Investing - Theory, News & General • Is custodian diversification worth it? (90/20 Portfolio, Excess SIPC, & Sweep Yields)

Hello everyone,

I need the forum’s perspective on ** custodian diversification** versus consolidation. I am 10–15 years from retirement with a 90/20 portfolio (90% VOO/VXUS at Vanguard + NV 529; 20% in bank CDs).

The Situation

The CD Problem: My 20% fixed income exceeds the $250k FDIC limit and earns low bank rates (3%–4%). I am moving it to higher-yielding brokered CDs or Treasuries as they mature.

The Core Dilemma: Since my Vanguard footprint is growing, should I use a second custodian for this fixed-income money to avoid having all my eggs in one basket?

The SIPC/Excess SIPC Factor: My total assets significantly exceed the baseline $500k SIPC limit. I know Fidelity offers a structurally better Excess SIPC policy compared to Vanguard, though given the low probability of institutional failure, I may not actually ever need it.

My Core Strategy Priorities

Personally, I put significantly more weight on operational simplicity, proper asset location, simple diversification, and the overall quality of the fixed-income platform than on trying to eliminate every conceivable custodian-concentration risk.

Additionally, I am factoring in the core cash options: Vanguard's default settlement fund (VMFXX) consistently yields slightly better than Fidelity's SPAXX. While the interest rate difference isn't huge for money sitting temporarily between ETF purchases, Vanguard's structural cash yield advantage is definitely on my radar.

The Options I am Evaluating:

Option 1 (The Split Setup): Move the fixed-income cash to Fidelity or Schwab to automate ladders, leave existing investments at Vanguard, and route future equity purchases to the new broker (eventually switching from VOO to a lower-cost fund like FXAIX/SWPPX).

Option 2 (The Full Migration): Transfer my entire existing portfolio in-kind over to Fidelity or Schwab and consolidate 100% of my wealth there to achieve both platform automation and a total exit from Vanguard.

Option 3 (The Status Quo Consolidation): Bring the cash over to Vanguard, manual-build my Treasury ladders, and keep everything perfectly streamlined under one roof.

My Questions:

1. Is it worth sacrificing simplicity just to satisfy the "best practice" of custodian diversification and Excess SIPC partitioning, or is it an unnecessary administrative headache if the insurance is never needed and the Vanguard settlement yield is superior?

2. If moving completely or splitting to a second custodian is the right move, do you prefer Fidelity or Schwab for automated fixed-income ladders and long-term indexing?

3. What is your current practice/strategy regarding this matter?

Looking forward to your insights!

Thank youI, and I appreciate your input in advance!

Statistics: Posted by yanki-R — Tue Sep 29, 2026 2:37 pm