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5 Benefits of a Consolidated Investment Portfolio

5 Benefits of a Consolidated Investment Portfolio

| August 29, 2018

I’m often asked by potential clients when they first approach us for financial planning advice, what my thoughts are on consolidating assets from multiple advisors to one advisor. Contrary to what you might have read about multiple advisors reducing your risk, the opposite is often true.

I will discuss some of the major advantages of consolidation from the end investor’s perspective.

Multiple Advisors Can Increase Risk

The more people you work with, and the more that you have to keep track of, the greater the chance of having some serious underperformance. Your asset allocation should reflect your current and future situation, your feelings about money, and your current status in life around your work and family. It is very difficult for one advisor to give good advice when they don’t know what the other three or four are doing or what assumptions they are making.

The Possibility of Lowering Fees

Most investment advisors have breakpoints where the fees are lower based on the amount of assets that they are managing. With multiple advisors, you could be paying the maximum fee for each advisory firm because each firm manages a smaller portion of your portfolio. One advisor managing the entire portfolio has the opportunity to help manage the internal expenses as well.

Multiple Advisors Create Redundancies

If you work with multiple advisers YOU become responsible for your asset allocation rather than your advisors. One advisor likely doesn’t know what the other one is doing and you could underweight or overweight certain companies, sectors etc. If you maintain a relationship with one advisor who understands what you’re trying to accomplish, this may provide the best opportunity for a successful outcome.

Streamlined Record Keeping
By having all of your investments with one firm it will help you take control of your financial life and could improve your wealth building potential. Then you have a true partner in your financial future. One advisor can also help you keep track of all your insurance policies, employee benefit programs retirement plans through your employer which could be very useful to your beneficiaries.

Helps develop a more effective wealth transfer strategy. If one of your goals is to make the transition of your estate to your beneficiaries as pain-free as possible, working with one trusted advisory firm can streamline the process and give heirs one point of contact that is knowledgeable about your entire situation. If you’ve never settled an estate there is a huge amount of work and time involved; even more so when someone has their assets in multiple places. Multiple advisors also increase the possibility that something will fall through the cracks.

In summary, find an advisor that you trust, preferably a Certified Financial Planner who will help you create a comprehensive financial plan, and you could save time money and headaches down the road.