Should You Put All Your Money With One Financial Advisor?

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There are many benefits of hiring a financial advisor. Getting a professional perspective on money and investment management is never bad. It can provide you with a deep insight into the market, help you understand the right investment strategies for your goals, plan for the future more efficiently, and above all, be able to make the most of the changing market situations. A lot of people see this as an expense, but it can really be an investment in your future. If you wish to learn about how you can attain your financial goals such as saving for retirement, reducing your tax liability, or designing a custom investment plan suited to your needs, reach out to a professional financial advisor who can guide you on the same.

While you may be on board with hiring a financial advisor, you may not be sure about how many advisors are ideal for you. Some people are able to benefit from hiring one, and others may need more. The right choice can depend on what you are looking for and what you expect to get from the advisor in return. Your investment budget can also play a role here. 

Irrespective of what you choose, it can help to understand the pros and cons of hiring a single financial advisor and those of hiring multiple professionals. Read on to find out. 

Benefits of having one financial advisor

Here are some pros of hiring a single financial advisor:

1. Low costs: 

One of the biggest advantages of hiring a single professional is the low costs. Hiring a financial advisor can be expensive, depending on the type of professional you choose. There are different types of advisors based on the payment method like fee-only, commission-only, hourly-fee, monthly fee, etc. The more advisors you hire, the higher budget you would require. This may or may not be a good idea, depending on what you are looking for. If you are able to get good advice and assistance and make up for the costs eventually through returns, you can still benefit from more than one investment advisorHowever, irrespective of how your returns turn out in the future, you would have to shell out the fee right now. If your investment budget does not permit you to do so, it may be better to only stick to a single financial advisor. 

2. More streamlined advice: 

Hiring a single investment advisor can be more structured as the same individual handles all your financial concerns. There is no overlapping of advice or any disagreement. One individual takes charge of all your questions and doubts and guides you to the best way to reach your goals. Streamlined advice ensures that there is no confusion along the way and that you are able to concentrate on your target with a singular focus. Many a time, hiring different individuals with differing views can come in the way of your plans. This may not always happen, but if you end up choosing people who do not align well together, you may likely be influenced by their bias toward each other. Moreover, the saying that too many cooks spoil the broth may also be true in such a case. 

However, if you choose a single person, all your financial information will be consolidated in one place. This makes it easier to track your investments. There are minimal errors and overlaps, and you can easily follow through with the professional’s advice. 

3. Ideal for smaller portfolios: 

Beginners or investors with smaller portfolios may only need one investment advisor as their needs are limited. Smaller portfolios do not contain several investments. Instead, they are limited to a few options that are more or less in the same category in terms of tax, contribution rules, etc. For instance, an average investor who has just begun their career and started investing may have a company-sponsored plan like a 401(k), along with some student debt to pay off. A single financial advisor can be sufficient in such a case until the individual can pay off debt and maximize contributions to the 401(k). However, with age, newer goals like planning the estate, lowering tax when in a higher tax slab, retirement planning, and more will likely crop up. In such a case, consulting with experts in each of these fields can be more beneficial.   

Cons of having one financial advisor

Here are some cons of hiring a single financial advisor:

1. Limited advice:

The biggest con of sticking to only one investment advisor is the limited scope of the guidance. The advisor’s experience, educational qualifications, expertise, etc., will dictate the integrity and depth of their advice. If you are lucky, you may end up with a good deal. However, if you get stuck with someone who lacks the right qualifications and experience to handle your portfolio, you may lose out on prospective opportunities to make money. 

2. Could be biased:

All individuals are slightly biased, and so are professional advisors. Some advisors like to play it safe by choosing traditional investment instruments. Others may be more adventurous and willing to explore risker options. The choice of which kind of advisor you go to ultimately lies on you and your goals. But if you choose this strategy, you run the risk of the advisor’s personal bias coming in the way. This may show in their recommendations and suggestions. Additionally, in some cases, the advisor may push a particular investment because of the possibility of earning a commission. This may not always turn out to be the best choice for you. 

3. Not suitable for large portfolios and high-net-worth individuals: 

Investors with an extensive portfolio may find hiring one financial advisor limiting and restrictive. A large portfolio, particularly of wealthy investors and high-net-worth clients, can include multiple undertakings. Right from real estate, collectibles, investments in international funds, global businesses, and more can require sophisticated guidance. Investors with relatively bigger portfolios and multiple goals may find hiring a single financial advisor fruitless.

