Answer: Not very well.
“There’s nothing wrong with juggling multiple retirement accounts. The problem is that most people don’t juggle them well.”
“Just 27% of investors said they look at all of their combined assets to develop a master asset allocation, according to first-quarter data from Financial Finesse, a provider of money-management educational services to companies nationwide.”
Andrea Coombes, “How to juggle multiple retirement accounts,” MarketWatch, August 7, 2013
How many people still have that 401(k) account left behind at their old employer, the Roth IRA they only funded for a year or two, the 457 account they haven’t looked at since last fall, the new plan at the current employer, and those old IRA accounts that date back to before the dot.com bubble?
Well, you get the idea. All your accounts should fit well together, like pieces of a puzzle, to get you to where you want to go.
It’s hard to keep an eye on a bunch of disparate accounts, let alone make sure that they are all working together in harmony, when they are spread all over town.
You can make your life much easier, and make your accounts more productive, by consolidating them as much as possible with one custodian.
Some people hesitate to do this, saying they are afraid of “putting all their eggs in one basket.”
But since the major custodians offer thousands of different investment choices from many different investment managers, consolidating accounts can actually give you better diversification, a more strategic allocation plan, and upgrades to top-flight asset managers.