Why It Makes Sense to Consolidate Your Financial Portfolios

Why It Makes Sense to Consolidate Your Financial Portfolios

July 29, 2019

Diversification makes sense in investing, but not necessarily in portfolio management. Juggling multiple financial portfolios with numerous advisors could create problems, whereas working with just one investment firm can provide many advantages.

Consolidating the view of your accounts with a single company can make it easier to form a complete overview of your investments, including asset mix and tax opportunities. Why make it harder on yourself to understand your overall risk exposure, cash flows, and investment returns? Consolidated accounts may lower your costs and facilitate financial planning.

Take a complete view of your investments. Investments spread across different locations hinder your ability to make separate portfolios work together. By consolidating, you can judge how well your investment strategies are meshing and get a better view of your investment mix. For example, if you hold mutual fund accounts with multiple advisors, portfolio overlaps and redundancies could complicate managing your asset allocation strategy.

Optimize your tax opportunities. You might be better able to implement tax-efficient investment strategies by bringing brokerage and retirement accounts together under a single financial advisor. Tax-loss harvesting in a consolidated taxable account might be simpler because you can easily view your losses and gains. Also, consolidation can make it easier to deploy tax-efficient assets in your taxable account and less-efficient assets in your retirement account.

Reduce your commissions and fees. It’s quite possible that investing with multiple advisors is inflating your costs. Financial providers frequently offer price breaks when investments under management exceed certain thresholds. Consolidation increases your opportunities for lowering investment expenses and account fees.

Make your planning more effective. You could improve your financial planning through account consolidation. For example, you might be better positioned to plan a sustainable post-retirement withdrawal rate over your full lifetime by consolidating your different retirement accounts into one. Consolidation can also facilitate your estate planning and gifting strategies for maximum effect.

Consolidation requires informed judgments. Moving accounts can have unintended consequences, such as back-end fees. I urge you to call or email me for a complete analysis of the benefits of a well-considered consolidation strategy that may help you maintain your asset allocations, improve tax efficiency, optimize your costs, and plan more effectively.

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