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Look to consolidate bank & brokerage accounts

One recommendation I find myself making consistently to advisory clients is to simplify their financial life by consolidating multiple bank and brokerage accounts. Individuals who have changed jobs several times often have multiple 401k/457b accounts that may be incurring fees they wouldn’t otherwise incur. The investments offered within these accounts are often more restrictive than those offered at most brokerages. These same people may have executive compensation accounts at various brokerages where options and RSUs vest, which leads to a large amount of assets spread over multiple accounts, making it difficult to accurately account for existing concentration risk. Managing your financial life is complex. Consolidating these accounts can provide several benefits that simplify your financial life.


Consolidating accounts can make it easier to manage your investments and track your portfolio performance. You can review your investments in one place, rather than logging into several accounts. This also helps you to analyze your portfolio, make informed investment decisions and rebalance effectively. It also makes it easier to spot concentration in any one stock or sector of the market.


Retirement accounts are especially important to consolidate. As you approach retirement and the requirement to take RMDs at certain ages, accurately calculating and taking distributions gets more difficult. Running afoul of IRS distribution requirements puts you at risk of incurring penalties.


However, there are also drawbacks to consolidating accounts. One potential downside is that it may limit your options for investment choices, depending on where you custody your assets. If you have multiple brokerage accounts, you may have access to different investment products, such as mutual funds, stocks, or bonds, which may not be available in a single brokerage account. You may also incur more fees at some financial institutions for trading and custody where you would not incur those fees at other locations. If you work with an investment advisor who charges fees for assets under management, you may want some assets under their advisement and another account to store other assets, to avoid overpaying for investment advice. And with the recent failure of Silicon Valley Bank, watch your level of cash holdings per “depositor” account title, to ensure you have full coverage for any cash balances.

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