How Many Financial Advisors Do You Work With?


According to legend, Confucius once said “Life is really simple, but we insist on making it complicated.”

A farmer once argued the point by saying “Don’t put all your eggs in one basket.”
Most adults strive to simplify their lives in order to have fewer matters to worry about. But when it comes to investing, many investors prefer to complicate their portfolios a bit by creating accounts with multiple providers.
As part of Spectrem’s monthly survey of investors, it asks questions about topics that are outside the usual matters of investor attitudes and behaviors. Recently, more than 800 investors were asked how many financial providers they work with, and why those working with multiple providers don’t consolidate their accounts to one firm.
Consider your own situation. Do you have investable assets with more than one firm? Do you have seperate bank accounts in multiple locations? If so, why?
Among all of the investors surveyed, 66 percent limit themselves to no more than three providers, and that can include a bank for checking and savings, and a firm for a managed investment account. With all of the financial matters the average affluent investor deals with, it is not surprising that two-thirds of investors have between one and three firms they work with.
But among all investors, 33 percent report having accounts with more than three providers, and 5 percent claim to have accounts with more than seven firms. That is a lot of accounts to pay attention to.
Of those who have accounts with at least three firms, 76 percent said there is an appeal to having accounts spread out among multiple providers. It is certainly one way to compare services and performance, especially among providers working on investment strategies for you.
Seventeen percent claim the exercise of consolidating accounts is just too difficult to accomplish.
The investors taking the survey were segmented by their knowledge level in matters of finance and investing, and those who consider themselves to be very knowledgeable were slightly more likely to have accounts with multiple firms. Forty percent reported having accounts with more than three firms.
There was also a large difference in number of accounts based on the age of the investor, and it may go the way you think it might. Almost half of Millennials report having accounts with at least four providers, compared to only 31 percent of Gen Xers and Baby Boomers. That diversification may indicate the ease of creating accounts in a digital world, but also shows Millennials are searching for the best services among providers.
It is also noteworthy that 24 percent of Millennials said consolidating accounts is too difficult to accomplish.