My wife's company was purchased, and the new crew moved everything over to VG.

Prior to the sale, we had institutional diversity with her accounts in Schwab, mine in VG, and a couple straggler 401ks from old jobs sitting in Fidelity and MMutual.

No complaints about VG, but now, post company sale, 90% of our investment account balance sit with VG.

Any reason to worry about all the eggs in a single basket?

It's just the plan administrator. It could change in a year. I would assume your underlying investment options are more than just Vanguard funds?

I am split across 3, but 60% is in one account.

no. 100% vanguard

Nah, no big deal being spread out among providers. Now if you have 3 pots of money all placed in the same index funds, that IS NOT diversification.

I wish all of ours was at one institution. Would make things easier. We have our 401k administrators which is all they do and then all of our taxable funds and IRA's at Fidelity. And then I have a few stocks that are on their 5th or 6th administrator due to M&A over the years. I think the latest one is Charles Schwab for those.

All A&M said:

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I'm split evenly between Vanguard and Fidelity. That is enough for me.

Did some research and experts that understand financial account insurance protections and the law don't really see a need to diversify institutions as long as you keep each individual account below $1M; they recommend having multiple accounts at one institution. I'm just echoing what I read. I don't have direct knowledge.

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I asked my Schwab advisor about this today. Basically, he told me that there is no need to keep any individual account to under $1 million. SIPC guarantees accounts for the first $500,000 of losses. According to him, there is almost never a claim against SIPC. However, stocks are held at the Depository Trust Company (DTC), at least all of those I have through him. In the case of Lehman Brothers, Merrill, etc., the brokerage firm can go bankrupt, but that does not have any effect upon the stockholder.

The Madoffs of the world got in trouble by never registering their shareholders' stocks with the DTC. People thought they held registered stocks, but in reality they never owned anything at all so there would be no SIPC guarantee. In the case of Schwab, he informed me that they are backed by Lloyd's of London. I would imagine that failure to register stocks with the DTC would fall under a fraud claim and losses would be backed by Lloyd's.

Long story short, according to him, there is no need to split up accounts with over $1 million. One of his clients, in fact, has $20 million in a single fund with an outside investor that he also has me in. Perhaps someone who is a broker could clarify/expand upon this.

This is largely a non-issue. However, there are some areas where it could be a more pressing issue:

• You have large cash balances that exceed FDIC limits. In reality, between using various account types, and bank waterfall programs, $5,000,000+ of cash can often be FDIC insured at ONE institution. Even if FDIC/SIPC limits are exceeded, excess policies exist for large firms like the prior poster referenced. Waterfall and excess SIPC aren't always available.
• You use proprietary investment products and/or have counterparty risk. Here, you are relying on the institution's ability to make good on the investment and care should be taken to potentially limit risk
• Advice... If I owned only mutual funds direct at a firm with a strong skillset/bias towards US Growth, that could be perfectly appropriate. But it is also a safe bet they will sell the concept of what they do well, even when outlook isn't favorable. Recognize this and seek advice from places that aren't narrowly focused.
• Madoff example... if you are investing somewhere other than with a major investment firm that is publicly traded, make sure audits are real.

If you are a diversified mutual fund investor/ETF investor, the firm the shares are held at is virtually irrelevant from a risk mgmt. perspective. That is part of the reason Financial Planners prefer these types of investments, it removes a possible risk.

I too am confused by this.

I kind of get it for cash/money market accounts in excess of the insured limits but I dont get thr point of having 3 admins.

One thing to consider is that expense ratios tend to go down at different institutions. Thus, if you has 3 401ks each at different places and each over $350k, you could combine into Vanguard and qualify for "Flagship" offering commission free or no trading fee funds. Depending on how active you are, this could add up. Point being, consolidating has some benefits that may outweigh the perception of risk diversification.