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AUGUST 10, 2022
By Kristen Mayne

What does it mean to consolidate your investments?

Simply put, consolidating your savings means taking the money you have with several different financial institutions and putting it all together. This way, you can take full advantage of a plan in one place.

Consolidating your savings into one place can make managing your investments simpler, lead to less confusion and stress, and mean more money for retirement.

Here’s how:

  • One. It can save you money on management fees. Every investment comes with fees, usually shown as a percentage. The percentage may sound small. But even a 0.75% reduction in fees can mean thousands of dollars more for your retirement, without having to increase your contribution.
  • Two.  It gives you a chance to consider your investment returns. Having your savings in one place provides you with an overview of your investments. This enables you to regularly review and rebalance your investment mix. And determine the amount of investment risk you’re comfortable with. Various assets perform differently over the short term and long term. Consolidating can also help ensure you’re not missing an opportunity to earn more on your investments.
  • Three. It makes it easier to keep track of your investments. Managing your household finances can be difficult enough. Having multiple savings plans in multiple places adds complexity. Keeping track of your investment performance, investment risk, and the associated fees, is much simpler.

Consolidating your savings can potentially save you money and make your investments easier to track. It may also mean a difference of thousands of dollars in income, when you’re ready to retire.

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Should you consolidate your investments?

Consolidating your investments doesn’t mean investing in only one product. It means taking the investments you have with different financial institutions and putting them in one place.

In fact, “Consolidating your investments can help you manage your money more efficiently,” says Sun Life Certified Financial Planner Jeffrey Wu.

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Wu shares 5 benefits of consolidating your assets with one advisor or one group of advisors:

1. A more holistic and easy-to-understand plan

When you work with one advisor, they have greater insight into your full financial picture, says Wu. “This can help them offer a strategy that will get all your assets working together towards your goals. One single plan ensures you don’t have multiple strategies that aren’t working together.”

“It can be hard enough to follow a single plan. It’s even harder to follow multiple plans,” says Wu. “Consolidating your investments gives you and your advisor a clearer picture of how your savings are performing.”

It can also be difficult to form saving habits when you’re working with multiple advisors. An advisor is there to help Clients develop these habits. They can also provide coaching when the market is volatile. It can be confusing when you’re getting different advice from multiple advisors or when you’re having to share your concerns with multiple people.

2. Saves you time and simplifies your life

It can take time to create a good financial plan that accounts for all of the unique aspects of your life. When you work with one trusted advisor you only have to create one plan versus multiple plans. “This also means you have one login and one monthly statement. And you can access all your financial information on one online platform,” Says Wu.

And if your circumstances change? It’s easier to review and update your plans with one advisor than multiple advisors. And you don’t have to repeat yourself.

A Sun Life advisor can help you address your changing needs by looking at the big picture, says Wu. “The best plans change with your needs and goals.” However, you may lose visibility and flexibility to adjust your course if you invest across multiple platforms.

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3. Saves you money on fees

Investing through multiple advisors may cause you to pay more fees. Generally, the more assets you have with one advisor, the more opportunities you have for reducing fees.

Wu shares an example:

  • Let’s say you have $500,000 in investible assets with three advisors. The average fee per year for the advisors is 1%. You would pay $5,000 per year in fees.
  • Usually fee-based advisors charge a fee based on assets under management with the advisor. By consolidating money with one advisor, you may be able to negotiate the fee.
  • Let’s assume the negotiated fee is 0.8% for the $500,000 in assets. You could save $1,000 per year just on advisory fees. This can have a big impact on the portfolio over time due to compounding.

4. More effective risk management

Understanding the risk characteristics of investment products can help you choose investments that match:

  • your risk tolerance,
  • your financial goals, and
  • your investment timeline.

“If your investments are with multiple advisors, managing your risk can be difficult. And what you’re invested in may not match up with your risk profile,” says Wu.

5. Long-term support in unison with your values and objectives

Do you want your investment strategy to be consistent with what you believe in? Working with one advisor may help you.

Getting to know Clients is more than completing a checklist or an investment assessment. It’s about getting to know you and what’s significant to you. Likewise, it’s important that you team up with an advisor that you trust and that you feel confident in.

“We have many Clients who have strong views on the environmental and social aspects of what they are investing in. We make sure all the funds we choose meet their financial goals and fit their values,” says Wu

It’s important to work with an advisor or advisory team that have a range of tools in their toolbox. This will ensure you get more comprehensive and tailored solutions. Many Sun Life advisors are licensed in insurance, mutual funds and/or are designed as financial planners.

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This article is meant to provide general information only. Sun Life Assurance Company of Canada does not provide legal, accounting, taxation, or other professional advice. Please seek advice from a qualified professional, including a thorough examination of your specific legal, accounting and tax situation.