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Featured Advisor

Ed Meek
CEO/Investment Advisor

Edge Portfolio Management


State: IL

At Edge, a low client to advisor ratio allows for personal and customized service for each individual.  Our goal is to work as a team for each client to provide not only portfolio management but wealth coordination and financial planning.  We make every effort to have frequent communication with our clients and to provide timely response to calls and emails.  I also enjoy spending time with my wife and three kids, playing and following basketball, playing golf, and participating as an advisory board member for Breakthrough Urban Ministries.

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IRA Consolidation Driven by Simplification Not Returns

Individuals consolidate their IRA’s to one provider primarily for simplification not because of investment returns

Approximately 935,000 households rollover IRA balances in excess of $200,000 and about 23% of these IRA rollovers are driven by the trend towards IRA Consolidation. As households begin to review their total assets, they realize the pieces of their savings are in multiple locations and IRA consolidation will continue to increase as more individuals approach retirement.

What is IRA Consolidation? IRA Consolidation occurs when an individual chooses to rollover assets from a qualified plan, such as his or her 401(k) plan into an IRA account. In many cases it may be an existing IRA account. Sometimes an individual may choose to rollover the funds held in an IRA account at one institution to another institution to combine the balances. IRA accounts can be mingled together as long as the financial organization receiving the rollover obtains the information verifying the assets are held in an IRA or within a “qualified” employee benefit plan. (“Qualified” means it is generally a plan established by an employer that meets specific tax code requirements….such as your 401(k) or other savings plan).

The primary reason for the IRA Consolidation was “Simplification/Less paper/Easier to Manage”. More than half of the IRA Consolidators chose this reason. About 14% consolidated their IRAs to achieve “Better returns/Better funds”. While 10% felt that consolidation led to “Better control of strategy/allocation”, only 5% consolidated based upon advice from their financial advisor.

About 43% of those who engaged in IRA Consolidation in the past year use a financial advisor. Interestingly, they are more likely than other individuals to attend seminars or workshops (32% vs. 16% of the general population).

Do you have several IRAs at multiple organizations? If so, you may want to assess whether IRA Consolidation is right for you. The decision should be based upon a few different issues.

1. Do you receive statements from multiple different institutions? Is that undesirable for you or do you like having your assets “spread around”?
2. Have you reviewed the overall investment strategy of all of your IRA and other retirement savings accounts? Do you feel that overall you are appropriately diversified? Would it be easier if all of the assets were combined? Or are you pursuing different strategies at the varying institutions?
3. Do you know the fees you are paying for each of the accounts? Is there any benefit to combining the accounts from the perspective of fees?

The decision of whether to consolidate your IRAs is a personal decision. It may be a wise decision to discuss IRA Consolidation with your financial advisor to determine the right strategy for you.