Why Consolidating Multiple Investment Accounts Is a Good Idea

Reducing complexity is just one of the advantages.

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Having a collection can be very fulfilling. My Mom collects Cat’s Meows, which are little painted wooden buildings with a small black cat painted on each of them. She probably has over a hundred of them all over her kitchen. When she goes on vacation, she’ll often get a new one painted like one of the buildings she visited on her trip. Each one is significant to her in some way or reminds her of a different time in her life.

By the time people are in their 50s many of them have developed a different type of collection; a collection of accounts at various financial institutions with different investments in each of them. There are two varieties of these collectors: intentional and unintentional.

Unintentional account collectors are the folks that changed jobs a few times, have a 401(k) from one job, and a SEP-IRA from another job, that brokerage account they set up with their college buddy who became a stockbroker, and three checking accounts and multiple IRAs all at different banks. The problem is that every one of those accounts probably has different investments and it’s very likely that they don’t have a good understanding of how each account fits in with the other accounts. If you have numerous accounts with different stocks, bonds, or mutual funds that you’ve collected over the years, can you honestly say that you know what your asset allocation is at any point in time? I doubt it.

Intentional collectors are a slightly rarer breed. Perhaps they’ve heard someone say “Don’t put all your eggs in one basket” and think that means they should have accounts at a number of different financial institutions so their investments are “diversified.” The problem this thinking creates is that they will often own some of the same or similar investments at each financial institution which can result in the illusion of diversification.

In either case, these “collections” of accounts can be confusing. Every financial institution could have different rules and forms. Each financial institution would have their own customer service staff, usernames and passwords and vary in allowable investments. You can multiply each one of these variables by the number of different institutions you work with and you can quickly realize how complicated it can be to keep everything straight in your mind.

We believe that you should pick one institution that you trust and then start the process of consolidating your “collection” there. The biggest advantages of doing this are:

  • reduced complexity
  • having a consistent service experience
  • understanding how your account is actually positioned
  • centralized tax reporting
  • potentially reduced costs

Managing your investments can be difficult enough at one firm, why add additional complexity by working with multiple financial institutions?

Will Your Money Last Through Retirement?

No one wants to run out of money. But without goals and a solid plan,
how can you know for sure whether you’re on the right track?

Will I be able to maintain my current lifestyle?

What will my monthly income be in retirement?

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