Let’s now move to the pros and cons of hiring multiple advisors to find out is it better to have one financial advisor or two.

Benefits of having multiple financial advisors

Here are some pros of hiring multiple financial advisors:

1. Diversified advice: 

Diversification plays a critical role in investment. However, it is not only limited to the choice and number of investments but also the approaches and strategies you follow. Hiring more than one investment advisor exposes you to different viewpoints. Each financial advisor would have a unique take on your portfolio based on their experience and qualification. This helps you leverage their expertise and strong suits and use them to your advantage. No two people are the same, and getting different professionals on your team can help you benefit from everyone’s positives. 

2. Option to compare:

Hiring several professionals at the same time makes it easier to cross-check the advice of one with another and then arrive at a conclusion. It also instills a sense of competition in the advisors and motivates them to perform better than the others in order to secure a stable position in your team. This ultimately helps you as you get the best advice and their complete attention. Hiring multiple professionals with differing approaches also lets you try them all out and decide the best one for yourself. This offers you more clarity, and you can be more sure of your decisions. Moreover, the advisors are always on their toes and ensure unbiased advice over the fear of being called out. 

3. Option to hire specialists:

Hiring more than one financial advisor is the most beneficial if you add different specialists to your team. For instance, a tax specialist, a real estate specialist, an estate planning expert, etc., can make for a good combination. Keeping a mix of different experts can help you create a valuable team. Having specialists may also be essential for high-net-worth individuals. Moreover, hiring more people means better attention, diligence, and caution. With so many people overlooking your investment portfolio, you are more likely to avoid errors. 

Cons of having multiple financial advisors 

Here are some cons of hiring multiple financial advisors:

1. Having to pay higher fees: 

Evidently, the biggest drawback is the high fee. The more financial advisors you hire, the more you will pay in total. This can impact your budget and eat into your returns. These may not be a concern if you are in a higher income bracket. But for some, the fees can come in the way of their other expenses and goals. 

2. May lead to confusion:

There may be confusion, duplication, and juxtaposition of ideas. Sometimes the advisors may not get along with each other which can create trouble for you. Further, having multiple people in charge of your finances can lead to various plans and diverse courses of action that can be hard to follow through. Keeping track of investments and monitoring your progress also becomes tricky.  

3. Can be time-consuming:

Managing a team of several financial advisors requires time and effort. You would have to meet every investment advisor individually on a regular basis to discuss your investments. This may be hard to do if you have a very hectic schedule. You may find it challenging to take out time from your professional and personal commitments that may lead you to neglecting your finances. 

Things to keep in mind when hiring an advisor

There are many benefits of hiring a financial advisor, but if you are still wondering is it better to have one financial advisor or twohere are some things you can keep in mind:

  • Check the size of your portfolio and evaluate if you really need more people to handle your finances. 
  • Avoid following other people and their approaches and think about what you need. Just because someone in the same income and age group as you has multiple advisors does not mean you do too, and vice versa. Everyone's needs are unique. If you want to hire more people, let that be an unbiased decision.
  • Consider the costs of hiring a financial advisor before going ahead. If you have a low budget, try to hire someone on an hourly basis or a fee-only advisor over a commission-based one.  
  • If you have an extensive portfolio and estate and can afford to hire more than one financial advisor, you can significantly benefit in the long run. 

To summarize

There is no direct answer to the dilemma here. The only correct answer is the one that resonates with you. So, try to evaluate your goals, budget, and needs to make a decision. This will simplify the investment process and allow you to enjoy it. Your investment advisor should be able to add value to your life and not be a cause of concern. So, trust educated, qualified, and credible professionals only. It can also help to take it slow. You do not necessarily have to hire multiple people at once. You start by consulting with one and slowly getting more people on your team if you feel the need to. 

No matter which option you choose, do not forget the many benefits of hiring a financial advisor and consider hiring at least one to manage your financial affairs. Use the free advisor match service to engage with a professional financial advisor or more, who can help you attain your unique financial needs and goals. Based on your requirements, the service matches you with 1-3 advisors suited to meet your financial needs and goals.

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The blog articles on this website are provided for general educational and informational purposes only, and no content included is intended to be used as financial or legal advice.
A professional financial advisor should be consulted prior to making any investment decisions. Each person's financial situation is unique, and your advisor would be able to provide you with the financial information and advice related to your financial situation.