Asset Consolidation Overview

We’re taught early on about the benefits of diversification, and many investors take this to heart by selecting two or three advisors to oversee their finances. Don’t put all your eggs in one basket, right?

While it may seem that having multiple investment advisors would help diversify risk, the reality is that it often has the opposite effect. Spreading your accounts across multiple advisors can result in overlapping strategies, and tax inefficiencies and make it incredibly challenging to reach your financial goals.

In this post, we look at five key benefits of asset consolidation.

1) Ensure Accurate Asset Allocation

Managing a well-diversified portfolio that is allocated according to the amount of risk you’re comfortable with is critical to reaching your long-term goals.

It is almost impossible to build an accurate asset allocation across different financial advisors who don’t know what the others are doing. Overlapping investments, conflicting advice, and needless duplication are bound to occur.

When it’s time to choose new investments or rebalance your portfolio, working with one advisor can make everything simpler. You’ll be able to assess the specifics of your asset allocation and portfolio construction at a glance and know whether you’re on track to achieve your financial goals.

2) Tax efficiency

One of the most important (and often overlooked) factors to successful investing is tax efficiency.

Allocating certain investments in non-retirement vs. retirement accounts can lower your taxes and save you money. This could include keeping fixed income in RRSPs, dividend-paying equities in personal non-registered portfolios, high-growth equities in TFSAs, etc.

By having your accounts in one place, it allows for easier coordination and maximum efficiency. At LT Wealth, we often work directly with our client’s CPA to save time and ensure optimal tax efficiency.

3) Help Reduce Fees.

Financial management fees are often based on the total “Fair Market Value” of all accounts. When you have more total assets invested with the same financial advisor, you may qualify for a lower fee schedule. By spreading your investments across multiple financial institutions, you lose these economies of scale.

4) Cash Flow Management.

When you’re ready to start using the money you’ve invested, you will need a cash flow strategy. It is important to have a clear plan outlining how much you can afford to take out, when you can take it out, and which account to use first.

Projecting income from multiple institutions can be challenging when information is presented in different formats across time periods that aren’t necessarily aligned. Keeping track of these components can become very time-consuming.

At the end of the day, managing and adjusting your future income streams, based on your budget and immediate needs is extremely important. Having one trusted financial advisor who has a holistic, overarching view of your entire financial picture is key to a long, sustainable retirement.

5) Simplified Financial Life.

Imagine having only one place to call for all your financial questions! From taxes and investments to rental real estate and general business consulting – asset consolidation can facilitate a true one-stop-shop experience.

Not only does this simplify your world, but it also allows for better coordination and efficiency in your financial life. You can improve your wealth-building potential while reducing the time spent making financial decisions.

Ready to Simplify and Maximize Your Wealth With One Advisor?

If you are ready to use your finances as a tool to meet your goals instead of being a burden that distracts you from living your life, check out our investment approach page or click the button below to get in contact with us.  


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December 18, 2020