Consolidate and Close Accounts to Keep Better Tabs on You Financial Situation
One of the great things that a steady stream of new entrants into the online brokerage arena had the effect of doing is to make companies compete harder for your business. There are now plenty of good places to hold your investments and with that said I'm a big believer of consolidating your investments and holding them at a handful on institutions rather than have assets all over the place. Below are the reasons that I think this outweighs the minimal benefits you may find from using a number of providers.
1) Reduce Fees: Many providers reduce or even eliminate fees and commissions once you hit a certain threshold of assets. Some investment houses will throw in free trades, free research, or advisory services if you increase your holdings to a higher tier.
2) Increase Your Sensitivity to Fees: With life being busy and time short, I find that I'm more likely to carefully inspect my monthly or quarterly statement if I have two or three to look at rather than 5. I also am more sensitive to being nickeled and dimmed with fees when I see multiple fees on the same statement rather than one from each investment company.
3) One statement: Many investment companies will provide you with one consolidated statement which makes record keeping a breeze and reduces hassles associated with tracking down important information.
4) Availability of Options: Nearly all the well known brokerage companies have been beefing up their no transaction fee mutual fund offerings which makes it easier for you hold a Janus fund in a Fidelity account or an Ariel fund in a Schwab account. This makes for one stop shopping and as stated earlier one statement. The rise of exchange traded funds (and more and more niche EFT's that act more like mutual funds) allows small and large individuals to level the playing field and diversify without the strings some mutual funds attach.
5) Get a Clear Picture of Your Financial Health: Pooling your investments with one provider is a quick way to see your net worth and if you are meeting your financial goals, whatever they may be.
6) Organize Your Affairs in the Event Something Should Happen to You: No one wants to think about death or serious injury, but if you were hospitalized would a family member or friend be able to track down your money to pay bills? Are your investments spread over 10 fund families held in 10 separate accounts plus your 401(k), Roth IRA, and traditional IRA? If you have a financial power of attorney in place you representative will have an easier time tapping funds that may be needed to settle your affairs or care for you.
Things to note. It should be noted that you want to consider FDIC and SIPC insurance limits that may be applicable to the funds you hold at a single institution. There are plenty of good discount brokers like Fidelity (the king of investment houses), OptionsXpress (a newer discount broker that has grown quickly and has no minimums, T.Rowe (one of the biggest discount fund shops), and Charles Schwab (the big time discount broker).
Many of these providers like Schwab and Fidelity have added high yielding checking account and other banking options to their typical securities offerings (read more here). While the new accounts have big benefits over the brick and mortar checking accounts, most people need somewhere to deposit money in person from time to time. I would suggest that if you are interested in consolidating financial holdings that you keep a completely free checking account at a bank close to your house so you can quickly deposit the occasional check (ask, because your bank will probably try to lead you to an account with minimums and/or fees). Once the money is deposited in your local bank account you can easily move the funds through the ACH system to your other account. This method is much faster than mailing a check to the financial institution.
