Should You Have All of Your Money with One Team or Spread Among Several Advisors?

In a discussion with Jamison Smith and Matt Blocki from EWA, the benefits of consolidating your financial advisory services with one team or advisor are highlighted. They mention three key reasons:

  1. Fee Efficiency: Combining all your assets under one advisor typically leads to lower fees as a percentage of your total wealth, resulting in potential savings of 30% to 50%.
  2. Tax Management: Having one team overseeing your finances allows for better coordination of tax strategies, such as Roth conversions and managing tax brackets, minimizing taxes and Medicare surcharges.
  3. Decision Fatigue and Time Maximization: Managing multiple advisors can lead to decision fatigue and inefficiencies. Consolidating your financial plan with one team streamlines communication, reduces stress, and helps protect your valuable time.

They also mention that good custodians provide protection mechanisms for your assets, and you can still keep your money with the custodian even if you decide to change advisory firms.

Video Transcript

Jamison Smith with EWA. Matt Blocki with EWA. Many clients come to us and say they like having multiple advisors or teams looking over their financial plan. But we’re going to go through a couple of reasons why you should consider having one team or one advisor looking over your plan.

Matt’s going to walk us through that. So, Matt, the first reason, what are some of the benefits from a fee perspective with having all of your stuff in one place? Yeah, absolutely. So typically, if you’re working with a fee only advisor that charges one wrap advisory fee, the fee becomes a lower percentage with a greater amount of money that you have.

So just as an example, if you have three $1 million accounts at three separate companies, in general, you’re probably going to pay 1% to each company. But if you had all $3 million with one company in general, you should be paying maybe between 0.5 to 0.7%.

So there’s going to be anywhere in that example between a 30% to 50% fee decrease, which would keep more money in your pocket if you were to consolidate things from three places into one place. Cool.

So basically, you would all want to be under one fee schedule versus being spread out on. Absolutely. Well, the second reason, matt, walk us through. From a tax management perspective, the benefits of having everything in one spot.

Yeah. So that’s a very important reason. Roth conversions, tax loss harvesting, staying under AMT, staying under Medicare surcharge brackets, all of these different limits should be evaluated on a year to year basis.

So, for example, if one team is doing a Roth conversion, it doesn’t communicate that to another person. That’s realizing a big capital gain. That could make the Roth conversion happen at a 32% versus a 24% bracket.

There could be capital gain rate increases depending on your tax bracket. There could be Medicare surcharges that occur. So again, having your money in one place allows. Clear communication, clear consistency and clear coordination of your financial plan and ultimately make sure you’re paying as little taxes, as little into the Medicare system as possible.

Awesome. I think that’s a great segue into the third reason of decision fatigue and making sure that you’re maximizing your time. Yeah, great. So the third reason of making sure you protect your only non renewable resource, which is your time and ultimately decision fatigue in today’s day and age, by the time you get up, get in your car, get to work address, you’ve made tons of decisions already.

And when it comes to financial planning, often foreign topics that are being discussed, often if you go to different advisors there may be some misalignment with the recommendations. So it’s often good to have a second opinion and make sure that everything that’s being recommended is always for your best interest.

But having multiple advisors can often create so much decision fatigue that ultimately nothing ends up getting implemented and there’s a lot of meetings, a lot of time, a lot of stress that’s created as a result.

So having everything in one place and having a very clear accountability system, the advisory team works for you and clearly understands your life objectives, goals and vision for the future. One team will be able to best execute this and make sure that everything is streamlined to protect your time, which again is the only nonrenewable resource.

So these are three reasons why we believe it’s in your best interest to keep everything in one place. As far as protection mechanisms, if you’re with a good custodian you’re going to have certain levels of protection from what’s called spic protection.

The company itself should have insurance protection as well. So usually there’s no pro or con from an actual liability perspective because most companies are going to use a well known custodian where your money is being held and ultimately if you decide to leave, you can still keep your money at the institution regardless of what company you work with.

Well, thanks, Matt. If that didn’t address all of your questions or concerns about having multiple advisors or your assets in more than one spot, feel free to reach out. And we’re happy to have that conversation.

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