It’s true that to make scrambled eggs you must first break some eggs.  And it’s equally true that a diverse array of investment ‘eggs’ is critical to boosting returns and managing risk.  But when you break too many investment ‘eggs’ into the same portfolio ‘bowl’, it becomes very difficult to sort out which of your investments are Grade A and which are stale dated.

It’s the ‘scrambled portfolio’ syndrome – and it could apply to you if …

·         You’ve worked for more than one employer and have a number of pension plans.

·         You have a variety of Registered Retirement Savings Plans (RRSPs) at different financial institutions.

·         You have a scattering of non-registered investments, all of which you acquired for very good reasons at the time. 

·         You receive a bewildering array of monthly, quarterly and annual statements that have you wondering … are your investments – including those pension accounts that remain under company management – working as hard as they should be?  Are they meeting the family and retirement goals you’ve set?

Good questions – and there is a solution:  Consolidation.

If you have self-funded pension plans and other assets spread across a number of financial institutions, here’s how consolidation can work for you:

·         Brings as many investments as possible under one roof so they’re much more easily managed.

·         Reduces the number of statements you receive from different financial institutions, makes performance tracking easier, and simplifies the investment process.

·         Makes it easier to structure investments for maximum tax efficiency.  For example, you can structure your portfolio so higher-taxed interest-generating investments are held inside registered plans while those that are eligible for capital gains and dividend tax credits are held in the non-registered portion of your portfolio.

·         Simplifies periodic portfolio restructuring to accommodate changes in your personal goals as they align with your future income requirements.  For instance, as you move closer to retirement, capital preservation assumes more importance and you’ll want to tighten your focus on investment growth that will provide a solid retirement income.

At first glance, diversification and consolidation may seem like opposite concepts – but they’re not.  Diversification of an investment portfolio means including the right proportions or growth, fixed income and cash investments to take advantage of potential returns from different markets, while limiting the negative impact of a downturn in any one asset class.  It also means taking advantage of global opportunities – for example, making the most of foreign content room in your RRSPs.

Consolidation simply puts all of this into one package that is easy to understand, evaluate, control, report on and modify. 

The key to ‘unscrambling’ your investment life begins with a careful examination of your current investments, pension holdings, and other assets to determine the level of returns they’re generating and the amount of income they’re expected to provide after you retire. Of course, to do this effectively, you need a clear view of what you want to do in retirement and your other life goals along the way.  A professional financial advisor can help you develop and maintain a diversified, yet consolidated, mix of registered and non-registered investments that reflects your financial goals and risk tolerance – so you’ll be sure to have a Grade A retirement nest egg when the time comes.