The article “Using More Than One Financial Adviser” was originally published on MoneySense on February 10, 2015.

At key times in your life, it makes sense to use more than one financial adviser. Does it make sense for Donna?

Q: What are the benefits and/or drawbacks to using more than one financial adviser at the same time? —Donna, via email

A: Investing 101 suggests that you should diversify your investments. I can see an argument for diversifying your advisers as well and in practice, Donna, it happens regularly.

Some people do it by accident because they contribute to an RRSP at their bank branch, they have investments with their insurance agent and they have a group retirement plan. If you end up with multiple accounts and more than one financial adviser as a result of happenstance, rather than on purpose, I’d be inclined to consider what you really want.

Some of the drawbacks of using multiple advisers are:

1. Higher fees: You may qualify for fee discounts on higher investment balances. If you have investments with multiple advisers, you might not be paying the lowest fees possible due to multiple small balances.
2. Poor asset allocation: If you or your advisers are not monitoring your overall asset allocation across all of your accounts, you might end up with duplication or over or underweighting that is unintentional.
3. Worse service: The bigger your account, the more money your adviser is making on your investments. Even if it’s just a small, subconscious bias, your adviser pays more attention to bigger accounts.
4. Lack of a plan: If you have money in different places, your financial, tax and estate planning might not be as efficient as it could be without some effort by you, one of the advisers or a third party financial planner.
5. More time: More advisers and more accounts means more time managing your investments. If you don’t have time for one adviser, having more than one means your investments may get that much less attention.

On the flipside, using multiple advisers can have its benefits. Those are:

1. Diversification: This approach might give you not only diversification of investments, but of approaches. One adviser might make a mistake that another makes up for.
2. Specialization: Some advisers are good Canadian equity managers and others are good with fixed income and can build a bond portfolio. It’s not uncommon to use different advisers for different specialties.
3. Comparison: In particular if you’re trying to evaluate how to best manage your investments, having multiple advisers can allow you to test drive a couple different approaches. Be careful about comparing investment returns, because you might not be comparing apples to apples depending on your asset allocation, geographical composition, etc. Beyond that, it’s hard to assess performance over the short-term.
4. Perspective: Working with multiple professionals in any discipline gives you added insight. Filtering insight from different sources may help you to better build your ultimate portfolio.
5. Due diligence: If you have two people looking over your finances and your investments, you may have an added layer of oversight.

I think that using multiple advisers is a personal decision, just like the active-passive debate. It works well for some and not so much for others. As with any decision, financial or otherwise, I’d suggest you consider the pros and cons, Donna.

These are the decisions that an active investor must make. Sometimes, you’re well served to be active with your advisers as well as your investments.

Jason Heath is a Certified Financial Planner (CFP) at Objective Financial Partners Inc. in Toronto.