If there is one thing all experts on personal finance agree on is that you should save – for retirement, for a better future and for specific goals like education and a home – and that you should ask an expert to help.
So if it is a smart decision to get one financial advisor to help you with you money goals – is it better to get more than one?
There are several factors to consider including fees, how many options you are seeking for your investments, the security of your money and your identity and your own financial plans.
Goals
The decision to work with more than one financial advisor will greatly depend on your money goals. It may be advisable to look for a second broker to make up for a lack of skills, for example an estate planner. It is also important that you understand the investment strategy of your broker and why, for instance, investments are going down in value in certain types of markets. They add that if you do decide to let more than one broker handle your investments you should make sure that they are all on the same page.
Start With One
Writing for Forbes.com the experts at Investopedia argues that the first step is to find one right one adding that many brokers now offer no-minimum, no-fee retirement accounts which would be a good way to start but adds that larger firms is a good idea as they offer a wider selection of investment options. They however add a warning that whatever you decide, not to switch investment firms repeatedly as this could be an unnecessary waste of money. They conclude by saying that your decision should be influenced by finding the lowest fees and the widest selection.
Protection
Financial advice website Nerdwallet proposes that it is a good plan to split investments between two or more brokers as it is easy and in many cases can offer increased security and even savings. They add that the insurance protection offered by the Securities Investor Protection Corporation would be more extensive if your money is spread over accounts at several brokers. The authors concede that having one broker will cut down on unnecessarily complicated regulations and paperwork. They advise long term investors that they are likely to benefit the most from having multiple accounts as it would be easier for them to absorb higher fees and these investments can benefit from the more extensive research offered by different firms.
Better service and variety
There are also very good reasons for having more than one account. These include getting access to firms that offer excellent retirement investment while others would offer the best deals for trading in stocks, while not all firms would offer options to invest in less traditional instruments like penny stocks, forex funded account and cryptocurrencies. You can find a convenient breakdown of brokers dealing with specific investments on the website http://www.asktraders.com.Multiple accounts can also give access to better fees.
On the other hand, some firms consolidate investment accounts and place you in a better position to gauge your financial health – if you have multiple accounts you will have to do this yourself. Geske adds finally that multiple brokerage accounts also increase the risk of identity theft as more firms have your confidential information.
Identity theft
The threat of identity theft is a very real one. According to the Identity Theft Resources Centre there were 1,579 data breaches exposing nearly 179 million records in 2017 alone. That represented a 44% increase in the number of breaches and a 389% increase in records exposed.
Millionaires have more than one
In his book Everyday Millionaires, author Chris Hogan, writes that the one thing they found about Americans who became millionaires is that they invest and in more than just their company retirement plan.
“In our study, we found that 75% of millionaires make regular, consistent investing part of their ongoing personal finances. Seventy-nine percent (79%) invest inside a company plan and 74 percent (74%) invest outside a company plan, meaning most millionaires invest in both. If I were a betting man, I’d go with the majority here. Their portfolios are proof positive of the power of perseverance,” Hogan wrote.
Danger of losing track
Some experts, however, warn that as people might have up to 12 jobs in their lifetime keeping track of retirement investments in different accounts might be difficult, leading to people forgetting that they have money in some accounts. Lawrence Solomon, director of investments and financial planning at OptiFour Integrated Wealth Management in McLean, Virginia is quoted in saying that having too many investment accounts “makes efficient management almost impossible and also increases costs.” He added that it was impractical to combine all investments as there are tax implications amongst other considerations.