Does One Need More than One Financial Advisor?

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Does One Need More than One Financial Advisor?

January 13
04:18 2022

It’s not uncommon for people to use multiple advisors to manage their finances. For example, someone might have an advisor that invests their 401(k), another who helps them manage real estate investments, and even one more to advise on retirement planning. But is more always better? Here’s how people can decide if they need more than one financial advisor.  

Is it a Good Idea to Have More Than One Financial Advisor?  

Whether or not one needs more than one financial advisor depends on a number of factors, including:  The complexity of someone’s financial situation: Someone with multiple businesses, rental properties, whole life insurance policies in addition to or instead of a term life insurance policy, or other financial products could find benefit in consulting with multiple advisors. A well-coordinated team including an insurance advisor, investment advisor and attorney can offer a variety of specialized knowledge and advice. 

How much one trusts their financial advisor: The financial advisor/advisee relationship is based strongly on trust. So the decision of how many advisors to use may come down to how much one trusts their financial advisor(s) to make decisions in their best interest. Having a capable and trusted advisor for investments can help an individual look for additional valuable support they may need in the form of an attorney or CPA. 

Benefits of Having a Single Financial Advisor  

Using a single financial advisor to oversee one’s money has benefits, including:  The financial advisor is in charge: While having a team of trusted and talented advisors may sound like an ideal situation, having a single point person who understands one’s entire financial situation can also have advantages. A single financial advisor can ensure a high level of continuity across one’s entire financial plan.  

The individual’s portfolio can be more effectively balanced: Effective asset management means looking at the big picture to assess risk and ensure proper diversification. A single advisor knows how assets are allocated across all financial accounts and can make sure one is not too heavily weighted in one area. 

How to Manage Multiple Financial Advisors  

If someone’s financial situation necessitates hiring multiple financial advisors, they’ll need to know how to make the most of it.  

Coordinate efforts: The last thing one wants is to pay multiple professionals to do the same work. Create a spreadsheet that outlines the types of tasks the financial advisors will perform, and which aspects of one’s financial plan they’ll be responsible for managing. That way, one can catch any overlap upfront and make sure they are getting the most out of each advisor relationship.  

Be transparent: It makes life significantly more challenging if one’s advisors don’t know about one another. Instead, individuals should fully disclose how their other assets are being managed. That doesn’t mean they need to share contact information if they don’t want, but they’ll at least want to share the assets they have and the investing strategy so each advisor can appropriately manage risk.  

One may not need to consult with multiple financial advisors for a simple financial situation. In fact, working with one advisor that the individual knows, likes, and trusts will often create the best experience. And ultimately, it will give one satisfaction and peace of mind that their money is priority number one.

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