should you put all your money with one financial advisor

The financial industry and the media have been pressuring consumers to select a financial advisor and create a plan to achieve their financial objectives for a long time. Although this is undoubtedly a good idea, some clients have gone one step further and are managing their money with multiple advisors. This can also be a smart decision in certain situations, but not always.

Several factors will determine whether you need more than one advisor to help you reach your financial objectives.

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Are Multiple Heads Better Than One?

If your current financial advisor is assisting you in achieving all of your goals, there’s no reason for you to look for another one. However, you should definitely look for a new member of your financial team if your advisor is obviously lacking in one or more areas of financial management, like estate planning.

Instead of seeking the advice of another financial advisor in this situation, you might prefer to just locate an estate planning lawyer or bank trust officer, but you must ensure that all of your needs are being satisfied.

Whether you need more than one stockbroker or investment advisor is a difficult question to answer. You might want to speak with someone else to get a second opinion if you’re not sure if your current money manager is giving you the best value for your money.

The kind of investments your current manager is using is crucial in this situation; if your money is currently mostly invested in low-cost index funds that are underperforming in a bear market, you probably won’t benefit much from switching to an active money manager because countless academic studies have shown that the vast majority of active money managers eventually underperform market indices over extended periods of time.

If you do work with more than one financial advisor, make sure their fees don’t outweigh the financial advantages they bring.

As a result, be sure to consider your options carefully if you choose to transfer some or all of your money to a different company or manager. Moving might be the best course of action if you believe the second advisor’s investing philosophy is more grounded in reality or if it can demonstrate that it could produce the same or better results with less risk. However, before choosing to move on to someone else, you should be able to succinctly describe the reasons why you are unhappy with your current advisor.

Who’s In Charge?

In order to efficiently coordinate all of your financial matters, it would be prudent to have at least one advisor who is fully aware of what the others are doing, should you choose to work with more than one.

For instance, if you work with a stockbroker to manage your actual investments and a State Farm agent to handle all of your insurance needs, in addition to hiring one advisor to provide you with a comprehensive financial plan, your comprehensive advisor will need to be aware of your dealings with the other advisors and be familiar with your bank accounts and company retirement plan.

Do I Really Need A Financial Advisor? When To Hire A Financial Advisor

FAQ

How much money should you have before using a financial advisor?

Usually, advisors that charge a percentage will want to work with clients that have a minimum portfolio of about $100,000. This makes it worth their time and will allow them to make about $1,000 to 2,000 a year.

Is a 1% financial advisor worth it?

But, if you’re already working with an advisor, the simplest way to determine whether a 1% fee is reasonable may be to look at what they’ve helped you accomplish. For example, if they’ve consistently helped you to earn a 12% return in your portfolio for five years running, then 1% may be a bargain.

Is it better to use a financial advisor or do it yourself?

Working with a financial advisor can increase returns, reduce risk and help you better manage your taxes. Most people choose to invest on their own, without turning to a financial advisor, but using a financial advisor is becoming more common.

How safe is your money with a financial advisor?

Many, but not all, registered investment advisors use an independent firm as their custodian. This means they don’t take actual possession of your money. The investment manager may have the discretion to buy or sell securities and in what quantity for your account, but the custodian holds the assets.

Should you put an advisor between you and your money?

Putting an advisor between you and your money can create the space you need to stay patient when the market gets volatile. Advisors charge for their services. Some advisors charge commissions when you buy investments and others charge an annual fee. Either way, advisor fees reduce your net investment returns.

Should high net worth individuals have more than one financial advisor?

High net worth individuals often gravitate toward having more than one financial advisor to manage their portfolios in an attempt to diversify investment strategies and minimize their risk level.

Should you hire a financial advisor?

The advisor’s mission is to close the gap between where you are financially and where you’d like to be. But there are costs involved and not everyone needs the help. Making a confident decision about hiring (or not hiring) an advisor requires some information-gathering, plus a bit of self-reflection. What Does a Financial Planner Do?

Do I need More than one financial advisor?

The question of whether you need more than one advisor to achieve your financial goals will depend on several factors. The main reason to find more than one financial advisor is if your current financial advisor is not meeting all of your needs. Your additional financial advisor should fill in the gaps of your current financial advisor.

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