We encounter individuals who work with more than one investment planning firm from time to time.
A decade or two ago, it seemed like a good idea (to some) to ‘pit’ one investment guy against another, to ‘diversify’ amongst investment professionals. The thinking might be to see who gets you better performance. Maybe that works on a stock jockey (it doesn’t), but it certainly doesn’t make sense in financial planning.
Does Planning Firm A know what Planning Firm B is doing and visa versa? For instance, are they entirely in sync with asset allocation, asset location, and tax loss harvesting? Is there a possibility of overlap in your portfolio? We have yet to see a scenario with good communication between the two firms (not that it cannot).
Would you want them to have your complete medical background if you had two doctors? Of course, you would. You wouldn’t go into a major surgery without a surgeon knowing what you were allergic to or which knee they were to operate.
Financial planning is no different. You have worked too hard for too long to let financial planners “guess” at what is happening in your financial picture. How can you expect to get your money’s worth if you are not giving the professionals all the information needed to serve your best interests? Similarly, It’s like both firms are playing with one arm tied behind their backs.
More isn’t always better
This is a classic case where one is more significant than two. There is no diversification or advantage from having two professionals who do not grasp your total financial picture. What seems like a wise move to diversify your planning, unfortunately, waters down the performance of both. At best, your plan takes a hit, your portfolio is sub-optimal, and you are likely overpaying two firms to do the work that one could! Let’s not get into the worst-case scenario, but let’s instead say it is probably time to remedy this problem.
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Information in this material is for general information only and not intended as investment, tax, or legal advice. Please consult the appropriate professionals for specific information regarding your individual situation prior to making any financial decision.
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