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Consolidate now - and prevent grief later

Do you have mutual funds with one financial institution, GICs with a second and maybe a trading or retirement account with a third?

Are you overwhelmed by financial statements and frequently feel a loss of control over your investments?

If so, you may be suffering from a chronic and debilitating condition known as investment scatteritis.

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Investment scatteritis, or IS, is a common disorder affecting roughly 50 per cent of the investing population, financial planners estimate.

Symptoms include large piles of paper arriving at your door every month, severe anxiety attacks (particularly at tax time) and not having a clue how much your investments are actually worth.

"A lot of people end up with accounts all over the place. They don't know what they have or where they have it," says Jason Heath, a certified financial planner with E.E.S. Financial Services in Markham, Ont.

In extreme cases, IS victims have been known to change addresses and totally forget about certain accounts, leaving thousands of dollars to collect dust.

Left untreated, IS can wreak havoc on families, particularly when the investor becomes incapacitated or dies, leaving relatives with the unenviable task of sifting through records and calling financial institutions to track down accounts.

The good news is that the treatment for IS has a 100-per-cent success rate: By consolidating all of your investment accounts with a single financial institution or reputable adviser, you can avoid the pain and suffering that affects IS victims and their families.

Here are five reasons it makes sense to combine all of your investment accounts under one roof. (Keeping in mind Canada Deposit Insurance Corp. limits.)

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Do it now - while you're still in New Year's resolution mode - and save yourself and your loved ones a lot of grief later.

It's easier to track - and rebalance - your assets

By dealing with a single financial institution, you'll get a complete picture of your investments.

That will make it easier to calculate your fixed-income and equity weightings, so you can easily rebalance to your desired targets.

"I can think of a recent case of a client, early 70s, widow. She told me she was a very conservative investor," Mr. Heath says. "But when we consolidated all six or seven of her accounts and looked at her fixed-income and equity mix, she was 90 per cent equities."

Lower fees

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Becky Wong, an independent financial planner in Vancouver, says investors with accounts at several institutions are often needlessly paying multiple administrative fees, which they can reduce - or eliminate - by consolidating their accounts in one place.

"You don't notice it. It's like $25 here, $50 there. If you have multiple accounts, you're paying multiple fees," she says.

Investors can often eliminate administrative fees altogether, and qualify for sharply discounted trading commissions, if the value of their consolidated accounts exceeds a certain threshold. Some discount brokers even offer inducements of cash, rewards points or other goodies if you're transferring a large enough account.

Be sure to ask your institution what promotions are being offered. Also ask them to reimburse you for any account transfer fees charged by the other institution.

Fewer dead trees

Another plus of consolidation is that you'll get fewer investment statements and less paperwork to sort through at tax time, Ms. Wong says. You'll also be able to look up all of your accounts on one website, giving you a quick snapshot of your wealth.

For retirees, a related benefit is that you'll be able to make a single withdrawal from your registered retirement income fund, rather than make multiple minimum withdrawals from several accounts, she says.

No more orphan accounts

In full-blown IS cases, money is actually lost.

"I know people who have moved from home to home and they haven't reported their new address, and the institution actually cannot find the person," Ms. Wong says. "So they're no longer getting statements and they have forgotten. So it becomes lost money."

Forgotten accounts are especially problematic in old age, when memory loss and other health problems can make it impossible to manage one's financial affairs.

"You could end up in a situation where the husband does all of the investing, and all of a sudden he has a stroke or some sort of accident and falls ill, and the wife doesn't even know where the accounts are, let alone what they have invested," Mr. Heath says.

To prepare for such crises, he has clients fill out a "financial data organizer."

"It lists off all of your different investment accounts, where they're held, names, phone numbers, insurance policies, pensions, where your will is kept, tax returns. Anything that you could possibly need is all in one place so it's nice and neat and simple," he says. "At least there's a starting point for whoever is left behind."

Peace of mind

Filling out all the forms to transfer accounts can be a lot of work. But you only have to do it once, and the payoff is huge, Ms. Wong says.

"It's a sense of relief. 'Finally, I've got this under control.' "

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About the Author
Investment Reporter and Columnist

John Heinzl has been writing about business and investing since 1990. A native of Hamilton, he earned a master's degree from the University of Western Ontario's Graduate School of Journalism and completed the Canadian Securities Course with honours. More

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