I would like to introduce to you a fictitious character by the name of Samson.
Samson’s story begins in a rural area. His father was a factory worker, and his mother was a homemaker. If you had an opportunity to peer into their lives you would conclude that of the two, his mother had the more challenging position.
Samson’s mother would take him with her to secure the list of items needed to keep the family going. This was Samson’s first opportunity to see how money was used to acquire the family’s needs. Because his mother was a stickler on the budget, Samson would only rarely be able to buy candy because the budget was so tight.
His mother wanted Samson to learn two things about budgeting: 1. Know how important it is to have one and then stick to a budget. 2. She also wanted him to learn and understand the difference between a need and a want (candy was surely a want and not a need).
Although budgeting was an extremely important attribute, it was not the most important lesson that Samson learned.
While Samson remembered many of his mother’s sayings, one saying stuck with him throughout his life: “don’t put all your eggs in one basket.” Even though he heard this saying often, Samson was never absolutely sure of its meaning.
One other thing Samson always noticed was how many grocery stores they would typically visit to buy the family’s supplies.
For fruit they would head to Eddie’s; for bread it would be Betty’s; and for meat they would head over to Paul’s. It was interesting to Samson that they frequented all three of these places even though they all offered the same solutions. All these providers had fruit, bread, and meat.
Samson was always puzzled why mom didn’t just go one place to meet all the family’s needs. In addition, the time that it took to travel to those other places, made shopping an all-day event.
During their visits, Samson noticed that each of the providers would attempt to encourage mom to buy the variety of goods only from their store. However, mom in her sweet voice would say, “I shop here because your particular solution is the best, but I don’t want to put all my eggs in one basket.”
As Samson grew up, he couldn’t help but notice that each provider always had a variety of suggestions. Once, when his mom was looking for a specific kind of bread (because one of his siblings developed an allergy) all the advice she received that day about the varieties of bread was overwhelming; so much so that she didn’t make any decision about where to get the bread for a whole month.
Another thing Samson noticed: none of the individual providers fully understood the family’s complete needs. They would provide advice to the best of their ability, but they didn’t have the complete picture. It was like ordering a pizza, and once you got it home, you noticed there were pieces already missing.
Samson also noticed that the amount of time it took his mom to explain the complete picture to each provider began to overwhelm her. As a result, she began to leave out more parts to the story every time she told it, and in the end grew frustrated with all three providers. Mom knew Betty’s always had the best bread, staff, and advice for her family. However, she didn’t want to put all her eggs in one basket.
Samson struggled with why they didn’t just choose to buy everything at Betty’s? In the end, his mother’s decision not to put all their eggs in one basket created a situation that she likely did not anticipate: the overall cost of that decision, including lost time; lost discounts for additional purchases which made the total cost of doing business higher.
Many of the families we work with seem to employ a similar thought process about how their money should be managed. They believe there is both an underlying convenience with multiple advisors, and that their variety of individual approaches also offers benefits.
However, what we often see is conflicting advice which in turn causes confusion. It also causes missed opportunities for discounts—breakpoints--based on the aggregate amount of dollars invested. One other significant impact we see is the time that is lost going back and forth between advisors to get questions answered on the advice they received.
Today, most advisors can typically offer you a variety of solutions, in house, so you do not have to worry about having your eggs in one basket and, at the same time, you can benefit from solutions to the other problems mentioned earlier.