I’ve encountered many folks over the years that invest with more than one firm, as they feel like they’re “putting their eggs in more than one basket”. People feel like they’re diversifying their risk if they employ more than one advisor. Some feel that they’re benefiting from multiple viewpoints.
Comprehensive financial planning is an art. It requires extensive input from you and in-depth conversations and knowledge from your advisor. They need to know your hopes and dreams. They need to know your family situation. They need to know your risk tolerance. They need to know your health and your investment knowledge. One of the most critical things they must know is what your investment portfolio looks like. All of it. They must be able to manage your wealth in a way that allows them to help you aim to achieve your financial goals. In order to be effective, an advisor needs to see your whole financial picture.
There are a virtually unlimited number of ways to invest your wealth, and most advisors have a way that works for them and their clients. Trying to hire more than one advisor basically only lets them do half their job. Would you hire 2 different roofing companies and give each of them half your roof to work on? Or have an attorney write the first half of your will, but have a second one write the other half?
Can you accumulate wealth that your advisor doesn’t personally manage? Sure! People own real estate, have corporate 401(k) accounts and bank savings that are usually owned either personally or held outside your financial planner’s immediate custody. That’s absolutely fine, but you need to tell your advisor about those assets and get them statements from time to time so they can fit them into your plan.
Second opinions are important. Periodically checking up on your advisor isn’t a bad idea. If you don’t have an advisor that you truly trust, then go find one. There are thousands of qualified, ethical, smart, caring financial advisors out there. Some won’t be a good fit for you. Some will. You’ll eventually find someone that seems to understand you and wants to help you make a sound financial plan and work toward your dreams. Employing multiple advisors could eventually put you in an awkward spot. You could get conflicting opinions on your financial plan. That doesn’t mean one advisor is wrong. It just means they have a different idea than the other. Find your person. Put your faith in them. Use their expertise. And if you feel uneasy about their advice, then go find another advisor. There are thousands of ways to build a bridge, but you can’t build half of it one way and half another. The whole bridge will collapse.