FREE NEWSLETTER
BEFORE 2022, OUR investments were held by multiple financial firms, more by chance than choice. Fidelity Investments was the 401(k) recordkeeper. My two individual stocks were held by separate transfer agents. My brokerage account was with Alight Financial. My two annuities and a small IRA were with RiverSource. It was a mess.
Each had different processes, websites with different functionality, and customer service that ranged from nonexistent to annoying. In one case, I couldn’t take a required minimum distribution online. I was required to speak with someone each time—a rep who’d then suggest where I put the cash.
My misplaced loyalty to my former employer—where I’d set up the 401(k) plan—for years kept me from rolling over my plan balance. When my old employer implemented a fee on inactive accounts, though, I’d had enough. It was especially annoying because, years before, I’d negotiated that all plan recordkeeping costs would be paid by the plan trust. The added fee would have meant that I paid twice for the same services.
Given that Fidelity was the plan’s recordkeeper, rolling over to a Fidelity IRA was easy. I initiated it online. Once I did that and saw Fidelity’s great website, I inquired about consolidating our other investments there.
My wife Connie and I went to the local Fidelity office. The consolidation process was explained. We discussed which mutual funds that I owned in the 401(k) could also be held in my IRA, and which Fidelity or other funds would come close to duplicating the others that I owned. Connie needed her own account because she had a small IRA.
Sign here, sign there. Everything was consolidated, though the annuity transfer took several months and several calls by Fidelity. It was a bit annoying—I was pressured not to move the annuities. Fidelity handled all the paperwork.
Everything is in one place now. Possibly the greatest benefit is at tax time. Waiting for those separate statements and ensuring I had everything I needed to file was a hassle. One year, I’d already filed when a late-arriving 1099 required me to amend our tax return.
Now, one consolidated statement does it all. TurboTax says it can download the information directly from our accounts, though I haven’t made that leap yet.
I regularly explore the Fidelity website. I like Fidelity, but no doubt other vendors are similarly robust. A click here and I see my net worth. I added the estimated value of our homes to the roster. Touch “activity” and every transaction, every reinvestment and every transfer appear.
I can see my overall gain or loss by investment, including for that day. The “research” function gives me more than I need to know about each investment. I’ve linked our bank accounts to Fidelity, so money flows back and forth in minutes—well, overnight at least.
While exploring the site yesterday, I found an option to add non-Fidelity accounts to the home screen display. Now, when I log on, I see not only our investments, but also the balances of each of our bank accounts. I love this technology stuff.
Years ago, I remember walking into our local bank with my passbook account to make a deposit and have it entered into my book. In the old days, I used to hold stock certificates. I recall sitting in a broker’s office watching the ticker roll by. What does a broker’s office look like today? Heck, I remember the milkman delivering to our apartment with a horse and wagon filled with blocks of ice, but I guess that’s a story for another day.
One thing does give me pause. Where are all our investments? I mean where are they actually? What proof do we have that all these investments are ours? We’re nothing but account numbers on a bunch of computers. If the web implodes, does it all disappear? Is the monthly consolidated statement that I print out our security blanket? I hope never to find out.
In the future, with the growth of artificial intelligence, I’m hoping for even greater capabilities. When will I be able to say, “Fidelity, increase my net worth by 10% next month”?
Richard Quinn blogs at QuinnsCommentary.net. Before retiring, Dick was a compensation and benefits executive. Follow him on Twitter @QuinnsComments and check out his earlier articles.
Want to receive our weekly newsletter? Sign up now. How about our daily alert about the site's latest posts? Join the list.
Totally with you on the benefits of consolidation. But there’s also a benefit to some amount of account diversification. SIPC insurance will provide protection up to $500K per denominated account (your IRAs will be difference than IRAs, etc.) If you’re over that limit, you might sleep better knowing that a second firm holds a considerable chunk of your assets. Similarly, a second reputable bank/brokerage can give you access to your funds if your first firm fails, has website or ATM problems, or changes policies on you.
So, in my case, most of our assets are split between Schwab and Fidelity, with a bunch in the federal Thrift Savings Program waiting for me to hit 75.
I had everything with TD-Ameritrade, and it all rolled over to Schwab last year because of the acquisition. Having a single pane to view all financial assets is great. I roll my employer 401k to IRA quarterly.
The convenience of consolidation sounds wonderful, but, but, but ……with cyber crime and identity theft being rampant, if all your investments are with a single brokerage, an unauthorized access to the single account can be catastrophic. By using several brokerages, you can mitigate the risk of a complete loss (or freeze) and utilize the untampered accounts while the ID theft problem is being investigated and hopefully resolved. As the saying goes, “Ask me how I know”
I see two benefits being discussed here. One is consolidation and the other is a best of class online service provider. In order to understand what others are looking at, I have smaller accounts (and one or two large sets of accounts) at Schwab, Fidelity, Vanguard, Chase, and Merrill/Bank of America. Even among these there are significant differences, but compared to all the world of options, these all have much to recommend. (My list is in my personal order of preference ;-).)
