10 Benefits of Consolidating Assets To One Financial Advisor

Marina Sidelnikova, CPWA®, MBA, MS Investing, Personal Finance 4 Comments

financial advisor

Many investors think their investments are safer if they have their accounts with multiple financial advisors (or multiple platforms). Don’t put all your eggs in one basket, right?

In reality, this strategy can have the opposite effect. Spreading your accounts across multiple financial advisors can make it incredibly challenging to reach your goals.

In this post, we will look at 10 benefits of consolidating your assets.

1. Accurate Asset Allocation

Having an accurate, personalized asset allocation is one of the keys to successful investing. Asset allocation is an investment strategy where your investment goals, time horizon, and tolerance for risk are considered to build your portfolio.

It’s almost impossible to coordinate accounts across different financial advisors to build an accurate asset allocation. Consolidation can get you back on track.

It can also help keep your portfolio diversified and avoid overlapping similar investments across multiple accounts. Your accounts can finally work together to accomplish your investment goals.

2. Tax Efficiency

A really important (and often overlooked) factor to successful investing is tax efficiency.

Allocating certain investments in non-retirement vs. retirement accounts can lower your taxes and save you money. By having your accounts in one place, it allows for easier coordination to maximize tax efficiency.

If your financial advisor’s firm also does your tax preparation, there is an additional level of tax efficiency. Your CPA can work directly with your financial advisor to make sure everything is coordinated and working together to meet your goals.

3. Simplified Tax Documents and Statements

Most people are moving to e-delivery of statements and tax documents to simplify their lives and minimize paper.

It doesn’t simplify your life much if these documents are being sent from tons of different financial advisors. You’ve just moved the problem from you physical mailbox to your email inbox!

Consolidation allows you to access all of your financial data from one place and eliminates the burden of multiple tax receipts and statements on an annual basis.

It also makes it easier to manage your needs during tax preparation time.

4. Simplified Cash Flow Management

When you’re preparing to start using the money you’ve invested, you will have to have a cash flow strategy. This financial planning strategy will lay out how much you can afford to take out when you can take it out, and which accounts you should use.

Projecting income from various institutions will be challenging because the information is often presented in different formats and different time periods. Keeping track of all those components becomes very time-consuming.

An adjustment of your future income stream, based on your budget and immediate needs, can also be done in a more efficient way when you have one source.

5. Monitoring Performance Results

Comparing one account to another should be done carefully, based on the types of investable assets and appropriate benchmarks.

Having a centralized reporting system allows you to monitor performances for each individual account as well as on the consolidated level.

6. Required Minimum Distribution

Once you hit the age of 70 ½ you will be required to take a Required Minimum Distribution (RMD) from your retirement accounts.

If your accounts are spread out, the computation of the RMD will have to be done done for each account.

Consolidation helps to determine the total amount and to plan based on your expected future cash flow. You will also be able to take out all RMDs from one account.

7. Transaction Benefit

Certain strategies are only possible when taxable and retirement accounts are located on the same platform.

For example, a client who needs to take a RMD can take advantage of an “in-kind transfer” without selling securities.

This strategy is when you transfer the shares of your investment from your retirement account to your non-retirement account instead of selling them and receiving cash. This would allow you to continue investing instead of having to cash out your investments.

8. Cost Efficiency

Most financial advisor management fees are based on the total “Fair Market Value” of all accounts. Consolidation might allow you to be qualified for a lower fee schedule because you have more total assets invested with the same financial advisor.

Some mutual funds also have lower cost share classes with higher minimum investments.

9. Integrated Technology

Paperless access through a wealth management portal allows you to securely view ALL your accounts (individually and on a consolidated level) using one access.

This gives greater visibility and will help you better understand your complete financial situation.

10. Simplified Financial Life

Imagine having only one place to call for all your financial questions!

If your taxes are prepared by your investment firm, along with any business consulting, rental real estate advice, or other financial advisory services, you will truly have a one-stop-shop experience.

Not only does this simplify your world, but it allows for better coordination and efficiency in your financial life.

Your finances can finally be a tool to meet your goals instead of being a burden that distracts you from your goals.

Ready to Simplify and Maximize Your Investments With One Financial Advisor?

If you feel overwhelmed by the nuances of managing all your different accounts, check out our financial advisor services, or click the button below to schedule an appointment.

About The Author

Marina Sidelnikova, CPWA®, MBA, MS

Director of Wealth Advisory Services | Learn More>>

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Comments 4

  1. It would be so nice to have just one place to call for financial questions like you talked about. I have a lot of questions about our finances, especially when it comes to tax season and budget planning. We don’t have a financial planner right now, but I can see how having one would really allow me to ask questions anytime I want. I’ll have to look into getting one so that we’re prepared for tax day next year.

  2. I found it interesting how you mentioned how a wealth management service can help you manage your taxes because your wealth is in one place. My son wants to put some of his spare wealth into the stock market but wants to make sure his other wealth is kept secure. I will be sure to pass this information on to him so he can assess all of his options!

  3. You made a good point that simplifying my tax documents is one of the best things to about having a financial advisor. A friend of mine is planning to start her own accounting firm soon so would be in need of employees to man her office. Perhaps looking into financial advisor firm recruitment agency can fill up the slots fast.

  4. I did not have time to look at all of my assets, so this is the reason I have decided to give them to me financial advisor. He would be able to manage it properly in return for a small annual fee that I need to pay.

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