Don’t put all your eggs in one basket, diversification and asset allocation are terms that suggest the process of dividing your investments among different types of assets (stocks, bonds, real estate, etc.). The purpose is to get the maximum reward with the minimum risk. Some people have adopted the practice "planner allocation" – dividing investments between two or more planners or institutions. But are you really maximizing your benefits using this strategy?

The first order of business when working with a financial planner is to identify your goals, review your resources to meet those goals and then develop a plan, custom tailored to meet your personal objectives. More often than not, this involves some element of savings and investment advice. When discussing investing, you must also look at a time horizon and your risk tolerance. Generally your risk tolerance will be the same regardless of the planner who you are consulting. You may be confusing yourself if you think you are a risk taker with one planner and a conservative investor with another.

Another argument for planner allocation could be to reduce fees. Financial planners are compensated in different ways. Some work on a commission basis, while others charge an hourly fee for services rendered. As a consumer, you must identify the best value proposition and select the planner that meets your personal needs. The more service you need the more you should expect to pay.

Product selection is another reason given for planner allocation. The investment products offered are the same or similar regardless of your planner choice. Some planners recommend products from their own company while others are independent and recommend products from many companies.

It may be costing you more time and money to deal with multiple planners and institutions rather than establishing a relationship with one trusted individual or firm. This relationship between a client and planner is a very personal one. You are dealing with intimate financial details of your life. Do your research and get a comfort level with one person who can implement a total needs approach to your personal situation. First and foremost, work with the planner with whom you can place your trust and confidence.

This is a monthly article on financial planning. Call or write to Rick Sutherland CLU, CFP, FDS, R.F.P., of Fundex Investments with your topics of interest at 798-2421 or E-mail at rick@invested-interest.ca.