Even if it’s just cash you have in a savings account, your advisor generally should know about it.
Basically, it’s a piece of the puzzle. Some assets get different tax treatment than others, which can influence an advisor’s recommendation on what source of money you should turn to for various needs or wants and when.
Also, undisclosed accounts could throw your asset allocation — how your money is divvied up among stocks, bonds and cash — out of whack.
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When advisors determine that mix, it’s based on your risk tolerance. That generally refers to both your ability to stomach swings in the market and how long until you need the money.
“We can’t build a portfolio based on your risk tolerance and have it be accurate if we don’t know what you have elsewhere,” Gucer said.
The importance of disclosure also applies to other assets or sources of income, including life insurance policies, real estate, variable annuities, pensions, alimony and the like.
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