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I'm in the USA. Currently, the bulk of my net worth is in accounts with TD Ameritrade. Right now, that's only about $30,000, but I plan to keep contributing; hopefully in a few decades, I'll have a couple million.

Are there any risks to keeping millions of dollars' worth of assets with one broker? Of course, there's always the risk that the assets in the account will lose value (the stock market could crash or the US dollar could undergo hyperinflation). But that's not what I'm asking; I'm wondering if there's a significant risk I might lose access to the investments themselves.

The scenarios I have in mind are things like:

  • TD Ameritrade suffers a computer glitch which results in some assets being lost from my account.
  • TD Ameritrade has financial problems and is unable to pay me the amount of money in my account.
  • TD Ameritrade goes out of business and the records of my account are lost completely.

Could something like this happen, or can I rest easy knowing that my assets will still be there no matter what?

In case it matters, most of my investments are in ETFs and individual stocks.

  • I wouldn't worry. All of my investments are concentrated in two (very large) brokerages. The only reason it's not one is because rolling IRAs from an account with Jr in the name to one without Jr is a hassle. – RonJohn Nov 11 '19 at 18:29
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TL;DR: you have nothing to worry about.

The risks that you described are nothing to be worried about with TDAmeritrade, Fidelity, Schwab, Merrill, eTrade and similar large brokerage firms.

First, the transfer agent for a company is the official record of ownership. The transfer agent has a record that says you own "50 shares IBM" held in 'street name' at TD Ameritrade. So, even if TDA ceased to exist, and lost all their on site and off site and tape drive backups...the transfer agent still knows how many shares you have.

Second, SIPC protects your assets in the event TDA ceases to operate. SIPC coverage is more than enough to cover your current assets. However, over time you're going to exceed their limits. TDA has excess SIPC coverage, via private insurance:

SIPC protection

TD Ameritrade, Inc. is a member of the Securities Investor Protection Corporation (SIPC). Securities in your account protected up to $500,000, which includes a $250,000 limit for cash. For details, please see www.sipc.org.

Additionally, TD Ameritrade provides each client $149.5 million worth of protection for securities and $2 million of protection for cash through supplemental coverage provided by London insurers. In the event of a brokerage insolvency, a client may receive amounts due from the trustee in bankruptcy and then SIPC. Supplemental coverage is paid out after the trustee and SIPC payouts and under such coverage each client is limited to a combined return of $152 million from a trustee, SIPC, and London insurers.

The TD Ameritrade supplemental coverage has an aggregate limit of $500 million over all customers. This policy provides coverage following brokerage insolvency and does not protect against loss in market value of the securities.

Third, TDA backs up their data intra-day and has multiple levels of backups (hourly, daily, weekly, etc). They have backups retained on different electrical grids so they can still access them in the event of a regional blackout. They have backups retained in different physical locations so they can still access them in the event of an earthquake, tornado, hurricane, etc. While they could be hacked and could in theory have a ransomware type of event, this would result in an inconvenience to you...and only if you happened to want to do something while they were mitigating the attack.

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SIPC coverage ($250k cash, $250k securities) comes into play when a broker shuts down and if customer assets are missing due to theft, unauthorized trading, and other fraudulent activities. It guarantees the custody function of the broker of your assets but not their value (market risk). Some brokers carry additional insurance so your risk first risk consideration is for your account size not to exceed your broker's coverage limits.

It's not unusual for a broker to computer program to have a glitch or for their server to crash, preventing you from accessing your account. Typically, these are vaery short term, lasting minutes to hours. A more serious access issue would be a natural disaster such as a hurricane where there's no power or internet for days (weeks?).

I think that it's a wise alternative to have a second brokerage account that is partially funded. If something hits the fan, you can hedge a position(s) by taking an offsetting position in this second account. This is applicable to a trader or active investor rather than a Buy & Holder where time isn't a pressing issue.

As for your three scenarios:

  • TD Ameritrade suffers a computer glitch which results in some assets being lost from my account.
  • TD Ameritrade has financial problems and is unable to pay me the amount of money in my account.
  • TD Ameritrade goes out of business and the records of my account are lost completely

... the answer is NO, NO, and NO.

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