Fidelity as one stop shop for life?

[FREE866]

So what happens if a firm goes down? Our funds are still protected right?

Yes. Your assets are segregated and are completely separate from the firms assets. Therefore, they can't be claimed by creditors in a bankruptcy.

 

[sengsational]

I have significant separation since my 401k is not at Fidelity. But we just got notified that the company is moving the 401k to Fidelity. I must admit, I was happy to hear that because the current admin is not very good. I still have a good bit separate from Fidelity. Just a little with Vanguard, but hold a lot of Vanguard ETF's. Nothing at Schwab.

 

[Pointby2]

I ran your question through ChatGPT and it looks like your assumptions are all correct. The forum doesn't allow AI replies but here is a quick synopsis.

As described, you can convert VSTAX to VTI, you can then transfer it in kind to Fidelity without creating a taxable event. They you may continue to buy VTI at Fidelity commission free.

VTI is the most tax efficient but FSKAX isn't far behind, same with FZROX.

 

[Gark]

As old-fashioned as it is, "don't put all your eggs in one basket" still resonates with my outlook.

 

[COcheesehead]

If you put all your eggs in one basket, you get a better basket.

 

[Lewis Clark]

As old-fashioned as it is, "don't put all your eggs in one basket" still resonates with my outlook.

As someone who has had multiple accounts locked for weeks (edited to clarify up to about 16 weeks) due to a single and simple clerical error, I follow this philosophy.

 

[COcheesehead]

Do we have multiple insurance carriers for our home or auto? What if they don’t pay a claim? Do you have a second home in case yours burns down?
If you have access to local checking/cash, good access to credit, I see no reason to add another level of complexity to investing.

 

[Midpack]

Do we have multiple insurance carriers for our home or auto? What if they don’t pay a claim? Do you have a second home in case yours burns down?
If you have access to local checking/cash, good access to credit, I see no reason to add another level of complexity to investing.

Literally many orders of magnitude difference for most here. Losing your nest egg would be a much bigger blow than losing your home or car for most...

 

[COcheesehead]

Literally many orders of magnitude difference for most here. Losing your nest egg would be a much bigger blow than losing your home or car

No one has lost their nest egg. There have been stories of loss of access for a short period. Something easy to address.

 

[mrfeh]

Hello F.I.R.E Team.

Hello. I have my pre tax 401k and Roth in plan conversion, Roth IRA, ESPP, BrokerageLink (currently, no investments) at Fidelity.

What I gathered so far is the best strategy is to convert VTSAX to VTI at Vanguard (Vanguard online account has this option). This will guarantee I will NOT get a tax event/fees correct?

That is my understanding, although I have never done it. I would verify w/ Vanguard.

After this, create a taxable account at Fidelity and do an in-kind transfer from VTI Vanguard to taxable Fidelity account and then keep buying VTI (Again, with no taxable/fees event)?

Transferring an account in-kind will not trigger any tax events.

I also read that it is not a good idea to buy a zero cost fund like FZROX in a taxable account and buying VTI ETF is the most tax efficient compared to FSKAX in a taxable account?

It's my understanding that VTI Is more tax efficient than a mutual fund like FSKAX. The only reason to not buy a zero fund at Fido is that it's not transferable if you choose to move to another vendor someday.

Do you think it’s a good strategy to have all my accounts at Fidelity for life?

What do you all experts advice me to do?

We have consolidated at Fidelity. We use their CMA for checking.

There is a very long thread on bogleheads on this subject: https://www.bogleheads.org/forum/viewtopic.php?t=266538

https://www.bogleheads.org/wiki/Fidelity:_one_stop_shop

 

[YellowSubmarine]

We have two banks and two brokerage/investment firms that we deal with. Fido has the lion's share. Personally, I would never back my self in a corner with a sole provider. I went through the Home State Saving & Loan debacle (OH) in 1984/5. Once burned (potentially); twice shy. Nearly had my entire newly established business and personal resources locked up for 60-90 days. With the assistance of Huntington Bank, I beat the lock up and business insolvency by 90 minutes.

 

[audreyh1]

So what happens if a firm goes down? Our funds are still protected right?

You should keep copies of recent statements. I download and save all PDFs. You still own the assets. Funds in your core (cash) accounts may have coverage limits if not in a mutual fund, but you still own all securities in your accounts.

 

[audreyh1]

No one has lost their nest egg. There have been stories of loss of access for a short period. Something easy to address.

Except for people investing with the likes of Bernie Madoff etc.

