Many families have numerous investment accounts spread over a variety of financial institutions. This usually creates undue complications for investment management not to mention keeping track of it all! What happens if one spouse knows everything and then is suddenly not around to share their knowledge?
Lack of Diversification
Diversification becomes a major problem when multiple accounts exist. Many times there is no diversification because, even though there are different funds in each account, the assets are all in the same market segment.
Difficult to Rebalance
If diversification is a problem, then proper rebalancing is even tougher. In many cases it just does not get done.
Former Workplace Accounts
It is common for couples to have multiple rollover accounts or accounts left at a former employers. This, along with their current retirement accounts, complicates diversification and rebalancing even more. Or even worse yet, maybe accounts have never even been looked at since job changes. What if an account is better off left alone? Will your advisor tell you so?
Make Them Work Together
While various reasons make multiple accounts a necessity, whenever possible and prudent, consolidate to achieve goals with less effort. Make sure all of your accounts have objectives and if accounts have similar objectives, then make sure they work together!
The Greatest Benefit
Your family will reap the greatest benefit since many times they are unexpectedly left to assume management of your financial affairs. Rest assured, consolidating accounts will make life easier for family members if or when that time ever comes.
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