The article “Money In Too Many Places” was originally published on MoneySense on November 24, 2015.

In most cases, an overly complicated portfolio will work against you and your future heirs. Here’s why and how to fix it.

Q: My finances are a mess! I have:

-RRSPs with 2 different investment companies;

-Non-registered accounts with 2 different companies;

-TFSAs only purchased 3 times total in all these years, thus I am missing out on an important asset. 2 different companies involved;

-A house for sale (a day drive away) that is not selling and with its 40 years is piling more problems on me. Do I do the improvements? What will I do with the proceeds from the eventual sale? There will be capital gains;

After doing all this work to accumulate assets, I need to reorganize, amalgamate and simplify them. I’m 66 years-old and I’m paying high fees, losing tax advantages, have no long term plan, causing grief for my children, etc.


A: I frequently encounter clients with money squirrelled away in different institutions. Diversification is important in portfolio management, but di-worsification can result if you have too many investments or too many investment accounts.

I think that’s the situation you’re in, Wood. The good news is that you realize it and you’re taking steps to get on track.

I may be preaching to the choir here, but here are some of the drawbacks of your current approach:

High fees

Canadians pay high enough investment fees as it is. But when you have many smaller accounts at different institutions, you don’t benefit from the fee discounts that often apply to larger account sizes.

High taxes

Without a consolidated view of your investments, you may be holding the wrong investments in the wrong accounts and paying higher taxes than you might otherwise pay if you held a more tax-efficient portfolio. As a case in point, your unused TFSA room, while your non-registered investments are earning taxable investment income.

Poor asset allocation

I’m going to guess you have no idea, Wood, how much you have in stocks versus bonds across your accounts? Or what is your exposure to U.S. equities versus Canadian? When you have money in different places, it’s hard to get a snapshot of your overall approach without doing extra work.

Poor visibility

When you have accounts all over the place, it’s easy to forget what you have or what you’re supposed to be doing. Especially as you get older, you should try to have your finances stream-lined, and not just for your kids. A day may come where you’re not as sharp as you are right now, Wood, so the more organized your finances are, the more organized you will be.

Your rental property sounds like it’s becoming a bit of a hassle. Your realtor is the main person to look to on strategy, Wood. Whether or not to do work and what work to do to get it saleable is a matter of opinion. Beyond that, it may be priced too high if you can’t move it and you may need to lower the price in order to sell it in a slow market. Not every location in the country has the multiple offer frenzy of the like of Toronto and Vancouver. Smaller locales can be tougher real estate markets.

From a secondary perspective, your accountant can chime in on the tax implications of selling your property. Generally, you will have a capital gain to the extent that the sale price (less transaction costs) exceeds the purchase price (including renovations and capital improvements). Tax may be as high as one-quarter of the capital gain, but depends on your other income sources for the year, Wood.

If you’ve claimed depreciation (capital cost allowance) over the years on your rental property, there may also be recapture, which is an income inclusion of all of your historic capital cost allowance claims in the past.

As far as what to do with the proceeds of the rental property, Wood, I’d say adding it proportionately to your new, improved, consolidated investment strategy would be the way to go. There’s not likely any reason to invest it differently than the rest of your retirement savings and hopefully by the time the property sells and closes, you’ve got your ducks in a row! That might be something to strive for with your various investment accounts.

I think you owe it to yourself first and foremost to develop a consolidated plan for your investments. From that will flow better tax efficiency, improved retirement funding plans and the kids will be the secondary beneficiaries of what should be a larger—and most importantly—a more organized estate.

Jason Heath is a fee-only, advice-only Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto. He does not sell any financial products whatsoever.