Since the begining of the era of consumers BUYING financial products we have all been encouraged to take the advice of a financial adviser to help us with our financial plans and to help us towards our financial goals. For many of us, particularly those with complicated financial affairs and/or a reasonable amount of wealth, many would suggest that that this is a good idea. However, some people have taken this a step further and have more than one adviser to advise them on money matters. But is this really a good idea?

Are two or three heads better than one?

If your financial adviser is already helping you meet all of your financial objectives, then there would be little reason to have another one. However,  if your adviser is either not meeting all of financial planning needs, or is not able to help you in a specific area, such as Inheritance Tax planning, then you may need to consider looking for another financial adviser to add to your team. In this case, you may want to find an adviser that can help you with Inheritance Tax planning as opposed to another financial adviser.

You do however need to make sure that all of your financial needs are being covered.

Do I need more than one adviser to manage my investments?

Everyone knows the old adage goes, “Don’t keep all your eggs in one basket”. Especially when it comes to investing. So, this begs the question, “Does having more than one financial adviser help keep my investments diversified?”

I don’t think it does and here’s why. Assuming that your financial advisers knows what they are doing when it comes to managing wealth and is ensuring that your portfolio is well diversified, having more than one adviser could be harming your financial plan, in fact, it could be doing you more harm than good. 

Here’s an example. Let’s say adviser one advises you that the UK stock market are overvalued and recommends a change to your portfolio.  Adviser two on the other hand thinks that UK stock market is undervalued and recommends that you increase your exposure.  The two recommendations are directly opposed and cancel each other out. You have two advisers and potentially two advice recommendations cancelling the other out.  

Furthermore, having two financial advisers may cause your advisers to take more risk in an attempt to increase the returns. If you like, competing with the other adviser, instead of looking after your overall financial plan!

This task of managing your financial plan or your retirement plan, can be accomplished by a competent financial adviser with relative ease.   Having two financial advisers just creates a greater focus on investment returns and not the overall financial objectives. Don’t get me wrong, investment returns are very important, but financial goals and objectives should not be driven by returns. Inadvertently encouraging two advisers to compete on investment returns is not likely to be a good idea.

Not only having two adviser lead to an “arms race” in terms of performance, it also puts the focus on short-term investment performance – which is the only way to compare advisers, again taking the focus away from your financial planning objectives.

The financial adviser’s job is to look at your overall financial position, establish where you are now, identify your goals, and help you make the right financial decisions. A good financial adviser will help you in create goals and help you track the progress towards your goals.  There are a lot of component parts to a financial plan and it is difficult to keep track of what has been happening if you have more than one adviser.

Here’s the question: Who’s in charge?

If you have more than one adviser, it would be wise to have at least one of them know exactly what the others are doing so that you can effectively coordinate your complete financial position.

Action Call

Do you have more than one adviser? Not sure that this is working well for you?

Contact us to today. We can review your current situation and let you know what options are available to you.

If you would like to talk to about financial planning, please get in touch for a no-obligation meeting. Go to our website and contact us via our “Get in touch” form on our home page or Contact Martin Dodd on 01902 742221.

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It is advisable to take advice from a professional financial adviser when making major financial planning decisions.

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This article has been prepared in good faith and based on Midlands Investment Agency’s understanding of the law and interpretation thereof at the time of creation. The contents should not be regarded as specific advice and we always recommend that specific advice is sort from a qualified professional. No responsibility can be accepted by Martin Dodd or Midlands Investment Agency Ltd., for any loss that may occur by a person acting or refraining from acting on the basis of this article.