Wow, I have the same list of brokerage accounts PLUS 401k’s at three different providers! I keep it all on a single spreadsheet updated monthly to ensure I have the full picture and proper diversification, but must admit it is getting difficult to keep track of the different rules across the providers. They absolutely offer different user experiences and products so consolidation will limit your options, but that may or may not matter to you based on your needs.
If not for you, be kind to your heirs and consolidate.
My father-in-law passed last year at 103. He had one of everything: stock certificates from companies that now have different names or had split/gone bankrupt, small annuities, multiple brokerage accounts with various load mutual funds etc. It’s not that he was wealthy, just very very diversified.
When he passed, fidelity was able to aggregate everything and split it into 3 equal accounts for his surviving sons. It would have been a monumental task to get that done on our own. They even did the many many medallion signatures. I’ve been a lifelong Fidelity customer and eliminated my Vanguard accounts 2 years ago so I was very familiar with their services and had a contact who worked with my husband’s family to get it done.
Can’t say enough good about them, hope they do not degrade, many years ago I loved Vanguard. Doesn’t sound like their new management is moving them back to a more client/partner focused model.
Over time, our investments had been spread over three main areas – Vanguard, Fidelity, and Schwab. I have been stuck on consolidation. I found Vanguard’s customer service to be noticeably deficient. Then, when they sent notices out there would be soon $100 charges for transferring accounts out of Vanguard, I knew it was time. Luckily, at that exact time, The Finance Buff had an article on the very topic: “Check these before you transfer an account from Vanguard “. Now that Vanguard is done, two are left standing. They both are excellent. I’m back at stalemate.
I too jumped on the Fidelity bandwagon. It simplifies the record-keeping, and I can see my entire financial picture at once. I use the budgeting tools and heavily rely on a Fidelity Credit Card to pay almost all my bills. My Net Worth, along with all of my holdings are there to see with a few clicks of the keyboard. Makes life so much simpler. My money is as safe there as anywhere else and I sleep well at night in my retirement.
I have most of my assets at Fidelity and have done so for years. At first, they just made it easy to move funds in and out which I liked. Later, when I had to roll over a 401K to them, or start a SEP IRA, they made it easy and were helpful on the phone. All my kids have accounts with Fidelity at my encouragement. Bottom line, they are not a publicly traded company and I prefer that. They’ve always been there through thick and thin. When the 2008 crisis hit, their money market funds were rock solid as was the company in stark contrast to Merrill Lynch. In 2020, when other brokers became overwhelmed, they were again a stable, solid platform. I’ll trust the Johnson family before I will some board of directors and a CEO with the wrong incentives any day.
This weekend I logged into one of the many websites I need to check my balances (which I try to do on a monthly basis to update my consolidated spreadsheeet). Much to my surprise, the JPMorgan Pension site said that per their records, I no longer have a pension balance as of May 31st and if I had any questions that I could call them M-F from 8-7pm. Fortunately it is a relatively small part of my retirement savings and I am not yet dependent on it. I called first thing Monday and was told that it was just a system error due to a recent “upgrade” and that it should be corrected soon. On the same call I asked them to send me the paperwork to move the cash balance into one of my existing IRAs. Maybe it is time to consolidate after all.
That was a bit scary. Consolidate and you won’t need a spreadsheet😃
We’re also mostly consolidated at Fidelity, with a few exceptions:
A Treasury Direct account with Series I bonds. We could do without this, but in no rush to eliminate it.
A high yield savings account that we could also do without. Our Fidelity MM has a higher rate.
The biggest exception by far is 401k – held not out of loyalty to the employer, but for the stable value account. There’s no close competitor available in an IRA. We’ll probably keep these accounts as long as possible for the combined benefit of the SV fund and safety/security diversification.
I agree that if Fidelity failed, that should not affect our ownership of the stocks and funds held in those accounts. However, a cyberattack or other problem could keep those assets in any account tied up for some time, and fraud could cause their complete loss. So we find it worth a tad of complexity for a bit of diversification in that regard.
Curious. What I interest rate on stable value?
“Previous 12 month return” as of March 31 was 6.08%
I had three accounts until a year ago. I consolidated everything to Vanguard. Vanguard has the facility to add everything including real estate holding to the website. So now I can know my net worth by logging into the Vanguard account.
Me too
All eggs in one basket is the obvious way to go. KISS is the simple way
Not ALL eggs. Firms do fail. I would never have everything under one roof.
How would a firm failing affect individual stocks, mutual funds and annuities?😳
It can affect access to your funds. I have firsthand experience. Rhode Island 1990.
Perhaps you could omit the infantile emoji with your next reply.
Given the assets you own, Dick, Fidelity is a great choice for consolidation.
My grandfather returned from the war and worked for a dairy in Scranton, using a horse-drawn trailer with ice. It was a sad day for him when his horse was retired.
