I’m breaking up with my bank, my credit cards, and my mutual fund company.
My reasons were influenced by three things.
- Many years back Roy and Pauline came to me for tax prep. Though not wealthy, they had about two dozen disparate investments in everything from amusement parks to oil wells. My first thought was that if Roy died first, Pauline was going to have a difficult time dealing with this veritable spaghetti bowl of K1s. He did die first, and she did struggle with all those investments.
- Shortly after I got hooked on HumbleDollar, one of the authors waxed eloquently about having all his stuff under one roof, with the ability to instantly view his entire financial world with the click of his mouse, (I’m paraphrasing, don’t yell at me Quinn). And
- Jonathan’s realization that his financial affairs were not as simple and organized as he thought they were.
I was considering either Vanguard or Fidelity as my future home, leaning towards the latter. I googled for a comparison of the two, and came across a YouTube video made by two sisters that call themselves the Wealth Twins, which solidified my decision to use Fidelity. The Twins have quite an inspiring story to tell and I encourage you to check them out at https://wealthpack.wealthtwins.com/about-page.
I opened my new account yesterday, and I have a lot of work ahead of me.
- Nine bill pay accounts at my current bank that will have to be moved. These are billers that I pay manually from checking.
- Ten vendors, such as Netflix, charities, cell phone and internet providers that bill my current credit card. Each one will need to be contacted when I receive my Fidelity credit card. Perhaps now would be a good time to consider using Qualified Charitable Distributions from my IRA.
- Six monthly direct deposits from Social Security, IRA’s, and pensions. Each one will need to be contacted.
- Six billers, such as utilities and insurance companies that dip into our checking accounts monthly will need the new information as well.
- Two of three bank accounts will be closed, I’ll keep a local credit union account for convenience, and will link it to Fidelity. Several seldom used credit cards accounts can be eliminated as well.
At Fidelity my cash will earn 4% interest versus about .1% at my old bank, and I can pay my bills directly from there. I can easily deploy excess cash into the Fidelity brokerage account.
I liken this project to living in the same home for a long time. My basement was a bit like a museum or maybe a time capsule; (what is this device with cords and a dial with numbers and letters and a handle thingy attached with a tangled up wire?) A lifetime of financial junk accumulates in a similar fashion. I don’t want my survivors to curse me for leaving all this junk to them.
I recently updated wills, POAs, and beneficiaries on all accounts and our house. What else is there? If you have taken steps to simplify, I’d be interested in your process.
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Thanks for writing on this topic! Very timely as I need to verify the beneficiaries on our accounts and update our trust for some land we purchased.
We use 3 companies: current bank (checking/bills), Marcus (CDs), and Fidelity (investments). Marcus Goldman Sachs pays 3.9% on savings, 4.15% on 13 month No-Penalty CD, 4.5% on 14 month CD or 4.25% on 12 month CD or 4.3% on 9 month CD. (FDIC and interest compounds daily).
I use Fidelity’s Retirement Planning Analysis tool. Recommend it for the geeks that enjoy these kind of tools.
Dan – We recently followed Jonathan’s and Charlie Warner’s lead and documented likely estate outcomes with our two kids (beneficiaries). Our children had already been advised where the account information, passwords and wills were located. However, they are still young (under age 35) and never focused on the inheritance ramifications of each of the asset buckets (step-up basis for our limited taxable appreciated assets, 10-years of added income for tax-deferred accounts, and 10-years of tax-free appreciation for Roths). Despite my wife having good longevity, this could help them in the both hit by a bus scenario.
There are many adults who resist having those conversations with their kids. I want mine to know everything, not just to make things easier after I croak, but also so they can step in and help if needed.
Interesting post and well done.
We also have the bulk of our assets at Fidelity. The next largest chunk is 401k, then a bit at Treasury Direct.
We’ll probably close the TD account in the next few years. Last year we closed high yield savings accounts at Ally and Capital One. We have a bank account I’ve had for 40+ years, and if we ever settle in one place, we might have a local bank account/relationship. That’s plenty.
We like the Fidelity credit card and at first we used it for just about everything. These days though, we use it very little. We have some bills paid through it automatically, and changing this would be a hassle. So, we avoid using it anywhere else to reduce the chances of it being compromised.
Except for cash withdrawals from our bank account, basically all our bills/expenses are paid from our Fidelity cash management account. The CM account offers a debit card but we don’t use it, again limiting exposure to avoid a compromised account and hassle of changing.
We have two other cards that are our primaries, and another we’ve had for many years through the bank I mentioned. We almost never use this but keep it open.
Dan:
A few years back, I closed my account with Wells Fargo and opened accounts with Capital One. I also have a local back where I keep $2-2.5K, mainly just to have a place to get Notary Work done.
