I have a few retirement accounts at Vanguard. I am considering opening a regular non-retirement investment account there. Is there any reason to diversify and open the new account with a different company like Fidelity, for example?
Note that I don't care about which company specifically (the ones listed are just examples). I want to know general information about diversifying between investment firms.
SIPC will cover up to $500K. I guess if you are going to stay up at night, once you hit that level, splitting the account up makes sense.
If you are happy with your current broker, especially if you have been with them for a while, I don't see the need to start a new investment account with another broker unless the new broker provides better service, features or products for the new investments you wish to start.
For exapmle if you're current broker provides good service and features for you share trading but does not for say options or ETFs, you may want to select a different broker for trading options or ETFs.
Yes, I would recommend opening your account with different brokers to prevent a repeat of the MF Global saga happening to you.
MF Global Saga
Brokers are mandated by law to segregate customer and brokers funds but MF Global dipped into customer funds to pay for trading losses, though this did not prevent them from bankruptcy. Many MF Global customers lost the money they put with MF Global and have no course of action now.
