Why I Have All My Brokerage Accounts in One Place

Working with multiple brokerage firms can have some big downsides.

Like many people, I have several different kinds of investment accounts. This includes retirement accounts, as well as a few taxable accounts. But while I have different goals for each of these -- and there are different rules to follow for each one -- there's one thing I've made certain is the same: Every brokerage account I have is held with the same company.

There are a few reasons why that's the case, including the fact I'm rewarded for my loyalty to my brokerage firm with extra credit card rewards points due to the broker's relationship with my card issuer. However, there's one reason that stands out above all others as justification for why maintaining all my accounts with the same broker makes sense.

If you also have multiple accounts, learning about my motivation for sticking with just one broker may convince you to do the same.

The simple reason why one brokerage firm is home to all my accounts

The biggest and most important reason why I have all of my investments with one brokerage firm -- even though I maintain several accounts at that firm -- is because keeping my accounts in one place makes it easier for me to determine if I have the appropriate asset allocation.

Investing inherently comes with risk, but there are ways to reduce the likelihood of suffering permanent losses. Two of the best techniques include building a diversified portfolio of many different kinds of assets, and making sure your portfolio exposes you to the right level of risk tolerance given your investing timeline and preferences.

Employing both of these techniques is much easier if you have all of your money with one brokerage firm instead of using different brokers for different kinds of accounts. That's because you can sign into one account and see at a glance what different kinds of investments you hold, and what percentage of your total combined portfolio is invested in each different asset.

If you have multiple separate brokerage accounts, on the other hand, you'd have to sign in to each one separately and compile a combined list of investments to make sure you aren't too heavily invested in one asset or industry, and to ensure you've been neither too conservative nor too aggressive. Manually compiling all this information can be more trouble than it's worth, and you may be better off opting for my strategy of having all your accounts kept with the same company.

The importance of researching different brokerages

Now, the downside is, not all brokerage firms offer all these account types. For example, some popular brokers have taxable accounts only with no opportunity for retirement savings. If your preferred brokerage firm offers only one type of account, you may be willing to accept the fact that assessing your asset allocation will just be a little harder. But you need to realize the added challenge you're taking on and the fact you could be exposed to more risk.

Rather than making life harder, and potentially jeopardizing the performance or your investments, consider doing a little more research to find out if there is a brokerage firm that offers all the account types and features you need. You may be surprised to find what's out there, and may be able to make a change that simplifies your investing process.