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My financial portfolio is confusing. What does
“consolidating” mean?
By Gord Ferguson of Edward Jones
If your retirement finances are in a state of disarray, you’ll find it
difficult to set goals, invest properly and track your progress. Often, the
solution is simple: consolidate your retirement accounts. Instead of
spreading savings, investments and other aspects of your financial life
among a series of financial institutions, bring them together. When your
RRSPs, non-registered investments and other financial products are with one
institution, you’ll have more control over your future.
One of the primary benefits of consolidation is the ability to more
effectively track your finances. Instead of having to pore over a series of
statements from different institutions, your records will be streamlined.
You’ll be able to better identify the progress you make, now and into the
future. You can gauge aggregate investment returns to see whether you’re
headed where you want to go. You’ll see at a glance whether your portfolio
is well-diversified, which is an important ingredient of investment success.
When it’s time to choose new investments or rebalance your portfolio,
working with one institution makes everything simpler. Buying and selling
investments, including mutual funds and individual securities, is less
complicated because you can readily move cash from one investment to
another.
Consolidation can be particularly important to your RRSP or other retirement
accounts. With all of your retirement investments under one roof, they can
be managed more efficiently. If you have a self-directed RRSP, selling
investments and reinvesting the proceeds is easy. Conversely, if you have
many RRSPs spread out among different financial institutions you won’t
necessarily have that type of flexibility. Also, dealing with a single
institution eases the transition from an RRSP to a Registered Retirement
Income Fund (RRIF) when it’s time to use retirement savings for income.
Another important benefit of consolidation is better financial advice. When
you deal with a single institution, you can build a closer relationship with
a financial advisor, who can provide guidance and suggest investments that
will keep you moving toward your goals. You may also realize a reduction in
account fees if you consolidate.
If your financial life is confused, start consolidating today. It may be
easier than you think. A financial advisor can help you with the paperwork
necessary to consolidate accounts, investments and other aspects of your
finances.
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