There May Be an Upside to Keeping Your Eggs in One Basket
Investors often assume that having accounts at multiple firms enhances diversification, but there’s an old saying that you shouldn’t put all your eggs in one basket. True diversification, however, comes from the composition of your portfolio, not the number of institutions where your assets are housed.
At its core, consolidating investment accounts enhances clarity and oversight. It’s harder to assess investment mix, risk, and alignment with your goals when assets are scattered across multiple 401(k)s, IRAs, and brokerage accounts. Yet nearly a third of pre-retirees report having two or more 401(k)s. This can obscure the true shape of a portfolio and make thoughtful planning more difficult.
To subscribe to the MalcolmOnMoney newsletter and receive more content like this, click here.
Bringing accounts together and keeping them in one place enables a single lens through which the entire portfolio can be seen. This clarity can help you evaluate whether your asset mix still fits your risk tolerance, time horizon, and financial goals without having to guess what’s in a 401(k) that hasn’t been touched in years.
Better asset allocation becomes achievable when you’re looking at the whole picture as a whole rather than in fragments. When your investments are consolidated, it’s easier to spot unintended over‑weights in one sector or under‑weights in another and act decisively. If bonds have lagged and stocks have surged, for instance, you can spot that imbalance more easily and restore your portfolio back to its intended mix.
Additionally, multiple accounts and custodians often mean multiple sets of administrative and custodial fees. Some brokerages offer lower pricing tiers and volume-based discounts as total assets under management rise.
Fewer accounts also simplify the labyrinth of year‑end tax documents and make it far easier to prepare accurate returns. This can be especially valuable once you need to take required minimum distributions (RMDs) because each retirement account can trigger its own RMD calculation and withdrawal requirement. With fewer accounts, that process becomes less arduous and more streamlined.
Consolidation also supports a smoother estate planning experience. With assets centralized, your executor or surviving spouse won’t have to track down custodians to settle your estate. This can reduce stress and delays at a time when survivors are already coping with loss.
When considering whether to consolidate accounts, some investors worry that keeping all their assets with a single brokerage might expose them to greater risk in the event of fraud or firm insolvency. But in practice, most major brokerages carry extensive insurance protection to protect against precisely these kinds of risks.
The Securities Investor Protection Corporation (SIPC) insures up to $500,000 per customer per brokerage firm, including up to $250,000 for cash. This coverage doesn’t protect against declines in the market value of your investments, but it does kick in if a brokerage fails and customer assets are missing due to misappropriation or error.
In addition to SIPC coverage, many brokerages purchase supplemental insurance policies from private firms—often through specialty insurers like Lloyd’s of London—that offer protection into the millions. These excess policies are designed to restore client assets beyond SIPC limits in the rare event of brokerage failure, providing additional peace of mind to investors with larger account balances.
Conversely, FDIC insurance—which applies only to bank deposits—covers up to $250,000 per depositor, per insured bank, and is typically more limited. For this reason, savers with high cash balances may need to spread funds across multiple banks, whereas investment account holders can often consolidate at a single brokerage without compromising security.
The tide, however, does appear to be shifting. According to the research firm Hearts & Wallets, between 2024 and 2025 the percentage of households with investible assets ranging from $1 million to $4.9 million that chose to consolidate those funds at a single financial institution rose sharply from 11% to 22%. The shift suggests a growing awareness among affluent investors that streamlining accounts can lead to better outcomes.
*************************
Malcolm Ethridge is the Managing Partner at Capital Area Planning Group, based in Washington, D.C. His areas of expertise include retirement planning, investment portfolio development, tax planning, insurance, equity compensation and other executive benefits.
To subscribe to the MalcolmOnMoney newsletter and receive more content like this, click here.
Disclosures:
The information provided is for educational and informational purposes only, does not constitute investment advice, and should not be relied upon as such. Be sure to consult with your legal advisors before taking any action that could have tax and legal consequences.
Investments in securities and insurance products are:
NOT FDIC-INSURED | NOT BANK-GUARANTEED | MAY LOSE VALUE