Dick,
I made the move the move to Fidelity over 20 years ago and have not regretted it. I also closed down my local bank account and use Fidelity’s banking features (checking, ATM, Bill Pay). After a few years I found a need for a local account for depositing cash. It seemed to come from receiving my annual rebates from Costco! I also needed a place to get Medallion Signature Guarantees. I opened an account with the local credit union with a nominal balance for these purposes. I would be concerned about closing Treasury Direct. They will let you know when bonds mature, Otherwise, who will tell you or your heirs?
I consolidated all my investments at Vanguard some years back, except for the stable value fund in my 401K. I rolled that money over to my Vanguard IRA when I had to start RMDs. I do have a local checking account, mostly because the bank has safety deposit boxes, but it doesn’t get much traffic. I also have a currently empty checking account at Capital One which I used for travel because it didn’t have foreign conversion fees.
If you invest in low cost index funds there’s no reason to spread the money around.
I would like that ability to see all my accounts in one place on Fidelity, but in the browser I use I have that blocked to prevent “cross-site tracking.”
Try Morningstar. I don’t have my accounts linked for security reasons, and quarterly manually input data. I also pay $250 per year to be able to access their research, and their portfolio X-ray feature which provides more information than you would ever be able to comprehend about your portfolio.
I woeker the majority of my career just down the road from Vanguard HQ. When VG was building their tech platform a umber of our engineers went to work there. So I’ve been loyal to them for decades. We have all our retirement and after-tax accounts there, and have linked our bank accounts. I’m sure the site has more capability than I need. The one outlier is our Treasury Direct Account. Funds can be transferred back and forth to VG.
Dick asks a profound question in his penultimate paragraph. Virtually all of our wealth is merely an entry in an electronic database. I’m sure they are required to do a daily backup of each account and transaction. I’ve become fairly adept at Venmo, and and dabbling in Zelle! It’s a Brave New World.
Not to worry. In the cloud era, there is much redundancy supporting what we rely on. The storage infrastructure Fidelity or Vanguard use makes multiple copies in realtime within the same datacenter on each write operation, and geo-replicates data to other DCs in near realtime. To deal with other types of issues they surely take daily snapshots of key data.
Yes, I can imagine a horrible service incident which puts these guys on the floor for hours or perhaps even days. Something which completely wipes it all out would be so extreme we’d probably be worried about many other things before this.
What about cybercrime? I am very nervous about hackers getting access to my accounts which could result in a complete loss of my assets.
I closed our Treasury Direct Account. I was afraid nobody would find it. The bonds we have we keep in our safe, closed safe deposit box too. Love Zelle. We pay a few one off bills to individuals that way. Someday actually having cash will be forgotten. Maybe my “gold” dollar coins will be worth a dollar.
I cleaned out our Treasury Direct accounts this year. Too much complexity for my heirs if I were to pass away suddenly. I also had several large denomination (5K) paper I Bonds that I had been holding for over 20 years. I cashed them out at my local bank over the past two years even though they had a 2% fixed rate. I don’t know how much longer my bank will redeem savings bonds and I don’t want to jump through hoops with a faceless Federal bureaucracy. Time to simplify.
You really still have paper bonds, Dick? I’ve been going through the process of cashing some matured bonds that my deceased mother in law left and it’s a somewhat painstaking process (especially when a beneficiary is also deceased), requiring original death certificates and proof of relationship. I was planning to switch all my remaining un-matured bonds to electronic and make sure my kids have the necessary information. As long as they know they are there, I think it may be easier for them to cash them in online or by mail.
A couple of years ago we decided to use the option of buying an additional $5,000 in I bonds with a portion of our tax refund. It was only after I had our CPA file our return that I found out that I bonds that purchased this way can only be received as paper bonds via the USPS. Once they are received, you can go through a tedious process to convert them to digital bonds on Treasury Direct that requires you to mail the bonds to an IRS office in Minneapolis. That was the one and only time we purchased I bonds in that manner.
Please make sure that access to your safe deposit box is extended to “not just” you and your wife. Add at least one of your children so they can access it in emergencies or after you are both gone (in the far-off future). Also let them know where you keep your key to the box. I learned this lesson the hard way when settling my parents’ estates. I was required to obtain a court order to allow me access to their safe deposit box.
I bought savings bonds through work for many years, I moved all those paper Series I bonds to the Treasury Direct account years ago. I remember taking my mother-in-law to a local bank and her signing bonds for an hour to cash them in. I have a number of gift bonds in there for the grandsons. I have fond memories of receiving bonds as a child, and my sons receive them also. It’s not the same to tell a 9 year old they have a new electronic entry in their account as it is to hand them a crisp $50 E bond (like the old days).
I went through a similar consolidation process, and was pleased with the results – information is so much easier to find. Note to Dick: this download to TurboTax works just fine.
My employer’s 403b is with an insurance company, but I’ve moved other investments to Vanguard as part of my attempt to simplify.
Yes, I know computers are what make many of the services we like convenient and affordable, but I suffer from nostalgia. I also remember milk delivery, though it was after the invention of motor vehicles.🙂
After getting married we purchased our first house in the mid eighties, and received milk deliveries from a local dairy. They left it in an insulated aluminum box on the front step.