Some people like to spread their money between two—or even three—investment advisors. They believe they’ll have better diversification in the market. Or maybe they believe it’s best to “hedge their bet” among different advisors to reduce their risk of loss. This usually isn’t a good move. There’s no good reason to have more than one advisor, especially if you have a good one you trust. On this informative episode of Worth It, Dustin R. Granger, CERTIFIED FINANCIAL PLANNER™ explains why having multiple financial advisors may actually be detrimental to your overall investment strategy and is likely costing you extra time and money.
Having multiple financial advisors may actually be detrimental to your overall investment strategy, and is likely costing you extra time and money. @worthit_podcast @DRGranger #worthitpodcast #FinancialAdvisor #Investing Click To Tweet
If you have two or three advisors, they won’t be able to create one cohesive investment strategy for you. One advisor will use a certain approach; another will craft a different one. When you use multiple advisors, there are often a couple of outcomes: 1. You can end up with large concentrations of certain types of investments because your advisors are putting money into the same kinds of things. 2. It may also be challenging to have a clear picture of your overall asset mix, fees, and performance, especially if advisors aren’t communicating with each other. Diversification is good; it’s necessary, but it’s usually best achieved with one advisor.
Hiring more than one financial advisor does not automatically mean you are diversifying your investments. In fact, using more than one advisor often results in redundancies that end up costing you more time and money. You are paying double the fees, filing redundant paperwork, and spending double the time, usually for sub-par results. The truth is, the quantity of advisors is no match for a quality comprehensive plan that helps you achieve your financial goals.
The truth is, the quantity of advisors is no match for a quality comprehensive plan that helps you achieve your financial goals. @worthit_podcast @DRGranger #worthitpodcast #FinancialAdvisor #Investing Click To Tweet
Typically in financial services, the more money you invest, the better your pricing should be. You can receive breakpoints on commissions and fees the more money you place with an advisor. If you divide $500,000 evenly between two advisors, then you will not get a break point for having the entire $500,000 with one. With one advisor, you eliminate this problem!
As for the benefits of hiring more than one investment advisor, I can think of none IF you’ve done your homework. The questions you should ask your advisor before hiring them should be comprehensive in nature and should give you confidence in their abilities. Ultimately, you hire an investment advisor to quarterback your investments. You rely on him to develop the best plan for you based on your unique circumstances. If you are not comfortable with them being your sole advisor, they probably shouldn’t be one of two or three advisors either.
Ultimately, you hire an investment advisor to quarterback your investments. You rely on him to develop the best plan for you based on your unique circumstances. @worthit_podcast @DRGranger #worthitpodcast #FinancialAdvisor #Investing Click To Tweet
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