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Right now my brokerage account has a non-trivial fraction of my total assets. It's all in a single account with Interactive Brokers.

I know in theory customer funds and assets are ring-fenced, but does it make sense, for safety reasons, to have more than one brokerage account? The obvious downside is higher transaction costs, would that actually buy me more security?

Fellow investors, if you have multiple accounts, what is the benefit?

  • Slight edit to rephrase and remove 'survey' aspect. – JoeTaxpayer Apr 16 '17 at 20:20
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You should ensure that your broker is a member of the Securities Investor Protection Corporation (SIPC). SIPC protects the cash and securities in your brokerage account much like the Federal Deposit Insurance Corporation (FDIC) protects bank deposits. Securities are protected with a limit of $500,000 USD. Cash is protected with a limit of $250,000 USD. It should be noted that SIPC does not protect investors against loss of value or bad advice.

As far as having multiple brokerage accounts for security, I personally don’t think it’s necessary to have multiple accounts for that reason. Depending on account or transaction fees, it might not hurt to have multiple accounts. It can actually be beneficial to have multiple accounts so long as each account serves a purpose in your overall financial plan. For example, I have three brokerage accounts, each of which serves a specific purpose. One provides low cost stock and bond transactions, another provides superior market data, and the third provides low cost mutual fund transactions.

If you’re worried about asset security, there are a few things you can do to protect yourself. I would recommend you begin by consulting a qualified financial advisor about your risk profile. You stated that a considerable portion of your total assets are in securities. Depending on your risk profile and the amount of your net worth held in securities, you might be better served by moving your money into lower risk asset classes.

I’m not an attorney or a financial advisor. This is not legal advice or financial advice. You can and should consult your own attorney and financial advisor.

  • In addition make sure your broker supports two factor authentication, and enable it. And access it from a computer that you've kept up to date with security patches etc. Sadly, in the US, if someone uses your password to log in to your account and transfers money out, you're likely on the hook. – horse hair Nov 9 '18 at 19:01
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Reasons for having additional accounts include :

  • your account size exceeds SIPC protection limits
  • a broker charges the lowest commissions, lowest margin borrowing fee
  • another offers a larger selection of mutual funds and ETFs, perhaps no fee as well
  • another offers better research or superior option analytics
  • infrequently, a broker’s server goes down and you can’t get through by phone because online investors/traders are jamming them up. With a second account, you can defend existing positions if price is moving against you

As a personal example, a long time ago, I paid $39.95 per month at TD Ameritrade for real time streaming Dow Jones News. Some time later, I found that if I parked $500 at Scottrade, I got it for free, saving me nearly $480 a year.

For investors with small accounts and don't trade much, who don’t care much about amenities and are willing to eat a few higher commissions each year in exchange for better resources, dealing with multiple brokerages is probably more hassle than it’s worth.

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