Investment Strategies

Pre-Retirement Consolidation

Now that the children are out of the house and retirement is around the corner, it might make sense to consolidate your investment accounts and assets in one place. Among the many benefits, you will be able to get a complete picture of your financial situation, which may allow you to plan better, invest more effectively, and manage taxes and taxation more efficiently.

More effective asset allocation:

The process of asset allocation refers to the spreading or ‘allocating’ of investments across different asset classes such as cash, bonds, and stocks. Asset allocation is an investment strategy with the goal to balance and even optimize risk versus reward by adjusting the percentage of each asset in an investment portfolio according to the investor's risk tolerance, goals and investment time frame. Consolidating your investments makes for more effective asset allocation because you only have one portfolio to diversify, which helps to manage risk and investment duplication/overlap. A single, consolidated investment portfolio also makes rebalancing easier, which involves buying and selling investments to help maintain the integrity of the original asset allocation.

Greater tax efficiency:

As an investor, you will pay tax on a wide range of investments, but not all investment income is taxed in the same way or at the same rate. It depends on the types of investments you’ve made, the types of accounts you hold them in, and how much you earn. Consolidating your accounts and investments will help you to structure the right types of investments in the right amounts and in the right accounts, so you can enjoy greater tax efficiency and potentially save money.


Better financial planning:
Most people want a financial plan that is integrated, comprehensive, and customized to meet their goals and that of their family. Consolidating assets with one financial advisor provides them with the big picture, enabling them to better meet your planning expectations. It also:


Simplified reporting:
Choosing a single financial institution to oversee your affairs will also make your life a lot easier when it comes to reporting. You will receive one investment statement, benefit from more accurate reporting of investment returns, and be able to track investments with ease; this cannot be achieved unless everything is consolidated. You might also receive fewer tax slips, which should reduce the amount of time spent on taxes, or make it less expensive for someone else to prepare.

Less administration:
Consolidation can go a long way to simplifying your administrative life, especially when it comes to pre-retirement planning. If you have multiple accounts – registered, non-registered, and/or TFSAs, for instance – it could be a challenge to determine which source of income to draw upon. This becomes particularly difficult when you must convert RRSPs into RRIFs, where you are required to make minimum withdrawals from each account annually. It is better to sort out and streamline this area in advance, so that your advisor can determine the most tax-efficient way to maximize your retirement income. The same thinking applies to estate planning and intergenerational wealth transfer, which require significantly more administration and paperwork, in the event that everything is spread out over several accounts.

Save money:
Account consolidation might yield substantial savings, as many institutions reduce their fees when assets reach a certain size threshold. It may also allow you to qualify for higher levels of service or premium discounts; in some circumstances, account fees may be tax deductible.

Keep in mind

As sensible as consolidation might appear in the long run, there may be charges and penalties that could stem from areas such as an account closing or transfer of assets. There may also be tax consequences, so be sure to understand the implications prior to consolidation and check the terms and conditions connected with disposal of current investments. Finally, some deposit-taking institutions are not members of the Canada Deposit Insurance Corporation or the Canadian Investor Protection Fund, which protect your deposits and assets in case of failure. If these safeguards are important to you, make sure the consolidating institution is a member.


Discuss with your advisor the consolidation of your investment accounts and pre-retirement strategies.