Consolidate: Why Having Multiple Financial Advisors Isn’t Better than One

Some investors think putting their money with multiple financial advisors will lead to better results.  This is not necessarily the case.  It can make things worse.

We believe working with one trusted advisor is best for most investors. 

At Signet, when we work with all of a client’s assets, we are better able to deliver a clear, comprehensive and coherent strategy designed to meet each client’s unique needs and circumstances.   

Pitfalls with Using Multiple Advisors

Spreading money across two, three, or more advisors may cause problems, such as: 

  • Lack of Coordination - Each advisor is often working in isolation, rarely, if ever speaking with one another or even knowing what the other is doing or how they are investing your assets. Nothing positive can come from this sort of relationship.  
  • Duplication – Just because you have multiple advisors does not necessarily mean that you are properly diversified. Multiple advisors may put a client into the same investment multiple times. You may unintentionally wind up overweight or underweight certain asset classes, which can impact your long-term returns and risk.
  • Over diversification - Recommendations by one advisor could inadvertently be offset by another advisor’s investment choices. This might cause the risk of the overall portfolio to be more conservative than the investor’s financial goals warrant.  For example, imagine one advisor tilts your portfolio to underweight small caps, while another is overweight small caps, thereby creating market neutral exposure. In other words, you could be too diversified and end up paying active fees for passive market exposure.
  • Higher taxes - Multiple advisors can exacerbate tax- and estate-related matters. For example, perhaps advisor A has $50,000 in realized taxable gains for the year, and advisor B has $50,000 of unrealized losses.  If they are not communicating and coordinating with one another, advisor B might not know to realize these tax losses.  The can result is a higher tax bill than necessary.
  • Undue Risk - In an attempt to diversify risk by using several advisors, investors may instead multiply it. Having multiple advisors may cause you to take more risk than you need to, because the advisors feel like they are competing with each other.  It’s only natural for each advisor to try to outperform the other.  This may compel each advisor to take unnecessary risks in search of higher return.  This could also put more emphasis on short-term performance, which may undermine the investor’s long-term financial plan and risk management. 

Benefits to Consolidating with One Firm or Advisor

We believe working with one primary advisor is best for most investors.  Signet provides the most value for clients when we manage a client’s entire portfolio.  It is difficult to design, implement, and monitor financial solutions without total awareness of each client’s whole financial picture.

How Signet can help:

  • Integration - Aggregate all of your statements and financial information, not only across your investments, but also your CPA, estate attorney and business advisors.
  • Simplicity - Managing your assets can become more complicated when using more than one advisor. We can provide a holistic view of your whole financial life.  In one conversation with us, you’re able to understand where everything stands.
  • Time - It’s hard enough to find time to speak with one advisor. Do you have enough time to meet with 2, 3, sometimes 4 different advisors to discuss strategy, goals, and financial planning on a consistent basis?  One advisor streamlines the process and frees up time for you. 
  • Lower Fees - By consolidating with one advisor, you are more likely to reach fee discounts based on assets under management
  • Efficiency - Effectively rebalance back to targets across all portfolios to help ensure that your short-term and long-term goals are met
  • Personalization – Design and manager portfolios to meet your unique needs.
  • Risk Management - Focus on potential risks across multiple investments & financial accounts – risks that could put your financial health in jeopardy

Just because you work with one firm, does not mean you have “all-your-eggs-in-one-basket”. 

At Signet, we design portfolios that embrace diversification and blend multiple sources of return.  We have many different investment strategies available to clients.  We know how to combine these strategies and personalize each client’s portfolio to their unique needs.

Furthermore, we utilize a team approach to helping clients achieve their goals.  We have multiple experts available to clients in different areas such as stocks, bonds, options, asset allocation, financial planning, social security, retirement planning, income investing, etc…  By utilizing a team approach, we aim to help each client through various stages of life.

Final Word: More is Not always Better

We believe Signet provides the most value when we manage a client’s entire portfolio.  This allows us to best integrate and monitor your complete financial life, including investments, taxes, estate planning, insurance, and retirement.  

 

About Signet Financial Management

Signet Financial Management is a wealth management firm that takes a personal approach in helping high-net worth families, individuals, and business owners navigate the complexities of managing money. We believe in your financial well-being, and custom tailor solutions using sophisticated investment management tools to help you keep more of what you earn and to reach your financial goals.

Founded in 1988, we manage approximately $800 million in assets with offices in Parsippany, NJ; Reston, VA; Chapel Hill, NC; Ft. Lauderdale, FL; and Naples Fl.

For more information, please contact Steve Tuttle at 800-390-2755 or This email address is being protected from spambots. You need JavaScript enabled to view it..

 

 

Important Disclaimers

Signet Financial Management, LLC ("Signet") is a Registered Investment Advisor ("RIA") with the U.S. Securities and Exchange Commission (“SEC”). Signet provides investment advisory and related services to clients nationally. Signet will maintain all applicable notice filings, registrations and licenses as required by the SEC and various state regulators in which Signet conducts business. Signet renders individualized responses to persons in a particular state only after complying with all regulatory requirements or pursuant to an applicable state exemption or exclusion.

This article is intended to provide general information. It is not intended to offer investment advice or to recommend the purchase and sale of any investment product. Information is provided to learn about our advisory services, our people and to be able to contact us for further information.

Please remember that past performance may not be indicative of future results. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product (including the investments and/or investment strategies recommended or undertaken by Signet) or any non-investment related content, made reference to directly or indirectly in this article, will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Moreover, you should not assume that any discussion or information contained in this article serves as the receipt of, or as a substitute for, personalized investment advice from Signet.

PLANNING AND ADVICE

IMPORTANT DISCLOSURE

Past performance may not be indicative of future results. Different types of investments and investment strategies involve varying degrees of risk, and there can be no assurance that their future performance will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. The statements made in this newsletter are, to the best of our ability and knowledge, accurate as of the date they were originally made. But due to various factors, including changing market conditions and/or applicable laws, the content may in the future no longer be reflective of current opinions or positions. Any forward-looking statements, information and opinions including descriptions of anticipated market changes and expectations of future activity contained in this newsletter are based upon reasonable estimates and assumptions. However, they are inherently uncertain and actual events or results may differ materially from those reflected in the newsletter. Nothing in this newsletter serves as the receipt of, or as a substitute for, personalized investment advice. Please remember to contact Signet Financial Management, LLC, if there are any changes in your personal or financial situation or investment objectives for the purpose of reviewing our previous recommendations and/or services. No portion of the newsletter content should be construed as legal, tax, or accounting advice. A copy of Signet Financial Management, LLC’s current written disclosure statements discussing our advisory services, fees, investment advisory personnel and operations are available upon request.

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