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3 Benefits to Consolidating Your Investment Accounts

Posted by Michael J. O'Connor | CWS®, Vice President Investments
October 8, 2013

There are several benefits to consolidating your investment accounts in one place. For some investors, however, this may not be possible for a variety of reasons. One option is to have a financial advisor build a comprehensive plan that includes all of your investment accounts. This can provide many of the benefits of consolidating your investment accounts.

Benefit # 1: Help Ensure Your Portfolio is Properly Diversified

By combining your investment accounts in one place, you’ll potentially be able to understand what your overall investments look like, and as a result, be better able to make decisions regarding your asset allocation, risk level and more.

When you have investment accounts in multiple places - an IRA at Schwab, a Trust at Fidelity, a 529 plan at TD Ameritrade, for instance - you can easily lose track of your overall asset allocation. Many investors often have investment strategies in multiple accounts that overlap, resulting in an improperly diversified portfolio and inappropriate risk levels.

For example, consider an investor whose IRA is heavily exposed to international stocks, while their Trust is heavily exposed to Emerging Markets. This investor could have too much exposure to non-US stocks, resulting in a portfolio that may be less diversified and more risky than it should be relative to their goals.

Benefit # 2: Increase Your Potential for Lower Fees and Expenses

When you have all of your investment accounts in one place, often times the custodian (Wells Fargo, TD Ameritrade, Fidelity, for example) will offer fee breaks for total account size. You can also potentially reduce your transactional expenses when you make changes to your holdings.

Benefit # 3: Easily Track Your Portfolio Balances and Performance

Instead of logging into various accounts and adding your balances manually and calculating your performance for each account separately, consolidating them or viewing them in a single view can help you to know where you stand and how you’ve been performing.

Some Items to Consider Before You Consolidate Your Investment Accounts

First, it’s important to make sure you understand what, if any, tax implications might be associated with combining investment accounts in one place. Second, when making transfers, you should check if some of your investments are going to be sold before transfer, or whether they will transfer “in kind.” Third, you should check to see what fees or expenses might be incurred when leaving one custodian or selling out of certain holdings.

Should You Consolidate Your Investment Accounts?

It’s important to remember that consolidating your investment accounts doesn’t necessarily mean you should have all of your assets in one place or with one money manager. As mentioned above, some financial advisors have the ability to aggregate your accounts in order to see them in one place.

Our Wealth Managers can examine your various investment accounts and help you understand how consolidating your assets could make your portfolio work more efficiently. We can also build a comprehensive plan for you that’s easy to understand and can help keep track of how you’re doing relative to your goals. Call us today at 1-800-541-7774 to learn more.

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Investment Planning