Manage all assets for clients

Clients can have assets all over—RRSPs with different institutions, inherited stocks, mutual funds bought from an advisor who long ago left the business, and a smattering of funds in an online brokerage account.

If you only see one part of the picture, your advice will be incomplete. Christy DeCosimo, CFA, of Toron Investment Management in Toronto, likens it to visiting a cardiologist with ultrasound results, but holding back blood work and still expecting a proper diagnosis. “Everything is connected,” she says. “To do a proper job, we have to see all the pieces.”

By consolidating assets, clients will get proper net-worth statements and better advice. There are five reasons why.

01 Reduce risk

Some clients mistakenly believe holding accounts with several institutions or advisors will help diversify their portfolios and therefore cut risk. Maryanne Hardman, CIM, FCSI, EPC, an investment advisor with CIBC Wood Gundy in Halifax, says this scattered approach will likely result in under-or over-diversification.

To prove the point, show how two similarly mandated mutual funds often hold a lot of the same equities. Then, explain how holding both funds, which perform similarly, actually increases risk.

02 See the forest

By spreading their wealth, clients can end up with guidance that’s conflicting or narrow, says Patti Shannon, CFA, a portfolio manager at Leith Wheeler Investment Counsel in Calgary. Using one advisor with a complete perspective can ensure a client has the right investments for her level of risk and is properly diversified by asset class, geography and sector.

Benefits of consolidation

A PriceMetrix study found outperforming advisors have more households with multiple accounts (registered, taxable, non-taxable, etc.).

• 46% Outperformers’ proportion of households with multiple account types
• 42% Other advisors’ proportion of households with multiple account types

03 Plan taxes

Without a big-picture view, it’s difficult for an advisor to find tax savings. “After setting allocations, you want to place the assets most tax-efficiently,” says Hardman.

An advisor who controls all assets can ensure bonds are inside registered accounts and high-dividend funds are outside. Such basics can be lost when accounts are spread out and no single person holds the client file.

04 save time and money

When clients have accounts at several institutions, they spend more time managing the flood of paperwork and going to multiple meetings.

Show how much time they’ll save by only seeing you, and offer to handle the paperwork and fees for all asset transfers. Also check if their combined assets put them in the next tier of your firm’s fee structure. If so, they’ll save even more money by consolidating.

05 Get a fresh look

Although there are many reasons to centralize their financial affairs, clients might not do so immediately—it can be unpleasant to sever other relationships.

To show why it’s worth the trouble, DeCosimo offers to do a portfolio analysis that includes the funds held elsewhere.

“Some people think the advisor just wants to secure all their assets,” she says. “That’s not my primary concern. I’m trying to [analyze] their whole piece because that’s when I can do the best job.”