 

[junkanoo]

As old-fashioned as it is, "don't put all your eggs in one basket" still resonates with my outlook.

Absolutely.

For those with large portfolios, it's wise not to ever have to find out the answer to the question ... what could possibly go wrong?

 

[FD1000]

Are you really safer?

Your question reminded me of something I witnessed at my local bank when I was in my early twenties.
A man walked up to the teller and said he wanted to withdraw all of his money.
The teller replied, "Mr. XXXXX, you did the same thing yesterday."
The man became upset and insisted, "Give me all of my money. I want it in cash."
The branch manager came over and told the teller, "Go ahead and give him the money."
The teller counted out more than $45,000 in cash and handed it to him.
The man looked at the cash for a moment, then handed it right back to the teller and said, "Now deposit it."
He turned to the people waiting in line, smiled, and said, "This is a great, safe bank. They had all of my money today, and tomorrow I'm going to do the same thing again."

I've never forgotten the above.

We've been using both Fidelity and Schwab for more than 25 years.
For many years, I alternated between the two, transferring about $1 million in-kind every other year to qualify for a $2,500 cash bonus. I haven't done that in the last eight years.

Today, we still maintain five accounts at Fidelity and five at Schwab. An in-kind transfer between the two firms typically takes about two business days.
The vast majority of our assets are now at Schwab because its mutual fund trading process better suits my investment style. Being able to trade funds on the same day has been worth thousands of dollars to me over the years.
There are 2 other reasons to have 2 brokers. I'm keeping it in my vault.

I've also found my local Schwab representatives to be more helpful than those at Fidelity. Other than that, I think the two firms are very comparable.

 

[junkanoo]

I also read that it is not a good idea to buy a zero cost fund like FZROX in a taxable account and buying VTI ETF is the most tax efficient compared to FSKAX in a taxable account?

FZROX distributes a slightly lower dividend, so it has less tax drag. However, the difference is not large so tax-efficiency is not the difference maker here. FZROX has had slightly better total return over VTI over the last five years. Naturally, the past is the past.

 

[Koolau]

As old-fashioned as it is, "don't put all your eggs in one basket" still resonates with my outlook.

Agree completely. Too many little glitches can trip you up. It's unlikely that you'd actually lose your money but it certainly could wind up in limbo or just be "held up" for a while.

 

[pacergal]

We have all of our investment accounts at Fidelity. We have a dedicated certified financial planner to work with.
We have banking at B of A and a local CU.
Simplicity is key for me as I age and for our kids when we die.

 

[junkanoo]

We have all of our investment accounts at Fidelity. We have a dedicated certified financial planner to work with.
We have banking at B of A and a local CU.
Simplicity is key for me as I age and for our kids when we die.

Dedicated ... to what?

 

[RetiredHappy]

Dedicated ... to what?

Assigned maybe a better description?

 

[ncbill]

The only one is the FZROX . You can't transfer it anywhere else so you can have tax issues.

As far as being safe with Fidelity for life, I never said that. I keep half our assets in a separate provider.

Yeah, I made the mistake of buying the above in a taxable account instead of just buying more VTI.

It's what I sell first, of course.

 

[FD1000]

Yeah, I made the mistake of buying the above in a taxable account instead of just buying more VTI.

It's what I sell first, of course.

Where is the mistake?
Based on Junkanoo, it did better than VTI with lower distribution.
Taxable is usually what you use first for expenses.
Don't sell and transfer, just spend it over years and leave it at Fidelity.
You can transfer the rest if you like.

 

[tizod]

So I K

So I am safe with Fidelity for life?

Can you answer my other questions in the topic?

No one can answer this but the fact is there is no guarantee that any single company will not have an issue: odds are they will. Did you diversify your investments? I worry a hacker/ransomware etc. (no one knows what quantum computers will do to break encryption) will breech something. Odds of two happening at once: much lower. I split my money about 50% to Etrade and schwab. Plus some outside for local bank ATM etc. Cannot imagine someone having 100% in one brokerage. Lehman bros anyone?

 

[COcheesehead]

Lehman bros anyone?

Not even close to applying here. They went under based on their connection with mortgage backed securities. We’re talking brokerages here.

 

[Dtail]

Not even close to applying here. They went under based on their connection with mortgage backed securities. We’re talking brokerages here.

Agree. I worked for Lehman in 2006 and saw the whole buildup leading to the fall. The leading trader in the MBS dept who made 37m in bonuses in 2006 said this game will never end.
P.S. I was not there in 2008.