Look for ways to consolidate family investments. I know you’ve heard the conventional wisdom about avoiding one basket for all your “eggs.” Yet, it’s easier than ever to adequately diversify investments within one account or institution. We routinely diversify accounts – some with extremely high balances – in ways to protect our clients. As a safety measure, we select diverse portfolio managers, market sectors, and institutions (for bank deposits).
Consolidation pays another high dividend, too. You receive just one set of statements each month and one set of tax reports each January. Later this month, when you are deluged with statements (or waiting for a straggling 1099), think how nice it would be to have just one source for all these documents!
The last benefit of consolidation is most important. By combining accounts, you present a much fuller image of overall finances. Whether you hire a professional advisor or manage your own investments, it’s easier to devise, implement, and evaluate strategies when you look at the big picture. Which account types are best for taxable investments? Which are best for tax-free? Is there a good way to organize retirement distributions from IRA, annuity, or pension accounts?
Our goal for clients is fairly simple. We work with them to organize and supervise investments. In my experience, families do better financially when they simplify all investment processes. Consolidation is one good (and easy) way to accomplish this goal.