Can I Keep My Financial Advisor and Hire Another Investment Manager?

You may be perfectly happy with your financial advisor but still want part of your portfolio invested differently.

Maybe your advisor has done a good job managing your overall portfolio and helping with retirement and financial planning. But perhaps you have heard about another investment manager with a different approach, or you want a portion of your money invested more aggressively for growth.

Do you have to leave your existing advisor and move everything?

No. You can have more than one financial advisor or investment manager. In fact, investors with more complex finances sometimes use different professionals for different purposes.

I see this with investors who come to us after hearing about our higher-growth strategies from a friend or family member. They are not necessarily unhappy with their existing advisor. They simply want a portion of their portfolio invested differently.

Suppose someone has a $5 million portfolio. They might be perfectly comfortable leaving $4.5 million with their existing advisor while allocating $500,000 to another investment manager with a different investment objective.

This goes back to a simple idea I have discussed before: different parts of your money can have different jobs.

Your existing advisor might manage the core of your portfolio with a more traditional investment approach. Another manager might be responsible for a smaller growth or aspirational sleeve where you are willing to accept greater volatility in pursuit of potentially higher returns.

There can also be another reason for using more than one manager: some investors simply prefer not to have all their assets managed by one firm or one investment approach.

But having multiple investment managers is not necessarily the same thing as having a more diversified portfolio.

If two managers own essentially the same investments or take similar risks, adding another manager may simply create duplication. Multiple advisors can also create conflicting strategies, additional fees and complexity if their responsibilities are not clear.

That is why I think the important question is not, “How many financial advisors should I have?”

A better question is, “What do I want each manager to accomplish?”

If one manager is responsible for your core portfolio and another is managing a higher-growth portion, the roles are fairly easy to understand. The accounts can be managed separately, although you should still understand how all of your investments fit together and how much risk you are taking across your entire portfolio.

You should also understand what you are paying each manager and whether you are getting something meaningfully different in return for the additional fee.

For many investors, one good financial advisor may be all they need. But as your wealth grows, you may want different portions of your money managed differently.

That doesn't mean you need to fire an advisor you like.

Sometimes the better question isn't, “Should I replace my financial advisor?”

It is, “Is there a portion of my portfolio that I want managed differently?”