Over a lifetime of investing we often have numerous accounts located at different financial firms.  Rarely are these accounts managed with a grand plan that takes into account all the individual pieces.   Account proliferation can be detrimental to your investment performance, increase your risk profile, and lighten your pocketbook.  

Account consolidation offers the following benefits:

  • Provides comprehensive management of assets and enhances financial planning –Asset allocation is the key to successful financial planning and risk management.  If your accounts are spread out, it’s harder to know where you are and how to manage to an equity target.  Rebalancing also becomes easier with an integrated view. As you move into retirement planning, coordinating how your accounts work for you is paramount.  Cash flow planning in retirement is crucial to make sure your assets live as long as you do. When assets are held at various institutions, it is harder to get a realistic view of the income generating potential of your portfolio.  

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  • Simplify investment advice - A good advisor will know your investment goals and preferences and how to work well with you.  Trying to form multiple relationships like this is difficult. In addition, multiple advisors will have different strategies and approaches to achieving your goals.  You are essentially acting as a general contractor, trying to get the various subcontractors to coordinate their game plans.

  • Eliminate redundancies – Having multiple advisors creates the potential to hold similar positions.   You may think you are diversifying, when in actuality you may not be as the managers employ similar strategies.  You may even own multiple funds that hold the same stock, further increasing your exposure.

  • Manage tax liabilities and identify opportunities – Having all of your taxable and retirement accounts in one place makes tax management easier.  Do you know what your realized gains and losses are if they are spread out over various accounts?  Can you easily spot the securities that are ripe for tax loss harvesting, or net out gains and losses with a few trades?  This is easier to do if all holdings can be viewed on one screen. If your accounts are supervised by different managers, they may miss this opportunity.  

  • Minimize fees and commission – Having all of your assets in one place builds scale and results in lower costs.  Many advisors offer a sliding fee schedule, so the more assets you have in one place the lower the overall fee percentage would be. Investing in multiple places negates this benefit.

  • Measure accurate performance - This is hard to do when accounts are at separate places, often using different portfolio accounting systems and time periods. If calculating your performance is difficult to do, you will tend to skip it or underweight its importance.  This can be a costly mistake.

  • Make things easier for your heirs – While we don’t like to think of this eventuality, when we are no longer here our heirs need to figure things out without our guidance.  They will have to pay estate bills, prepare taxes and find all of our assets for distribution. Everyone has heard horror stories about settling parents’ estates, wading through documents, safe deposit boxes and shoeboxes trying to find where all of the money is kept.  Having everything located with one manager eases this process and makes the distribution of the estate move smoothly.

Account consolidation is a key component of any investment strategy, offering concrete financial benefits as well as administrative ease and peace of mind.  Put it at the top of your to-do list today!!

Note: Elaine Phipps, MBA, CFA, is a Portfolio Manager at Point View Wealth Management, Inc., a registered investment advisor at 382 Springfield Ave., Summit.

For over 25 years, Point View Wealth Management, Inc. has been working with families in Summit and beyond, providing customized portfolio management services and comprehensive financial planning, to develop and achieve their financial goals.  Click here to contact David Dietze, John Petrides, Claire Toth, Donna St.Amant, and Elaine Phipps, or call 908-598-1717 to learn more about Point View Wealth Management, Inc. and how we can help you and your family meet your financial objectives. To sign up for our complementary commentaries and newsletters, e-mail us at firm@ptview.com.

CNBC has named Point View one of the Top 100 fee-only wealth managers in America.