All my investment accounts are at Vanguard. (VTI and VXUS) I use their PAS program, meaning I have an Assigned CFP Advisor. Cost is 30 basis points annually. I also have a Money Market Account with Vanguard as well, VNFXX, currently paying 3.7%
Our Social Security Benefits are deposited in our Capital One account monthly. Capital One is one of those banks that makes deposit available 2 days earlier than the stated date…meaning that our SSA benefits are paid on the 2nd Wednesday of the month. They are, in fact, deposited 2 days earlier, at Capital One.
I also have 4 annuities that deposit payments into our Capital One account monthly.
Both the Capital One and the local bank accounts are tied into Vanguard, so I can do transfers without any issues.
All our Estate Planning Documents are current, as they were updated when I retired last year.
The one thing I did for my wife is what we call my “Final Love Letter.” This is a 6 page document, that is updated once a quarter, or more often, if needed. This document lists every Bank Account, Credit Card, Investment Account, Insurance policy, Membership, etc…and every Screen Name, Password, you name it…and all the information that would be required to access any and all accounts we have, in the event that I did not wake up tomorrow!
It has recommendations for her to consider, and the advisors/ attorneys/insurance agents, names, addresses, phone numbers, etc. It also directs her on how to dispose off my personal belongings, specifically my gun collection and all my related firearms materials. A number of those items are controlled by the ATF/NFA regulations, so they can’t simply be given away.
(Note: I highly recommend this idea to all HD readers. Your surviving spouse will love you more for it.)
I gave serious consideration to transferring everything to Fidelity, as well, mainly to have access to a true Cash Management Account, have everything under one roof, and so I could drop Capital One, but I just don’t respect them enough to “pull the trigger.” I was with them years ago and it wasn’t a good experience. In addition, I like the idea of the ownership of Vanguard vs. Fidelity.
As you pointed out so well…breaking uo with your primary financial source is a giant PITA…and I suspect that it stops many people from doing it exactly for that reason..
As far as the Customer Services issues go, I have seen a marked improvement in Vanguard over the past year, but I never really had that many issues, since my advisor is top notch and is quite responsive.
Good Luck with your move and happy finances!
Great post Keven, many good points for people to consider. My current bank also makes regular deposits available days earlier, and I have no idea if Fidelity does the same. Using WillMaker software I have done something similar to your final love letter, and will have to make updates now that I have reinvented my financial wheel.
Good to hear positive news regarding Vanguards customer service as well.
Dan, I think a lot about this topic, especially as I visualize Lisa having to pick up the financial pieces if I pass away first. One thing that’s perhaps unique about our situation: a very large portion of our overall wealth is still tied to my former employer. I’ve kept my 401(k) with them and they are responsible for my monthly pension check. I emptied our Treasury Direct accounts as an act of simplification. Our Roth IRAs and taxable brokerage account are all with one provider. We have accounts with a local bank and a credit union. I have good reasons for keeping both.
This year we plan to update our wills. I’m not sure how much more I can simplify our financial holdings.
That sounds pretty good Ken. I’m betting that you have TOD or POD, and primary and contingent beneficiaries named appropriately as well.
You would win that bet, Dan.
Dan – interestingly, this corresponds to what we’ve gradually done over time. Our finances are both separate and joint, depending on the situation due to this being the second marriage for us both and we both have children from our first marriages.
All my investments are with Schwab, while my wife splits between Schwab and Voya. All our banking is through a credit union and most bills are on autopay. We do maintain several credit cards, both individual and joint, mostly for points/miles.
Our wills/trusts and accounts all have updated beneficiaries. Our credit union does not use Zelle. I use PayPal when I must. I have not moved to Venmo yet.
The biggest pain is when someone attempts to fraudulently use one of our credit cards. It has never impacted us. Our financial institutions handle this well, freezes the abused card and issues a new one. That means that someone (me) needs to make sure all autopay accounts and authorized card payments (think Amazon) must be updated.
Thanks for publishing. With the exception of a local bank account we are all under the same roof with Schwab. It does increase transparency and add simplicity. I have had all wills etc revised and reviewed by a second attorney.
My wife and I took another step this year, I’m 72 and she is 70, and both in good health. We included our two adult children in our financial review, plan and outlook. My thought behind inviting them into this space, I want them keeping and eye of me for mistakes or issues as I advance in age. Odds are my wife will survive me and she will solicit there help at that time so why not get ahead start.
It is my understanding that factors that influence one’s credit score include credit usage, payment history, age of credit and number of open accounts.
Having more cards may result in lower credit usage which improves the score. Usage below 20% is good. Payment history is very important. Age of credit is also important, so keeping some older cards can be very helpful. According to my credit reports, having >13 credit lines open is “good”, but age of credit is more important. Student and auto loans are included.
