Executive Summary

When it comes to financial advisors, less is more! There are many benefits to having only one advisor that you trust to work with to execute your financial plan and work toward your financial goal.  Below are a few ways having one advisor can benefit you.

What You Need to Know

  1. Consolidation

Having multiple advisors means you have multiple accounts, possibly with multiple different companies.  This can become confusing for you and eventually your beneficiaries.  Consolidating will not only make your investments easier to keep track of, but it will ensure that your investments are working together instead of potentially working against one another. 

For example, if you hold a clean energy fund with Advisor A and also hold a clean energy fund with Advisor B, then you may be over invested in an asset class.  If the investments were all being managed by one advisor, they would be able to create an asset allocation for all your money that would manage risk appropriately.

  • Taxes

Registered contributions, income planning, and estate planning are just a few of the decisions that you will make with an advisor that can significantly impact your income taxes. Having two or more advisors can pose a significant risk when it comes to tax planning.   One advisor can’t know what another is doing.

For example: If your RRSP contribution for a given year is $20,000, your advisor may advise you to contribute to your RRSP.  However, if you have another advisor who is unaware that you have already used up that contribution room, they may advise you to contribute to your RRSP as well.  This can result in stiff penalties for overcontribution.  Having one trusted advisor can eliminate this problem. 

  • Fees

Many advisors operate with a fee-based compensation structure that is dictated by account size.  Having all your investments in one place may offer you the opportunity to save on fees. 

For example, if you have three $100,000 accounts with three different advisors and are paying 1% on each account then you are paying $3,000 total in fees.  However, if you consolidated your portfolio with one advisor who may be able to offer you a lower fee due to account size (let us say .75%), you could be saving big time in annual fees!

  • Insurance

Every advisor offers insurance in many if not all areas and many people working with advisors are not familiar that this is available.  As mentioned in the above list, using one advisor for your savings, investments and insurance has only positive benefits.  Fees will be lower from adding on another advisor as your insurance provider and above all, your needs and constraints will be better understood and taken into account which in turn will only lead to better advice on what you need or do not need in this area. 

The Bottom Line

Having one advisor that you trust is a smart financial move.  Your portfolio will be simplified, better allocated, and benefit from someone having knowledge of your entire financial picture.  If you do choose to have more than one advisor, be prudent to ensure that the advisors are in contact to make sure that their decisions align and make sense for your financial plan.