In the world of investing, we’ve all heard the phrase, “Don’t put all your eggs in one basket.” It’s solid advice that emphasizes the importance of diversifying your investments. Unfortunately, some people misinterpret this wisdom to mean they should avoid consolidating their investment accounts and keep their money spread across multiple financial institutions, often working with several different financial advisors.
However, when financial professionals talk about diversification, they’re referring to diversifying your investment assets, not your accounts. There’s a big difference between the two, and confusing them could hurt your financial future.
Scattered accounts may affect costs, paperwork and advice. When your assets are spread among multiple financial institutions, you could face several drawbacks. First, you’re likely paying more in fees than necessary. Multiple providers often mean multiple account fees, transaction costs and mutual fund expenses that can add up quickly. Generally, the more assets you have with one financial provider, the more opportunities you have for reducing or eliminating these costs.
