Using more than one financial adviser

By Jason Heath, CFP on February 10, 2015
Estimated reading time: 3 minutes

At key times in your life, it makes sense to use more than one financial adviser. Does it make sense for Donna?

: Getty Images/Hero Images

Q: What are the benefits and/or drawbacks to using more than one financial adviser at the same time? —Donna, via email A: Investing 101 suggests that you should diversify your investments. I can see an argument for diversifying your advisers as well and in practice, Donna, it happens regularly. Some people do it by accident because they contribute to an RRSP at their bank branch, they have investments with their insurance agent and they have a group retirement plan. If you end up with multiple accounts and more than one financial adviser as a result of happenstance, rather than on purpose, I’d be inclined to consider what you really want. Some of the drawbacks of using multiple advisers are: 1. Higher fees: You may qualify for fee discounts on higher investment balances. If you have investments with multiple advisers, you might not be paying the lowest fees possible due to multiple small balances. 2. Poor asset allocation: If you or your advisers are not monitoring your overall asset allocation across all of your accounts, you might end up with duplication or over or underweighting that is unintentional. 3. Worse service: The bigger your account, the more money your adviser is making on your investments. Even if it’s just a small, subconscious bias, your adviser pays more attention to bigger accounts. 4. Lack of a plan: If you have money in different places, your financial, tax and estate planning might not be as efficient as it could be without some effort by you, one of the advisers or a third party financial planner. 5. More time: More advisers and more accounts means more time managing your investments. If you don’t have time for one adviser, having more than one means your investments may get that much less attention. On the flipside, using multiple advisers can have its benefits. Those are: 1. Diversification: This approach might give you not only diversification of investments, but of approaches. One adviser might make a mistake that another makes up for. 2. Specialization: Some advisers are good Canadian equity managers and others are good with fixed income and can build a bond portfolio. It’s not uncommon to use different advisers for different specialties. 3. Comparison: In particular if you’re trying to evaluate how to best manage your investments, having multiple advisers can allow you to test drive a couple different approaches. Be careful about comparing investment returns, because you might not be comparing apples to apples depending on your asset allocation, geographical composition, etc. Beyond that, it’s hard to assess performance over the short-term. 4. Perspective: Working with multiple professionals in any discipline gives you added insight. Filtering insight from different sources may help you to better build your ultimate portfolio. 5. Due diligence: If you have two people looking over your finances and your investments, you may have an added layer of oversight. I think that using multiple advisers is a personal decision, just like the active-passive debate. It works well for some and not so much for others. As with any decision, financial or otherwise, I’d suggest you consider the pros and cons, Donna. These are the decisions that an active investor must make. Sometimes, you’re well served to be active with your advisers as well as your investments. Jason Heath is a Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto.

About Jason Heath, CFP

Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto. He does not sell any financial products whatsoever.

Linkedin Twitter Facebook Website

Comments Cancel reply

American and Canadian flags waving side by side

Ask a Planner

Can you move your investments from Canada to the U.S.?

Learn the tax implications of moving investments from Canada to the U.S. There’s lots to consider.

Can you move your investments from Canada to the U.S.?

Ask a Planner

Can Canadian investors save tax when a stock’s company goes bankrupt?

You may be able to get some tax relief when the stock of a company you hold goes bankrupt....

Can Canadian investors save tax when a stock’s company goes bankrupt?

Canadian couple outside of home, wondering if they should transfer it to their corporation.

Ask MoneySense

Is transferring your principal residence to your corporation a good idea?

Would swapping a house for cash from a corporation save on taxes? And is this tactic worth it in...

Is transferring your principal residence to your corporation a good idea?

Ask a Planner

RBC’s discount broker launches international trading—what to know before you invest

It’s a first among bank-owned discount brokers in Canada. With more banks likely to follow RBC's lead, what should...

RBC’s discount broker launches international trading—what to know before you invest

Ask a Planner

What are the tax implications if you resell Taylor Swift tickets?

Allison resold her Eras Tour tickets instead of going to the concert. The resale website asked for her SIN,...

What are the tax implications if you resell Taylor Swift tickets?

Ask a Planner

Should you take extra RRIF withdrawals to increase your estate?

Contrary to the conventional advice, taking more than the minimum RRIF withdrawal can at times save tax on your...

Should you take extra RRIF withdrawals to increase your estate?

Ask MoneySense

How much income can I earn while getting OAS?

If you continue working in retirement, it could cause a clawback on your OAS. Here’s how to figure out...

How much income can I earn while getting OAS?

Ask a Planner

Estate planning for singles—is a trust company the answer?

Canadians with no children or siblings must consider estate planning alternatives. Here’s why trust companies can be a good...

Estate planning for singles—is a trust company the answer?

Ask a Planner

What to know as Canada’s capital gains tax changes remain in legal limbo

The federal government’s capital gains inclusion rate increase has yet to become law. There’s a slight chance it may...

What to know as Canada’s capital gains tax changes remain in legal limbo

Ask a Planner

How to report foreign income in Canada

Canadians have reporting requirements for foreign assets, income and tax paid. Here’s how to claim each of these on...

How to report foreign income in Canada

Using more than one financial adviser

About Jason Heath, CFP

Comments Cancel reply

Related Articles

Can you move your investments from Canada to the U.S.?

Can Canadian investors save tax when a stock’s company goes bankrupt?

Is transferring your principal residence to your corporation a good idea?

RBC’s discount broker launches international trading—what to know before you invest

What are the tax implications if you resell Taylor Swift tickets?

Should you take extra RRIF withdrawals to increase your estate?

How much income can I earn while getting OAS?

Estate planning for singles—is a trust company the answer?

What to know as Canada’s capital gains tax changes remain in legal limbo

How to report foreign income in Canada