From time to time, I encounter people who have accounts spread out all over the place. They want to know if there are any advantages to consolidating them.

With certain exceptions, it can be a good idea to bring the accounts together to simplify your life.

Here are some of the reasons:

• Rebalancing may be easier because funds sold in one fund would be available to purchase a broader array of funds and potentially better funds.
• A higher amount to invest may provide access to lower-cost share classes for specific funds.
• Fund families often duplicate each other; for example, both Fidelity and Vanguard have low-cost index funds; it may not make sense to own essentially the same funds in different accounts.
• Life will be simpler when it comes to taking required distributions from IRAs. While the entirety of a required minimum distribution can be taken from only one IRA – i.e., you don’t have to take distributions proportionately from each account – the calculation of how much needs to be take out is applied to the totality of your IRAs.
• Fewer statements!

But one thing to watch out for in taxable accounts is triggering gains when a fund is available in one family but not another and has to be sold to accommodate a transfer to a new custodian. The greater convenience of consolidating accounts may not be worth the tax hit.

This article discusses some other reasons to consolidate your accounts and tips for simplifying your financial life.

Wall Street Journal article