Should I consolidate my investment accounts?

A guide to investment consolidation


Should you consolidate your investments?

If you have several investment accounts with a range of providers, you may find it difficult to keep on top of them. If that's the case, then you might have considered consolidating your investments.

Consolidation offers the benefit of keeping all your investments in one place, therefore making them easier to manage. This guide provides a broad overview, to give you an idea of whether it's the right choice for you.

Keep in mind that the value of your investments can go down as well as up, and you may get back less than you put in.

Why consolidate investments?

Here are some of the key benefits of merging investments into a single account:

  1. Simplicity
  2. Fees
  3. Estate planning
  • Simplicity – Perhaps the main benefit of having your investments in one place is the simplicity it offers. If they're spread across different providers and accounts, then it's easy to forget about one or lose track of how they're performing.

    This may not be as much of a problem if you've consolidated your investments. You will have only the one account to follow and check up on. This will make it easier to top up your investment, or make other changes where and when necessary.

  • Fees – Depending on what type of investments you hold, there may be management fees to pay. If spread across multiple providers, these additional costs can add up. If you're not keeping track of your investments, they can also come as a surprise when you do notice.

    With your investments consolidated into one account, you’re likely to have fewer management fees to pay. Keeping track of your investment will also be easier, so they shouldn't be unexpected.

  • Estate planning – If there are investments that you've forgotten about, or failed to keep up to date with, they may become a potential issue for your loved ones after you've died.

    There is the prospect of the executor or administrator having the difficult task of locating these investments. This could involve additional costs for a professional search. And then there's also the matter of Inheritance Tax (IHT).

    If you've not kept track of investments, it can make it more difficult to plan your estate efficiently to reduce Inheritance Tax. Finding out the value of these investments after you've died could potentially result in there being less to leave to your loved ones.
  • Please note that the Financial Conduct Authority does not regulate inheritance tax planning and trusts.

How can you consolidate all your investments?

If you are considering moving your investments into a single account, it makes sense to speak to a financial adviser first.

A financial adviser can provide guidance on whether consolidation is the right option for you, or if some of your investments are better off staying where they are. They can also offer support throughout the consolidation process, and let you know the types of investment plans available to you.

If you have stocks and shares ISAs and want to consolidate them, then the account provider you choose should be able to arrange this via an ISA transferal process.

Consolidating pensions

Personal and workplace pensions are one of the most popular types of investment. As you journey through your working life, you may have built up a number of pensions pots as you move from one place of work to another. It's always possible that older pots become neglected and no longer work as hard for you as they could.

There are potential advantages and disadvantages to merging existing pensions into a single pot. Some advantages include:

  • Less administration
  • Possible savings on fees and charges
  • Easier retirement and estate planning

Whereas disadvantages could be the loss of benefits associated with an existing pension, such as:

  • Guaranteed annuity rates
  • Protected tax-free cash amounts

To find out more, read our guide to consolidating pensions.

Consolidating your investments with a partner's

Whether recently or long-time married, in a civil partnership or simply living together, you may want to combine your investments with those of your partner. Joint financial arrangements with somebody trusted are common, particularly joint bank accounts, so there's no reason why you shouldn't consolidate your investments. Of course, you would both have to agree to this.

For instance, if you both hold various investments, there is the opportunity to combine these, split them down the middle and then place them into two separate ISAs, one in each name. This can be done via a process known as 'Bed and ISA', where you sell existing investments and then buy them back within the stocks and shares ISA.

The amount moved into each ISA isn’t allowed to exceed the £20,000 limit, but it would effectively give you and your spouse or partner a £40,000 allowance across both ISAs each tax year. And there would be no tax to pay on any returns or withdrawals.

It is worth noting that outside of capital gains tax (CGT) allowances, there may be CGT to pay when you sell your investments as part of the Bed and ISA process. There may also be Stamp Duty costs to consider. Lastly, it’s also worth bearing in mind that your investments may sell for lower than the price you buy them back for.

What to consider when consolidating investments

  • Diversification – Consider a diversified fund. Consolidating your investments doesn't mean you have to place all your eggs in the one basket. By choosing a diversified fund, your money can be invested in a range of assets across a variety of business sectors and regions. The aim of diversification is to offer a degree of protection against investing in a single asset or a single sector, and losing your money if it goes on to fail. A diversified fund provides a mixed variety, to potentially cushion the blow of any individual losses. You can find out more about diversified investments in our guide, 'What is diversification?'.
  • Stocks and shares ISAs – If you haven't already got one, you might consider a stocks and shares ISA as a starting point. That way you can invest £20,000 of your money each tax year, without having to a pay a penny in tax on the returns. If you already have more than one stocks and shares ISA, then consolidating them into a single account will allow you to keep track of how it's performing. If you so wish, you can transfer all your ISAs into a single stocks and shares ISA, regardless of whether their value exceeds £20,000. You can find out more about stocks and shares ISAs in our guides, 'What is a stocks and shares ISA?' and 'How do ISA transfers work?'.
  • Exit fees – Consider what it might cost to consolidate your investments. There may be exit fees, capital gains tax or other costs associated with moving or closing existing accounts. It's worth finding out whether this is the case as far as your investments go, and how much they'll cost you.

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