Different investment strategies can lead to better returns in the long run, said Ron McCoy, a portfolio manager of the LOWS fund (Levered Options Writing Strategy) on Covestor, the online investing company and chief investment officer at Freedom Capital Advisors in Winter Garden, Fla.
"What works in one market may not work in another and having two or three sets of eyes managing your money can be a plus," he said. "Having more that one advisor can also reduce 'firm risk' in the event you have all your money with one that is doing some unscrupulous things so you can avoid getting completely blown out like Bernie Madoff's clients did."
Obtaining a second opinion before buying a stock or changing the allocation in your portfolio can be helpful, McCoy said.
"Don't be afraid to ask a few advisors what they think and compare what they are saying to see if makes sense," he said. "Be wary of the advisor who has an answer for everything because no one has all the answers."
Risks When You Add an Advisor
As the number of investment professionals who manage their money increases, investors may find themselves in a situation where the "law of diminishing returns can affect your nest egg," Ulin said.
When your advisors fail to communicate with each other frequently, investors may find themselves owning duplicate products and investment holdings which can skew the allocation of their portfolios.
The lack of tax efficiency may also emerge since an advisor which has gains in your account to "work to execute a tax loss harvesting strategy from another advisor's account which is down," he said.
Investors who opt to have multiple financial advisors should ensure they choose a lead who can audit the other advisors' statements in quarterly meetings, Ulin said.
"This will help you to minimize your risks and problems of working with too many investment professionals while increasing your ability to maintain a handle on your big picture," he said.
Younger investors or individuals who want to eschew paying fees could bypass using an advisor and focus on a diversified portfolio and rebalancing periodically, said Morris.
"For most people, the best advisor might be no advisor," he said. "Smaller investors have the tools they need to keep on track without an advisor. Ultimately, indexing wins in all periods that are relevant to investors today. Cheap, effective and efficient options exist and the big platforms tacitly endorse them by applying high minimums."