I do hold multiple “cash back” cards, and these have been useful. The banks tend to rotate the highest categories. For example, at present one of my cards offers 5% cash back for dining. That’s the one we currently use when dining out.
The cash back categories among the cards I hold range from 2% to 5%. Yes, it takes a bit of work to check these offers monthly. But it all adds up, as they say. While I prefer to get the highest cash back, my spouse is less attentive and that’s okay. Cash back is merely an enhancement, and I don’t want this to drive our finances.
As for Fidelity, I’ve got one of their money market funds at a brokerage other than Fidelity. Vanguard also has higher yield MMFs available, including VUSXX (4.26% 7-day yield) and VMRXX.
Norm
Although I left Wells Fargo years back, we retired our Wells Fargo Active Cash credit cards. They pay 2% on every dollar spent, so there is no having to worry about what is covered at which rate.
LIke many folks who use rewards cards, we typically charge anything and everything that we can, pay it off monthly, and enjoy the few thousand we get from them annually.
Norm, is there any significant risk to money market funds as opposed to a bank account that is FDIC insured? I looked at Fidelity this morning, where we have all of our investments, and the rate was higher than the 3.7% we currently receive from Ally Bank, which is online only. We have a local credit union for currency exchange, etc. I know that Fidelity says that there’s no guarantee you won’t lose money in their MMFs, but I don’t know under what circumstances that might happen.
There is some risk Jan. I believe that the value of a dollar in some money market accounts briefly fell below a dollar in 2008.
Here are the results of a Google search, per AI.
No, Fidelity’s money market funds are not FDIC insured. However, they are protected by the Securities Investor Protection Corporation (SIPC).
Explanation
Thanks, Dan, for your response. I think I’ll keep the money in Ally for now. The many steps needed to change all bill pay and deposits doesn’t appeal to me for such a small increase in interest and knowing it can fluctuate daily.
I consolidated everything under Fidelity’s umbrella a couple of years ago and have been very pleased with their service and website. I also moved all of my mom’s financial accounts to Fidelity many years ago since I was managing her money. She died in 2023 and as executor of her estate I was able to easily handle the division of her financial assets to her heirs within 30 days of death. Having visibility to all of her transactions, acct balances and correct beneficiary setup allowed for a smooth and quick dispensation.
That’s great to hear Ray. While all the services offered look great, one never knows about the customer service.
Dan, I’ve found the customer service to be excellent via phone or physical center. I have a friend who just transferred all of his accounts from Vanguard to Fidelity due to VG’s customer service issues. I showed him everything that I do using Fidelity’s services and he’s been very pleased with the move, including the interactions with the local branch acct exec and website tools. Evidently, based on Fidelity rep’s comment, Fidelity is picking up a lot of former VG clients due to deteriorating customer service.
After 30+ years with Vanguard, we moved our investments to Fidelity last year. Customer service at Vanguard had declined precipitously in recent years. We have been very pleased with Fidelity. Their customer service is great, and their website vastly superior to Vanguard. We are index investors, but have not been pressured by Fidelity to use their active products. An added bonus is that they have a local office and assigned account rep (CFP) we can go to if desired or necessary.
We are longtime customers of Wells Fargo, but are seriously considering replacing them as our primary bank. An online bank would not work for my wife, so we will either switch to a CU or a local bank. All regular payments and SS/pensions are automated. We now write less than 10 paper checks a year.
Congratulations on simplifying your financial world. We have been doing that for a few years, and it is more challenging than you would think.
I’ve been a Wells Fargo customer since 1981 (actually First Interstate Bank that Wells Fargo bought out in the late 80s.) I’m recently widowed, but prior we had most retirement accounts either at Vanguard or E-Trade and company 401ks wherever the company held those accounts. I knew it was a mess for my wife should I have died before her, so I consolidated everything (except company 401k and HSA) to Wells Fargo. Using Wells Trade for her two IRAs (traditional and roth) as well as both of mine. When I retire this year, I will roll-over my 401k accounts (roth and traditional) from Fidelity to their respective accounts at Wells Fargo. Having rolled her accounts into mine this past fall, that will consolidate everything to WF except HSA – they don’t have that option. I see great value in having a one-stop shop, wherever that shop is.
I agree it’s good to keep a local bank. I appreciate your thoughts.
Dan, while I applaud your diligence to consolidate/ simplify your financial accounts, it seems like a lot of work. I have considered the impact on my DW of having several financial accounts and credit cards, but we are both knowledgeable about these accounts and keep a shared password manager that allows access to all of our accounts. I think we all have experienced financial life “creep” over many years, but it just doesn’t seem to be that unmanageable a task. I will watch the twins video and maybe my feeling will change. Best of luck in your transition. I hope all goes smoothly.
