Personal Finance: Ask the Experts

Get advice on money matters from The Bee's Claudia Buck and a panel of local experts

August 23, 2012
Should I keep all my assets with one investment company?

"Q:" I have my 401(K) in an investment management company that has been wonderful through the recent financial crises. They have managed my funds well and diversified as the market fluctuated. I will be retiring in six months and will need to move my pension funds from my employer's account. As pleased as I am with my investment company I'm reluctant to put my pension in the same "bucket". Is it safe to do so or would it be better to put my pension into separate company altogether?

-- Jackie, Fair Oaks

In 1970, Congress created the Securities Investor Protection Corporation (SIPC) to protect customers of member broker-dealers that my fail or be liquidated. If any securities or cash are "missing" from eligible customers accounts, the SIPC steps in replace those securities and cash. The protection is limited to $500,000 per customer.

It's important to note that the SIPC does not protect customers against market risk, i.e., losses resulting from a fall in a security's value, are not covered.

Most firms also offer additional account protection beyond the SIPC limit, which is called "excess SIPC".

Assuming your firm has SIPC coverage, and Excess SIPC coverage if the total of your assets are more than $500,000, there is no real risk with leaving all your assets with one investment Management Company. If you are pleased with your current company, by all means, stay the course.

The advantages of keeping all of your assets with your current company include:

• You are familiar with their services, and have developed a relationship with them.
• Depending on the amount of assets they are managing, you may get a reduced fee on the additional assets that will come from your pension fund. Typically, the fees that investment management companies charge are based on a sliding scale, e.g., a certain percentage of assets invested up to a $500,000 or $1,000,000, and then a lower percentage on amounts above those levels.

On the other hand, you won't know if another company can provide better service, unless you test the waters. In addition, another company's investment philosophy may be better suited to your needs.

I suggest you ask trusted friends or family if they can recommend their investment management companies, and then interview a few to get a feel for their services. You could then transfer your pension assets to one of these firms, and after a year or so, compare their service and performance to your current firm. If you are not satisfied, you can always transfer the pension assets to your current firm.

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Meet Our Financial Experts

Claudia Buck

Claudia Buck is The Sacramento Bee's personal finance columnist. Read all her columns here. Contact her at

Terri Carpenter

Terri Carpenter offers advice on job hunting, retraining and career counseling. Carpenter works at Sacramento Works Inc., the career and job training arm of the Sacramento Employment and Training Agency (SETA). With 15 years in the field, she has hands-on experience with everyone from first-time job seekers to career professionals seeking advice after a layoff or looking for a mid-career change. Ask her a question.

Carlena Tapella

Carlena Tapella is a partner in the law firm of Webb & Tapella Law Corp. in Sacramento. The firm specializes in estate planning and probate, such as estates, trusts, conservatorships and litigation. She is a past president of the Sacramento County Bar Association's Estate Planning & Probate Section. Ask her a question.

Kimberly Foss

Kimberly Foss, certified financial planner, is the founder of Empyrion Wealth Management in Roseville. With nearly 30 years in the financial industry, her clients include women in transition, small business owners, retirees and "pre-retirees." Ask her a question.

Jesse Weller

Gregory Burke, a CPA and tax expert with John Waddell & Co. in Sacramento since 1984, worked as an IRS tax auditor for six years. He’s a past chairman of the California Society of CPAs. Ask him a question.

Daniel Tahara

Daniel Tahara takes your questions about California taxes. Tahara, a spokesman for the state Franchise Tax Board, has 10 years of experience as a tax auditor. Ask him a question.

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