf, we will evaluate a Bluestone or a Blackrock holding, for instance.

Will be meeting soon to discuss positions after transitioning to this new broker team next week.

It's hard to switch brokers after 25 years.

 

[CRLLS]

There are no high expense ratio funds. And no mutual funds. We plan to own every stock individually and duplicate any ETF or MF they like.

That was one of the reasons for my decision. I also like the 3% credit card and private banker status.

I am curious. How often are you going to readjust your stock holdings to follow the target funds? It would seem to me that trying to match the holdings of any managed fund will always be behind the curve no matter how often you sell/buy. it might be a good strategy for a SP500 fund or such where the turnover is very low. But then again, so are the fees.