Consolidate to One Advisor, or Diversify Among Many?

Many investors find themselves considering the same question, and analyzing the pros and cons of sticking with one financial advisor for all of their investments, or spreading their portfolio across many advisors in the hopes of maximizing their diversification. The fact is, investors may be doing more harm than good when trying to do this, and there are many solid reasons why one should opt for consolidating accounts with a single advisor. This excellent article in Forbes provides the top five reasons to consolidate your accounts, pointing out how working with multiple advisors could increase your risk, create redundancies, and possibly result in higher fees.

These issues are all very applicable points for an investor to consider, and we at Krilogy agree that a better course of action is to consolidate accounts. As I reflected on this, other points came to mind that could be helpful through this process:

  1. Spend your time interviewing and aligning with an advisor who is able to identify your goals and desires with you, offers valuable options you may not have considered, and whose investment style feeds those objectives.
  2. Having multiple advisors means multiple investment styles, overlap, and additional oversight necessary by the client. It could potentially also result in higher fees, as was mentioned in the Forbes article.
  3. The best advisors walk the financial walk with you. They take what you have today and build a portfolio to fund the gap for your tomorrows.

At Krilogy, we take a team approach to investing, where many minds work together on the mathematics behind your investments. We purchased a computer tool to analyze various scenarios for each account. For example, what will happen with each asset in your accounts if scenarios like interest rate hikes or overseas turmoil come to fruition? We’re always looking at what CAN happen going forward so we’re ahead of the game. Our program is a unique tool that we use for portfolio stress testing. It’s something that few firms, regardless of size, invest in – but we believe in investing in you. This program is very sophisticated and puts Krilogy and our clients on the leading edge of technology. We also provide clients with a tool called TotalPortfolio™, an online dashboard which captures all assets and liabilities for a complete financial picture, accessible at any time (a feature important to our busy clients).

This advanced technology came to mind as I considered the issue of consolidating accounts because if you’ve spread your portfolio among multiple financial advisors, you’re not getting the whole picture. When you have a team actively managing that picture, your assets are constantly being analyzed to make sure each asset deserves to be in your portfolio, or if profits from that asset sector can be deployed into lower cost opportunities. You see your entire portfolio, which ultimately is what will create your future. Managing multiple advisors can make that vision a challenge.

Disclosures