Is it safe to keep all my stocks with one broker?

Question

I have an account with a "traditional" stock broker but recently discovered Robinhood which is quite convenient to use and is commission-free. Is it considered safe to keep all my investment money with Robinhood or should I keep my money with multiple brokers to be safe? My main concerns are:

1. Robinhood might go bankrupt (though they are insured by the government)
2. Robinhood might be hacked, causing chaos
3. My own account might be hacked despite 2FA being active
4. Robinhood might have a glitch of some kind that erases my money

Are the fears justified? Note that this question applies to any stock broker, not just Robinhood.

Answer 1

The pro

• reporting one account/one broker for taxes is easier than multiple
• It is easier to gauge your performance and spare cash if there is only one place to check

The cons

• A single point of failure can be problematic. If your broker goes bankrupt the shares are still yours. But it may take some time to claim ownership and transfer them to another broker while you are still exposed to market risk. (And remember, bankrupcty rarely happens in the good times)
• As an extension of the first bullet point, some (neo-)brokers are not very profitable. It is not guaranteed that they will be around for long. For example, the German counterpart of Robin Hood is estimated to run on 16 million Euro a year (Source, German only)
• depending on jurisdiction capital gains by shares might be taxed differently depending on when they were bought. Keeping two accounts helps to tax them correctly
• one might have different risk profiles for different accounts. Let's say one account that runs long term ETF plans and another one that includes stock picking for the fun of it. Separating these allows to limit gambling to one dedicated account
• different brokers have different cost structures. This seems to be less of a problem in the US but here in Germany standard provisions for an ETF plan are 1.5-2% range and only some ETFs will be on provision free plans. Having multiple accounts can help you to minimize provisions

Answer 2

Other than the convenience of a phone app, it eludes me why anyone with a decent amount of assets would use Robinhood. I provided the reasons for that belief in response to the question: Why is Robinhood a second rate stock broker?. Robinhood is often in the news with bad press (outages, SEC settlements, payment for order flow issues, the "Robinhood Glitch", etc.). Google for details.

Note that SIPC insurance covers the custodial function of your broker. If your account becomes inaccessible due to hacking, broker bankruptcy, etc., you are not protected against if market prices move against you.

If you're a buy and hold investor, having only one account might be acceptable. Personally, I think that it's a good idea to have at least two funded accounts because if one broker's platform is down, you can trade at the other if you need to defend an existing position.