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.
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 that 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.
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.
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 multiple accounts with different advisors, each of those advisors has to cover costs expenses (e.g. administrative expenses). By consolidating your accounts to one advisor, they may be able to pass on savings to you as there is only one sent of expenses instead of paying the same expenses with every advisor.