Should I divide my portfolio up and put the parts in different investment firms or banks?

I have a portfolio at a big investment firm. The portfolio itself is pretty diversified. So all my eggs are not in one basket. However, is not having the entire portfolio at one investment firm or Bank kind of like having all your eggs in one basket? What if this bank goes down? It's a very well known and reputable investment firm but so was Arthur Anderson and they went down.

The SIPC insures your investments (not the FDIC, or ****, as people have suggested). Arthur Andersen was a consulting firm. The were a business services firm, nothing else. Other than the owners of Arthuer Andersen, their collapse didn't destroy anyone's assets.

Also, by holding your investments in multiple investment firms, you would likely expose yourself to more account fees.

Myself, I own all of my mutual funds directly through the fund firms, for no other reason than to avoid fees and higher minimum purchases.

Here's one opinion: I'm with one of the big investment companies. I just spent literally months getting everything consolidated...exactly opposite of what you are thinking. My thoughts are that, if my investment house does something stupid, the companies I have invested in are still viable. I suppose there is some sort of risk that someone will run off with all the loot, but aren't your shares, bonds, etc still with a company, not the investment house? Looking forward to more answers...but that's my 2 cents worth.

Yes! However think insurance when doing this most banks have fdic insurance up to $100k on deposits. So you might not want more than that in one bank. Then the insurance on other asset types differ if any is available at all. You would need to do some research on the ins. coverage available for the asset types you have.

Also keep in mind that your cost increases somewhat so you might not want to go gang busters since you holdings are already diversified. Finally speak to your financial professional This is what they're supposed to get paid for just not the one at your bank.

that depends on the investment firm. If the firm is big enough, you really dont have to worry -- if they crash, then the whole market would crumble around them. If you're at Fidelity or Schwab youre with a LOT of other people so you're probably fine.

It all depends on how much money you have. I have my money split between 3 different firms, all self directed investments. I don't like one firm knowing all my business. Having been in the brokerage business 20 years ago I can tell you that I know the game and they want to capture all your assets, it makes them all warm and fuzzy. If you don't call your own shots, it is better to have the opinion of more than one advisor with you choosing the best sounding ideas from each firm or rep. Most firms have insurance to cover amounts above SIPC protections.

What if your broker at one of the big firms starts trading without your knowledge and you don't spot it for awhile. This could put your account in limbo until it is corrected either through normal channels or arbitration/lawsuit.

You do get some benefits for having larger amounts with some firms, reduced fees, lower commission rates, etc.

Diversify the diversification. I vote for at least 2 firms!

Although Trade Info does have a valid point with respect to a broker going bad, here's the other side of the argument.

I am a Financial Planner, not a Broker, but then again, almost everyone is a "planner" these days. And yes, I prefer to manage all of my clients assets, but not just from a compensation standpoint.

More importantly, it is critical for me to at least know the details of all of my clients assets so that my planning efforts are accurate. It is like the old computer adage goes, Garbage In, Garbage Out. Unless I know exactly what my client is invested in, my recommendations for asset allocation, savings rates and even risk management are skewed and inaccurate.

As for a brokerage firm going under, check your brokers **** coverage and any supplemental coverage they provide. Remember, Your investments are yours and are not commingled with the broker's assets. The truly important thing is to have a strong relationship with a planner you can trust.