I was speaking with a gentleman last week, who likes to think he knows a thing or two about investing (he is an engineer by the way) and he remarked to me how we have seen it all over the past decade – from boom to bust, to housing bubbles, runs on financial institutions and the odd Ponzi scheme thrown in as well.

Without a doubt investing money no matter how small or big in whatever investment vehicle you choose i.e. stocks, government bonds, property etc. has taken on a whole new level of risk and this has led to all sorts of opinions from many different areas which in many cases has led to information overload and who do you listen to and who do you trust?

And this has influenced my engineering friend because he believes the answer to getting advice and direction is to get it from multiple financial advisors and in his particular case, from two.

His rationale for this was interesting - he decided to give one portion of his portfolio to one advisor and the other portion to another advisor because he thought it first of all offered him protection because if one advisor made a bags of things or made off with his money (we know this happens more frequently than we care to imagine) at least all of his money won’t have disappeared.

His second reason was that it would keep both advisors “on their toes” so to speak and encourage competition between them and as a result improve his overall performance. And again I understand his logic behind this because if one advisor is looking after your money, he or she may tend to become stale or less interested in your money because they know the chances of you moving it to someone else is small.

And his third and final reason was that both advisors had different attitudes to risk and different attitudes to where his money should be invested so his portfolio would be “diversified” and he really loved this word – because it was the type of thing that his friends and advisors refer to all the time – diversification – he loved saying over and over to me “I have an excellent diversified portfolio”  - Great lucky you I thought – I won‘t ask him for a breakdown of what he is diversified in as I suspect he doesn’t really know and I didn’t want to say that I had read recently that the most successful investor of our time, Mr. Warren Buffet, says of diversification that it is “protection against ignorance” Mr. Buffett went on to say that “It makes little sense if you know what you are doing.” But I am sure my engineering friend and his advisors know what they are doing.

Anyway, I got to thinking after I met him, was his strategy in fact a good one because I have heard this logic on more than one occasion.

What I have found and through experience of dealing with people who have or had multiple financial advisors who tell me their stories is a different one to what he is hoping to achieve.

My experience is that having more than one financial advisor at the same time does not increase returns, does not offer any more protection than just having one and does create a better, mixed investment strategy. My experience in many cases is that the client ends up paying more in fees, are left feeling more confused and end up making decisions for themselves rather than taking the advice being offered.

And yes I appreciate that one of the biggest reasons people are nervous taking advice from people is who do they TRUST? How hard is it to find one person you actually trust not to mind two? But if you are lucky enough to find an advisor you are comfortable with and whom you trust why bother look for another? If you took the time to source that one person from the outset and sought recommendations from others and received testimonials as to how they felt about them and what they did for them then that I think will offer you as much protection as it would using more than one.

And using more than one advisor to achieve greater returns whilst logically might make sense, didn’t for a client of mine back in 2011 – it actually ended up losing him money. Because he gave both advisors carte blanche over his investments and one then tried to out-do the other which led to both taking more risks than they ought to in the hope the winner i.e. the one who made him more money would then take control over all of his money – in the end it was a choice of deciding who lost him less money was the one he would stay with. So having more than one advisor doesn’t guarantee better returns, but what it does guarantee is that they fees you end up paying are more.

A client of mine told me a story about himself where he split €200,000 between two advisors some years ago, he gave one advisor who invested €50,000 of his money where the annual charge was 1.5% and the another advisor €150,000 invested in a fund where the annual charge was 0.50% because of the amount involved – so his overall management fees was €875 more each year than had he chosen the one provider and the one fund.

Finally, there is the issue of who really ends of making the decisions about your money? Why do you seek advice in the first place? You want someone who is an expert in their chosen field, someone who has an excellent reputation, someone who will give you objective, constructive advice who is acting in your best interests. But if you have two such people in place and Advisor A gives you advice and Advisor B rubbishes it (it is very rare that two financial advisors will agree on a particular strategy – no one is better than them when it comes to giving advice) what do you end up doing? That’s right, making the decision yourself and very few of us want to end up in that position as it defeats the whole purpose of getting financial advice.

It appears to me that choosing two advisors rather than one does not achieve the objectives you think it will. Finding one advisor, someone you can trust who doesn’t take your business with them for granted and who works with you to achieve your goals is the best investment strategy I think you will ever make.