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Mentor RIA Consulting

Allowing you to focus on what you do best

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Simplify Your Financial Life

Posted on August 14, 2019 at 8:54 AM
All too often, we see clients with a potpourri of investments, accounts funded from various sources, opened at different times and using different advisers. There is no overall plan or strategy and the client usually doesn’t exactly know what they have. This is a clarion call for the client to organize and simplify their finances.
What can one do? Merge similar accounts such as IRAs, CDs and brokerage accounts. Exit, combine or exchange products such as annuities and insurance. These actions not only make it easier for you as owner to keep up with what you have but it will save a great deal of effort and aggravation for your personal representatives when you either become disabled or die. You and your fiduciaries are much less likely to overlook an investment or fail to report income when things are streamlined.
Multiple accounts can lead to inefficiencies in investing, management and even estate planning. Although an investor is likely not to treat each account as requiring a similar allocation to every other account in their investment portfolio, and would be very wise not to do so, it is still necessary to have an overall strategy in mind and ensure some balance exists while considering the allocations in all of the accounts. Where there are different managers for accounts, inconsistencies in their style, approach, investment philosophy and more can lead to variations which may leave gaps in your portfolio as well as overreliance on some investments. This in turn can lead to volatility and unnecessary risk or even extra tax burden.
The use of beneficiary designations, including TOD or POD for taxable accounts, also can lead to problems when the account owner dies. When multiple accounts and beneficiaries are involved, care must be taken to ensure that the money goes where the account owner wishes and that includes not only the individual beneficiary but also to address the costs of funeral, estate administration and other expenses. With many accounts, it is easy for things to go awry.
The solution is to mindfully simplify and organize your finances. You and your loved ones will benefit.

Categories: Clients, Investing

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