As financial advisors, we want to be able to help clients reach their important financial goals as best as possible. One of the key aspects of helping you reach your goals involves getting an overall snapshot of your financial portfolio. Many people tend to have money in many different places: employer retirement plans, banks, investment accounts, savings accounts, and many other financial institutions. While there could be good reasons for this, most of the time it would be smarter to consolidate everything at one place. While it may seem like a short-term headache to move your money, consolidating assets is a much better strategy long term for a variety of reasons.
- Helps Reduce Fees Some types of accounts have annual fees, or other fees, to maintain and operate them. These are dependent on account type, the financial institution, and many other things. Regardless, moving your assets to one institution will lower the total number of accounts you have, which can significantly lower your annual account fees.
- Get Rid of Conflicting Advice When you have multiple accounts with multiple advisors, you may get conflicting advice based on the data and opinion of each advisor. Consolidating accounts to one advisor at one institution will allow you to get more clear, comprehensive advice. Your advisor will be able to provide more well-informed advice as well since he/she will have a more accurate picture of your overall portfolio.
- Diversify Properly It is a huge advantage to have all your assets in one place when it comes to investment strategy. If your advisor’s institution has the ability to hold many different types of securities, they can apply all of your assets to a comprehensive investment strategy tailored to your goals and needs. When your assets are split between too many places, it can be hard to keep track of your investments and easy to become to heavily weighted in a strategy that is not best for you.
- Cleaner Record Keeping Paper statements are becoming a thing of the past, which is good or bad depending on who you ask. Paper can be easier to manage, but electronic statements are more accessible. Regardless of how you receive your statements and communications, the more you receive, the harder it is to manage all of your accounts. By consolidating your assets to one institution, you will receive fewer communications and be able to monitor all of your assets and accounts more clearly and concisely.
- Easier Estate Planning Estate planning, in summary, is the process of planning out the transfer of your property and assets once you pass away. Many people don’t think to make a plan until it is too late. Many others have a plan, but it is complex and hard to execute for their successors. When you are able to consolidate everything to one institution, you have more control over the types of accounts and how those can be passed to their beneficiaries. It is exceptionally easier for your beneficiaries to be able to deal with one institution to settle your finances, rather than playing a game of “find the money” when you pass away.
6. Better Control of Money Movements Many people use their money as income, for unexpected events, or they are simply required to take it because of the account type and their age. For example, Required Minimum Distributions must be taken from qualified accounts starting the year you turn 73. Keeping track of how much money you have contributed or withdrawn from your accounts is a tough thing to do, especially as you get older and take money more frequently. If you have your assets split between institutions, it can be nearly impossible to track everything. It is much easier to have someone at one institution who you can call to give you an exact answer about your money movements without having to do a lot of research.
While we’ve laid out 6 reasons to consolidate your assets, there are a number of other reasons that could be based on you and your situation. It is always encouraged to speak with your financial advisor to ask how consolidating accounts can help you and your loved ones.
