"Elizabeth Richardson" <erichktn[at]worldnet.att.net> writes:

- quote -

It gives on a lot more flexibility.

I have two accounts directly with funds - one's an IRA
and one's a very low expense fund which isn't available
without a transaction fee through my brokerage. Oh, and
I have an account at Vanguard which is not a regular
brokerage account, but rather, a set of several funds.

The thing is, if you have an IRA and want to adjust
the asset mix, it's a lot easier if you have it at
either a brokerage or at a fund complex with multiple
funds available. Similarly, if you're starting to
take distributions from the IRA, it helps to have some
of that kind of flexibility, too (ie. write checks from it).

So long as one has enough that the brokerage isn't charging
lots of little fees, there's no reason not to have it
be a brokerage account except, perhaps, transaction-fee-free
access to certain low-expense-ratio funds.

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"Elizabeth Richardson" <erichktn[at]worldnet.att.net> wrote
- quote -

I wonder if it's a vocabulary problem, or perhaps a hazard
of the necessity of posting largely in sound bite format.

I tend to use "mutual fund company" and "brokerage"
interchangeably these days, even though I know they're not
exactly the same thing. I do it because most people asking
about starting IRAs are younger and don't know much about
investing, apart from a sense that they should get into
stocks at least a little. What's the best way? Mutual funds,
AFAIC. Which often leads to a mention of ETFs and/or buying
from different fund companies, which means now we need a
broker. Which means many large mutual fund companies also
have brokerage services. And so forth.

Elizabeth Richardson wrote:
- quote -

When you say "to have a broker", are you referring to an actual person?
I don't think the norm anymore to have use a person-broker. But it's
pretty much the norm to use an online brokerage firm.

Elizabeth Richardson wrote:
- quote -


Elizabeth,
I think most people are referring to discount brokers and yes, it's
becoming more common to open an IRA with a brokerage firm because it
provides more investment alternatives. And more and more it's hard to
find a single fund company offering everything you want.

If you're a Vanguard fan though, it's still better to stay with
Vanguard, to avoid transaction fees that even the discount brokerage
firms will typically charge to buy Vanguard funds (they're not part of
the typical supermarkets). So those favoring a Vanguard approach - I
think they're much more likely to work directly with Vanguard than use a
brokerage account. Or maybe they'd have both.

I haven't seen data on the breakdown of IRA assets between brokerage,
mutual fund companies, banks, and annuities so can't quantify this.

-Tad

I am constantly seeing in MIFP the suggestion that it is "normal" for a
person to keep their IRA with a brokerage. Since it never occurred to me to
have a broker, this attitude always raises my eyebrows. Is this truly the
norm? Or are investors more likely to open an account with a fund company?

Elizabeth Richardson