If you’ve held jobs with a number of different employers over the years, it’s likely you have a hodgepodge of retirement accounts scattered around the financial landscape.
Sometimes it feels like a part-time job just keeping up with all the account statements, investment options, plan changes and more. Keeping track of who’s managing your money can be a burden too. Heaven forbid you move to a new home and lose track of some of your investments altogether.
It can be a good idea to consolidate your retirement accounts with one account manager that is best for you.
For all these reasons and more, it can be a good idea to consolidate your retirement accounts with one account manager that is best for you. The closer you get to retirement, the more important this is.
Isn’t it dangerous to put all my eggs in one basket?
The short answer is “yes, BUT.”
Long answer: Yes, it can be dangerous to put all your eggs in one basket, BUT consolidating isn’t the same thing. It just means you’re holding all (or most) of your investments with one company. Investing 100% of your retirement money in one stock or industry? Now that’s putting all your eggs in one basket.
You can still diversify even if you have all of your assets with one investment company. In many cases, you’ll be able to diversify better with everything under one roof.
Investing 100% of your retirement money in one stock or industry? Now that’s putting all your eggs in one basket.
Reasons to consolidate investments:
- Better view of your total portfolio
- Simplified record keeping
- Fewer contacts to keep track of
- Potentially lower expenses
Suppose you’re striving for a diversification strategy of 60% of your portfolio in stocks and 40% in bonds. It’s a bigger challenge to accomplish that if you have to contact two or three companies, instead of just one. One company with a website that you can navigate easily is often the best way to accomplish the task.
What to look for in an investment manager:
- Solid reputation as a fiduciary
- User-friendly website or statements
- Fee structure you can live with
- Investment lineup that meets your needs
- Access to advice and/or research
- Automated rebalancing service or managed allocation funds
Fiduciary: Company or individual who acts in the best interests of their clients.
When looking for one company to consolidate with, it’s important to look beyond your current situation. Start with the firms you already do business with. Which one(s) do you feel best about working with? It may not be the one you have the most money with.
Think long term. Even if you’re still building up your retirement savings, think ahead to a day when you’ll need to get money out. You’ll likely have different needs and abilities when you’re older. Which company do you think will help you when you need it most? It may not be the one that’s currently offering you three months of free stock trades.
By now, you may be thinking, “I know exactly which company I want to consolidate with.” If so, give them a call and get the process started.
If you’re not sure yet, start by looking through statements you have from companies you currently do business with. Then, log into their websites and see how easy (or difficult) it is to manage your money, unless you can’t see yourself doing this kind of business online. It’s possible you’re not fond of any company you currently do business with. If that’s your situation, ask for recommendations from friends and family members you trust.
It can be dangerous to put all your eggs in one basket. That’s why good financial advisors often recommend a diversified approach where you invest in a variety of different asset classes such as stock, bonds, real estate and others. Consolidating your retirement accounts with one money manager doesn’t mean you can’t diversify. In fact, you’ll probably be able to do it more effectively.
Important: The information provided here is for educational purposes and should not be considered advice. Before you make any decisions that affect your finances, consult a trustworthy financial professional and/or tax planner.