Vanguard vs Fidelity vs... Brokerage Mix

[Fudge102]

So having some talks with a financial advisor.  Nice kid, don't really intend to do too much, but I'm curious what he has to say since he reached out to us.  Also curious about some education plans and seeing what numbers he comes up with for the kids.

Anyhow, he's taking a look at our accounts, seeing how the mixes are and all that.  Sees that we're heavily invested in Vanguard and VTSAX.  Doesn't necessarily think that the index is the problem, more so placing all our investments in one company.  If something happens to Vanguard, etc.  Other than him using this as an avenue to sell us products, I'm curious, do others diversify their investments across firms?  I.E. Some Vanguard VTSAX and some Fidelity FSKAX? 

I get that the market does most of the work with index funds, but is there concern about just using Vanguard or just using Fidelity?

Thanks!

[blueberrybushes]

FWIW - I have everything with Fidelity which makes updates and any transactions for my DW and my accounts easy.  I also use their Cash Management option instead of a brick and mortar bank/CU.   IMO - buying a similar fund in two different brokerage firms is not really diversification - same companies, different access, more to keep track of and the risk does not change.

Did the fellow say why having two brokerages is better than one?  Like one of these is going to go bankrupt or get charged with embezzlement?

I don't see any benefit - maybe the answer is more nuanced if you are using a managed service or buying specialty products.

[reeshau]

As long as your accounts are within SIPC insurance limits, the only thing a Vanguard default of some form would do is delay you having access to your holdings until the SIPC kicks in.  So really, if you have your emergency fund elsewhere, that should be enough. (Not that such a period would be without anxiety)

For reference, there is just one open SIPC case at the moment: Bernie Madhoff, opened in 2008.  So, it's not common.
https://www.sipc.org/cases-and-claims/open-cases/

FWIW, I do have my accounts split between two firms:  Schwab and Fidelity.  (RIP TDA)  I don't mind the split; there are some features and functions differences, and if I was ever greatly displeased, I could easily consolidate.  I view it as keeping each other on their toes, as well as not having the full view of my finances, to ey and push something at me.  Schwab came from TD Ameritrade, where I opened up my taxable account.  Fidelity, not surprisingly, was my 401k, which is now rolled over.

[Telecaster]

I get that the market does most of the work with index funds, but is there concern about just using Vanguard or just using Fidelity?

Thanks!

Not really.   By some weird quirk of fate I use both Vanguard and Fidelity.  I haven't consolidated in part because I'm too lazy and also because it seems possible there could be an account glitch or something could happen to one of the companies and I wouldn't be able to access my money for a period of time.   Mostly laziness though.   

[markpst]

All I can think of is due to SIPC limit, but brokerages aren't taking your money and lending out to others like banks do, so I don't see the risk or need for this if you are using a well established firm like Fidelity or Vanguard.

I currently have all of my personal accounts with Vanguard, and my work account is with Fidelity. I could see myself consolidating into either one of the two when I retire.

[sonofsven]

For a long time I only used Vanguard, then I wanted to open an HSA and Vanguard doesn't offer one, so I opened one at Lively.
Then Lively decided to charge $$ for an HSA with invested funds so I moved it to Fidelity, which is still free.
Then Robin Hood offered a 2% match on transferred brokerage assets so I moved my tIRA and Roth there, while keeping my Roth solo 401k at Vanguard.
So, move funds to whichever offers you the best deal. Loyalty is rarely rewarded in the marketplace.

[jim555]

I use at least two major brokerages, never want all the eggs in one basket.

[MDM]

For various reasons we had accounts (traditional, Roth, and taxable) at Fidelity, Schwab, and Vanguard.  That worked fine.

But, to get down to one "consolidated 1099" form at tax filing time, we moved everything from the other two into the one that had the largest total balance. 

Moved all investments in the traditional and Roth accounts to the one broker's funds, and moved all investments in the taxable account with minimal capital gains to the one broker's funds.

Still have a couple of the "other" brokers' funds being held by the one broker, at no extra cost.

See Stocks — Part X: What if Vanguard Gets Nuked? - JLCollinsnh for a good overview and note his comment:

All of this, by the way, is also true of other mutual fund investment companies

[FINate]

Something going wrong at Vanguard is way less of a worry than a salesperson inventing problems to try make their commission.