Scattered - funds in different places

[O2Bfree]

I'm with Fidelity through my workplace, and have a chunk in FSEVX, Fidelity Spartan Extended Market Index Fund Fidelity Advantage Class. I've been eyeing VTSAX, Vanguard Total Stock Market Index Fund Admiral Shares, but if I'm not mistaken, I'd need to open a Vanguard account to get some.

My retirement funds are already scattered in various places, in Fidelity, National Securities (old company stock account), Scottrade, and some IRAs at my bank. Other than more complex record keeping, are there any big disadvantages to opening an account with yet another institution? Will I really regret it when I retire and start drawing income?

 

[RunningBum]

I don't think there's any big disadvantages. As you say, the record keeping is a bit more. You have to wait on more forms for taxes, keep track of passwords, and when you die, your executor will have to track all the accounts down.

There are a few perks with having a lot at one institution. Vanguard Flagship, with over $1M, gets you a dedicated service rep (and a pool of other reps in case yours is unavailable), access to a CFP, 25 free brokerage trades, free or reduced TurboTax, and possibly access to some closed fund. $10M gets you another class with a few more benefits. Not that much really. Some places have nicer perks, but charge more in fees. Back in the dotcom boom, it would've been nice to have a large amount with a brokerage that could get you in an IPO. That might have been worth it, though I'm not sure just how much you really had to be let in.

All in one place makes it easier to move money between funds, which helps if you rebalance asset classes. You can still do it between institutions, but your money may be out of the market for a few days and there's more possibility of a glitch.

OTOH, more accounts reduces the impact of an account being hacked or being unavailable to you when you might need it in a hurry. You won't have all your eggs in one basket.

Personally I have all mine in VG except for CDs and bank accounts. Sometimes I think about splitting it at Fido so I don't have it all in one basket but haven't been motivated to do it.

 

[RunningBum]

Also, while I think you're correct that you need to go directly to VG for admiral funds, you could buy the corresponding ETF (VTI, for VTSAX) at any brokerage and get the same expense ratio.

 

[O2Bfree]

Ah, yes --thank you RunningBum. So now I'm learning a little about Admiral shares vs. ETFs:

When It Makes Sense to Buy a Vanguard ETF Rather Than the Index Fund

To repeat a previous point, one outstanding feature of ETFs is their ability to trade intraday like a stock, whereas mutual funds can only trade at the end of the day. When looking to take advantage of price movements (or in anticipation of a price movement), ETFs can be advantageous.

For example, like with stocks, a ETF investor can place a stop-loss order that will trigger the sale of the respective ETF at a pre-determined price. This can be quite useful in a rapidly declining price environment.

To boil everything down, there are only two basic reasons to buy Vanguard ETFs instead of the comparable Vanguard index funds:

If you want the ability to place minute-by-minute, intraday trades
If you can’t afford the Admiral share minimum initial purchase.
Otherwise, the clear winner in the Vanguard index funds vs Vanguard ETFs competition is the index funds — if you can get the Admiral shares. ---

I don't currently see myself doing intraday trades in a declining market, but I'm going to think about ETFs a bit more.

 

[Bamaman]

I prefer to keep all investments in one or two places. Life is complicated enough. It's nice that Fidelity's selling I Shares ETF's and trades can be made online thru their website.

In times such as this week, it's nice to have the "emergency fund" to draw upon if needed without having to cash any funds/stocks in.

 

[Animorph]

With electronic funds transfers it's really easy to shift funds between many brokerages and fund companies. Nonetheless, I hope to consolidate a bit over the next 10 years just to simplify things as I get older.

Not going with Vanguard Extended Market Index, VEXAX? That's the comparable Vanguard fund for FSEVX. They track very closely, with a small Vanguard edge according to Perf Charts. Or try Fidelity TSM FSTVX if you want to change indexes but stay at Fidelity.

 

[O2Bfree]

Not going with Vanguard Extended Market Index, VEXAX? That's the comparable Vanguard fund for FSEVX. They track very closely, with a small Vanguard edge according to Perf Charts. Or try Fidelity TSM FSTVX if you want to change indexes but stay at Fidelity.

I do have all those on my FOIL (Funds of Interest List). VEXAX is a possibility, a little higher ExR and risk than FSEVX though.

 

[ERD50]

... when you die, your executor will have to track all the accounts down. ...

Yes, though the OP doesn't seem to be too scattered, but some consolidation does make things simpler.

The one change I would heartily recommend though: 'and some IRAs at my bank. ' -- when settling my FIL's estate, the bank IRA's were among the most trouble-some. Other's have reported the same. It was just a mess to get them closed and consolidated. The banks just seems to be some combination of clueless/obstructionist. We consolidated them at Fidelity, and they just seem way more on top of things there. Other big-name places should be good as well, we chose Fidelity since they have a nearby brick&mortar presence, which was helpful when we needed to get MIL in to sign things.

Also pay attention to how the beneficiaries are named. IRA's avoid probate since the heir(s) are named in the document. So make sure that fits in with your overall wishes - big-picture-wise.

And if you have a trust, be careful about naming your trust as the beneficiary of an IRA. That could mean splitting that IRA among lots of people (if there are children and grandchildren named in the trust). That seems like a lot of extra work for the executor.

-ERD50

 

[O2Bfree]

The banks just seems to be some combination of clueless/obstructionist. We consolidated them at Fidelity, and they just seem way more on top of things there.-ERD50

Yes, I've run into this several times already just trying to contribute to an IRA at my bank. One year, I went in to contribute, and the account manager didn't know exactly what to do. He said, "We're more used to people taking money out than putting it in." I was stunned!

Another year, I had to go back THREE TIMES before they got the right paperwork in order.

The year after that, I called ahead to make an appointment and let my intentions be known. When I got there, I told the teller I had an appointment. She retrieved a folder, looked through it, and said, "Oh yes, you must be so-and-so. I said no, I'm o2BFree. She looked lost and said, "Well...do you know who so-and-so is?"

I do plan to move my IRAs elsewhere, but have been procrastinating since I'm not looking forward to the hassle.

 

[big-papa]

Mine are scattered. All of my tax deferred accounts including rollover IRA's and my current employer's 401k plan are at Fidelity. I also have a taxable account there and one at Vanguard. I have a deferred compensation account at MullinTBG. Lastly I have a small account at Schwab from back when I used to own individual stocks - was going to be a pain to close it so i just keep open with a single mutual fund. Presently about 60% of my investments are in tax deferred accounts and 40% are in taxable accounts.


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