Dan, good stuff. We consolidated to Vanguard, Capital One online checking and savings, and one local bank (for the very occasional paper check). I’m now looking at Vanguard’s Cash Plus Account as an alternative. Do you have any financial Apps that are tied to an account or credit card? I’m thinking Amazon Prime, Venmo, PayPal, Uber, …. Other lesser used accounts (Dr offices??) will usually reach out if a credit card doesn’t work. Thanks for the link to the Wealth Twins.
Rick: I have an Amazon Credit card specifically to take advantage of the 5% rewards on EVERY PURCHASE from them. Like many people, I buy lots and lots from Amazon, and I have the Prime membership as well. Primary for the Video Service, but also for the free shipping.
My bank offers Zelle which works great, but I also have a Venmo account, that is almost never used. I only got it to send money to my late sister’s adult children, when she passed. I was her executor, and she didn’t want them gaining access to her money to soon, so I managed it for her for 3 years, as I disbursed the funds. That’s all done now.
Thanks Rick. I used Venmo for my practice. No transaction fees, at least not when I used it. Almost all my young clients, and a good number older ones used it.
However, about a year ago we were selling something on Facebook marketplace and a prospective buyer tried to scam us. I stopped using it at that time.
I sometimes use Zelle now, but only with family members. I’m not sure if Fidelity uses that app.
Fidelity does not use Zelle. Good for them. Too much risk for consumers.
BEWARE of Zelle:
In December a federal regulator sued JPMorgan Chase, Wells Fargo and Bank of America, claiming the banks failed to protect hundreds of thousands of consumers from rampant fraud on Zelle, in violation of consumer financial laws.
In the federal civil complaint, the CFPB asserted that the banks rushed to get the peer-to-peer payments platform to market without effective safeguards against fraud and then, after consumers complained about being defrauded on the service, largely denied them relief.
The Trump administration just dropped the suit, no reason given, but I have a good idea. I’ll leave my comment there.
I only use Zelle with my children, to send them Money from time to time. I have had zero issues.
Thanks Dave. It appears that Zelle is no better than Venmo.
I won’t use either. I have used Paypal, albeit reluctantly. No issues so far.
I forgot Zelle. Just started using it recently.
They don’t.
A caution if your FICO credit score matters to you: If you close a credit card account, its credit limit is removed, so your overall credit limit decreases. When you use any of the remaining credit cards, the credit usage (which counts 30% toward your score) is now a larger percentage of your overall credit limit.
Example: old overall credit limit $20k, new $16k; you buy $4k on credit; old usage 4/20=20%, new 4/16=25%. If your usage exceeds 30% your credit score will likely drop.
Best to close accounts that have annual fees or low credit limits. Best not to close the oldest account, since credit history is also a factor in the credit score (15%).
Thanks. We will let unused cards sit dormant rather than actually closing them. I watch my scores closely. We had some extraordinary charges while building our house. Though we always paid the balance in full, our score went from approximately 820, down to 780.
It’s interesting that we get dinged for not having any installment loans, and also get dinged when that usage % increases without regard to being paid in full every month.
I would add that the drop on our score happened way below the 30% threshold.
And another thing regarding dormant credit cards. You have to occasionally charge something to prevent the issuer from closing them.
Yes, and some credit agencies “ding” you for lack of activity on your credit cards while others subtract a few points for too many cards in use (or something like that). Remarkable. Our oldest line of credit is a card from J.C. Penney – almost 45 years. Hope they stay in the game. We’ve never missed a payment on any line of credit and for about 35 years, never carried a balance forward. Our rating ranges from exceptional to perfect, depending on the agency. I simply find it laughable at the reasons provided when our score moves a bit either way unless a credit inquiry is authorized (new card, car loan, etc.) which is rare for us to do.
We paid off our mortgage a few weeks ago. It will be interesting to see how that impacts our score. Good news overall is that you apparently do not have to have the highest possible score to get the most favorable rates on things that use your score to determine costs you pay for certain things. The rating systems seem like a rather silly game in many ways.
Property and casualty insurance companies have found a correlation between credit score and claim history.
We have been dinged a bit for too many cards in use.
As long as we remain above 800 I’m happy.
I moved to Fidelity a few years go, not banks accounts but all investments, annuities, stocks and they did all the work for transfers. I just signed some papers.
It’s been easy so far, they have good website, especially considering how many products offered. So far I’ve linked all our accounts, ordered checks, populated the bill pay tool, and moved one savings account.
Next up is moving our IRA’s and one brokerage account. After that I’ll apply for the credit card, which rewards 2% on all purchases.