Investing can be complicated enough as it is. Business development professional Fahim Imam-Sadeque says it can become even more complex if you have multiple accounts with multiple investment companies and brokerage firms.
There may come a time when you find you’re spending more time tracking those multiple accounts than you are indeed planning for your future. If this sounds familiar, it might be time to consolidate your holdings.
There are many benefits to consolidating investment accounts. Here are some of those benefits and the right way to do it.
It’s Easier to Manage
It becomes much easier to manage and track your overall portfolio when you consolidate your holdings. This becomes especially valuable if you have a diverse portfolio and/or a large portfolio.
When you can view your entire retirement portfolio in one place, it’s easier to see your strengths, weaknesses, and risks. You can shift around assets more effectively and efficiently so that you’re not too overloaded in one type of fund, for instance.
As you get closer to retirement age, asset allocation is perhaps as important — if not more so — than the specific investments you choose. If your assets are spread over multiple companies or firms, it becomes that much more difficult to truly see where you are at all times.
In this case, the best thing to do is to try to consolidate all your holdings into one or two companies that provide a single dashboard where you can view all of your account performance.
It Reduces Cost
The greater your balance, the more perks you can potentially qualify for. These perks could include lower fees or waived fees for certain transactions.
If your holdings are split among multiple firms, your balance at each will be lower than if you combine all your holdings together. Having all of your assets at one firm allows you to capitalise on these perks, which can be extremely valuable in the long run.
In this case, the best thing to do is to view the available perks at each of your current firms and choose the one that offers the best perks based on your total combined balance.
It’s Easier to Make Withdrawals
When you get to the time in your life when you are ready to make withdrawals from your retirement account, it can become very complicated if you have to do so from multiple firms. In addition, it may be challenging to calculate how much you need to withdraw from each month to ensure you are meeting the accounts’ requirements and giving yourself enough to live off.
When you consolidate your holdings into a single account, you simplify the process of withdrawing your money. There’s no reason to make getting your money too complicated.
It’s Easier for Heirs to Manage
A final significant benefit of consolidating your holdings is that it becomes easier for your heirs to manage when you pass away. As Fahim Imam-Sadeque explains, if you have multiple heirs, you can easily designate a percentage of your financial holdings that go to each person. However, if you have multiple accounts with different balances, it can be challenging to split your assets evenly.
Even if you only have one heir, though, having a single firm that manages your retirement holdings makes it simpler for them. And at a time when your heirs are going to be grieving, you want to make it as simple as possible for them to access the money they may need.
About Fahim Imam-Sadeque
Fahim Imam-Sadeque is a business development professional with proven experience in the asset management industry. He has a Bachelor of Science in Actuarial Science from the City University of London and is a Fellow of the Institute of Actuaries. Fahim’s top skills include asset management, hedge funds, investment management, sales, and consultant & client relationship management.