The Benefit of Asset Consolidation

Do you need more than one adviser?

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There is an old saying in football:  if you have two or more quarterbacks, you really have none. And we all know you can’t win a football game without a quarterback.  When you have more than one adviser, you really have none, at least no lead adviser coordinating all your financial issues. You become the lead adviser managing what each adviser is doing. You become the quarterback.  Let’s look at some of the issues.

Conflicting Strategies:  What if one financial planner’s strategy conflicts with the other? For example, what if Adviser One plans to minimize capital gains in her part of the portfolio to enable a Roth conversion, while Adviser Two plans to execute sales in his part of your portfolio to create capital gains while you are in a low tax bracket? If they both executed their strategy, you would have capital gains, a Roth conversion and the resulting, a large tax bill. Not what you had in mind? Remember you are the quarterback. You would need to intervene and decide which strategy is best for you.

Portfolio Overlap:  Portfolios managed by multiple advisers can overlap, possibly creating a higher level of risk. Both advisers may hold the same investments. So by thinking you are not putting all your eggs in one basket, i.e. having more than one adviser, you may actually be putting all your eggs in one basket, or very similar baskets in the form of overlapping investments. With more than one adviser, you must coordinate the portfolio to reduce concentration and overlap. A diversified portfolio is the goal and one adviser is best suited to provide that.

Are you prepared to be the quarterback? Do you have the time and expertise? Are you an expert in taxes, investments, estate planning and insurance?  When you have multiple advisers, the actual coordination between advisers may be delayed or not accomplished at all because of the confusion of tax and estate planning.  Multiple advisers without expert coordination may end up doing you more harm than good.

It is in your best interest to find a single trusted adviser to give you advice on your entire financial picture. If you have only one adviser coordinating everything for you, you reduce the risk of the left hand not knowing what the right hand is doing. Not every adviser fits that bill, and if they are simply selling investments or insurance products, they may be no better at coordinating everything than you are.

It is important to find a comprehensive financial adviser you feel confident in. A good adviser will tell you how much (and what type of) insurance you need, how to plan your estate, how to invest your money, and what to do to minimize taxes. Are your advisers acting as a quarterback for you? If not, and if you don’t feel up to the task, you need to find someone who can. So how do you find such an adviser? We believe you should only consider advisers who operate under the fee-only model. Commissions create conflicts of interest that may work against you. In the fee-only model, you pay for advice, not a product. Our post on finding an adviser is a good place to start.


Will Your Money Last Through Retirement?

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Will I be able to maintain my current lifestyle?

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Can I protect my hard-earned savings and still
have the income I want?

Rodgers & Associates answers questions like these every day.

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2025 Lititz Pike, Lancaster, PA 17601
Phone: 717-560-3800, Toll-Free: 888-876-3437