Holding bank and investment accounts with a single service provider is a smart strategy for simplifying your financial life.
"Most people don't do a good job of keeping track of multiple accounts," says Robert O. Weagley, chair of the personal financial planning department at the University of Missouri. "They've got a little bit here, an insurance policy there, some investment accounts—and all are set up differently. If your accounts are all through the same institution, they can be linked, which makes it much easier to get a full view of everything you have."
What are some additional benefits of consolidation?
Moving funds between accounts at different institutions can take several days to process and might incur fees. In some cases, you might even need to write a check from one account to another. The process is much faster and simpler with one institution, Weagley notes, and offers real-world benefits. "With kids living all different places, I sometimes need to send money, so this is a big plus," he says.
Logging on to a single website to review several accounts is much easier than using a different site for each account. Not to mention, you'll have fewer passwords to remember.
And if the institution offers consolidated statements, you’ll have less paperwork, Weagley adds. Taking advantage of electronic statements can simplify your record keeping even further.
Consolidation might also reduce your likelihood of incurring low-balance fees.
More coordinated planning
With a more holistic view of your finances, you can better gauge your overall financial well-being. Are your investments well diversified to better weather the market's ups and downs? Do you have extra money you could move to an IRA? "When you see your money in bits and pieces, you may not realize what you have," says Weagley. "Some people might even have orphaned accounts—perhaps they moved but didn't transfer their bank accounts right away and forgot about them."
Keeping accounts with one institution can better prevent this possibility—and give you a better handle on your financial life.