Why I do not Consolidate Accounts

by Doug on Jun.27, 2009, under Personal Finance

I thought long and hard about making my investment life easier – just merge all the investment accounts into one broker. One monthly statement. One broker. One online institution. Good idea?

Bad idea.

After all the turmoil of the financial system in the past year or so, it seemed self-evident that holding all of ones assets in a single institution was toxic. When a financial institution gets into trouble all your money may be tied up for weeks or months. I couldn’t imagine pleading with a bank or broker for my money so I can pay the bills and be told sure, in a few weeks.

Another eye-opener is if someone swipes your financial identity and drains your account. If you have more than one, it is not an immediate disaster. Yes, there have been notices sent out that your personal information has been compromised and we promise to watch your credit account for 90 days. BFD. Identity thieves know about the 90 day limit. Check out the identity theft prevention tips.

What is the solution?

Dividing up assets into three institutions is prudent. Make sure there is a checking account or easy money transfer available at each one. Be vigilant in monitoring your accounts.

The unthinkable can happen.