I was wondering if there is any reason to use more than one on-line broker. Currently I have all my investments with a single broker. Does this open me to some risk? Later this year I am expecting some money from a real estate transaction and I wonder if I should add it to my current account, or open a new account with a new broker.Anyone with an opinion? mabl
OPINION: might be some slight risk if flaky brokerageand you have tonnes of assets. might be some value ifyou want advice from one and low fees from the other otoh- can be a pain keeping things straight(been there/done that --at one time, I was usingthree different brokers)
I can't see any reason for using more than one broker period -- on line or otherwise. I can see lots of reasons not to. The only risk that I see is if somehow that broker disappeared with your investments. But the Schwabs of the world have a very different setup than the Bernie Maddoffs.If I were Gate or Buffet with 40+ billions I might consider more than one, but once you get past the first 200 million, you undoubtedly have hired someone to worry about all that anyway.GordonAtlanta, GAUSA
I can't see any reason for using more than one brokerThat's very unimaginative. I can see lots of reasons not to.Such as? Frankly, I can't see many more than a couple of (weak) reasons not to.A married couple would have a minimum of 7 accounts. One Roth, one IRA, one individual account each, plus one joint account.I don't see any strong reason why these can't be a different brokers.A very good reason for multiple brokers is so that you can run different screens in different accounts. The greatly simplifies tracking of your screen performance. The brokers I've used won't let you have more than one account titled the same way, so you've got to use different brokers.Another reason is that different brokers have different combinations of features and prices. Interactive Brokers has cheap stock commission but an awkward web site for the non-daytrader. Mutual fund commission is very high--they **really** don't want your fund business. Realtime quotes cost $10/mo. Research tools are virtually non-existant.Etrade has a bank, so you can link your brokerage accounts with checking & saving account and easily move money back and forth instantly. But higher commission. Very good research tools.Just2Trade and OptionsHouse have low commission, but no banking, and little research tools.
A very good reason for multiple brokers is so that you can run different screens in different accounts.I use Fidelity for everything except my HSA brokerage account (when I set it up they didn't handle them, maybe they do now). Fidelity lets me open accounts however I wish. I have a different accounts for different things. My "scholarship fund" is separate from my retirement funds separate from my other designated funds. So I do run different screens in different accounts in effect.The only advantage I'd see to different brokers, insurance issues. Like bank accounts with FDIC, brokers are supposed to be covered by SIPC. It to has its limits. However, when I hit those limits, I talked with Fidelity and they said they buy extra insurance or something to that effect. So it depends if your comfortable with the "extra insurance" of if you want to depend on the government.JLC
I can't see any reason for using more than one broker period -- on line or otherwise.I can. Insurance limits. Broker outages. Separation of taxable and tax deferred accounts. Even separation by beneficiary.I'm doing it for something less than 200 million.
Several years ago, the money market fund that was the default at TDAmeritrade had some problems (the NAV went below $1.00), and the accounts were frozen. I had taken my money out of that money market fund, and put it with another that held only treasury bonds. There was no problem there, but the manager was the same as the one with the problem, and so my funds got frozen also.TDAmeritrade was not at all helpful. Since I was using that money for living expenses, I had to scramble around to find other sources for living expenses, and ended up using a line of credit for $20,000. Eventually, everything was OK, although I think that the people in the default money market fund lost money.Anyway, I do not want to go through that again, and so I have several different accounts.
Best Of |
Favorites & Replies |
Start a New Board |
My Fool |