How to Track Your Investment Performance Across Multiple Brokerages

In today's increasingly diversified financial landscape, many investors hold accounts across multiple brokerage platforms. This strategy can help in achieving better diversification, accessing different investment options, or even capitalizing on various account types and tax advantages. However, managing investment portfolios across multiple brokerages can also create challenges, particularly in tracking performance, managing risk, and ensuring accurate reporting.

This article outlines how to effectively track your investment performance across multiple brokerages, offering guidance on strategies, tools, and best practices for investors looking to monitor their investments in a comprehensive and organized manner.

Understanding the Challenges of Multiple Brokerages

1.1 Diversification and Convenience

One of the primary reasons for holding accounts at multiple brokerages is diversification. Different platforms may offer unique asset classes, investment tools, or specific market access. For instance, one brokerage might specialize in stocks, while another might be better for bonds or international investments. By utilizing different brokerages, investors can access a wider range of investment opportunities, minimizing risk by spreading capital across different sectors.

However, while this strategy offers diversification benefits, it also adds complexity to portfolio management. Tracking the performance of investments across several platforms requires monitoring multiple user interfaces, understanding different fee structures, and consolidating data from various sources to get an accurate picture of portfolio health.

1.2 Data Fragmentation

Each brokerage has its own reporting structure, performance metrics, and formats. Some brokerages provide detailed insights into asset performance, while others may offer more basic tools. With each brokerage offering different services and reporting mechanisms, it can be challenging to compare and consolidate data to evaluate overall portfolio performance. Investors might find themselves manually consolidating reports, which can be time-consuming and error-prone.

1.3 Rebalancing Complexity

When managing investments across multiple brokerages, rebalancing portfolios can be a daunting task. Some brokerages provide automatic rebalancing features, while others require manual adjustments. When portfolios are fragmented, rebalancing becomes a matter of tracking all individual holdings, understanding tax implications, and ensuring that asset allocation aligns with the investor's goals across the entire portfolio.

Key Metrics for Tracking Investment Performance

Before diving into the tools and strategies for tracking investments across multiple brokerages, it's essential to understand the key metrics to evaluate investment performance accurately. These metrics provide the foundation for assessing returns, comparing assets, and making informed decisions:

2.1 Total Return

Total return is a comprehensive measure of an investment's performance, accounting for both price changes and income generated from dividends or interest. This metric reflects the true performance of your investments over a given period, including both realized and unrealized gains. It's important to track total return across all investments in your portfolio, regardless of the brokerage, to understand the overall success of your strategy.

2.2 Annualized Return (CAGR)

The compound annual growth rate (CAGR) represents the mean annual growth rate of an investment over a specified time period longer than one year. This metric is valuable because it smoothes out fluctuations in short-term returns, providing a clearer picture of an investment's long-term performance. It's essential for comparing investments that have been held for different periods.

2.3 Risk-Adjusted Return

Risk-adjusted return is a measure that adjusts return for the amount of risk taken. The most common metric used is the Sharpe ratio, which divides the excess return of the investment (return above the risk-free rate) by its volatility (standard deviation). This metric helps investors assess whether the returns justify the risks involved. Tracking this metric across multiple brokerages can give you an understanding of how well your portfolio is performing relative to the level of risk you're taking.

2.4 Portfolio Allocation

Monitoring the allocation of your portfolio across different asset classes (e.g., stocks, bonds, ETFs, commodities, etc.) is vital for understanding how well you're diversifying risk. Overexposure to a particular asset or sector, for example, may significantly increase risk, even if the returns appear solid in one brokerage account. Keeping track of your overall allocation ensures that you remain aligned with your financial goals and risk tolerance.

Tools and Strategies for Tracking Performance Across Multiple Brokerages

3.1 Use of Portfolio Management Software

One of the most effective ways to track your investments across multiple brokerages is to use portfolio management software. These tools provide an aggregated view of your entire portfolio, pulling in data from different brokerages and offering insights into performance, risk, and asset allocation. Some popular options include:

• Personal Capital: This tool offers both free and premium versions and allows users to track investment performance across multiple accounts, including brokerage accounts, 401(k)s, and IRAs. Personal Capital automatically updates account balances and tracks total returns and portfolio allocation.
• Mint: Mint is another free tool that aggregates financial accounts, including investments. While it's more focused on budgeting, Mint allows users to track investment performance and provides insights into the overall financial situation.
• Morningstar Portfolio Manager: Morningstar is known for its investment research, and its Portfolio Manager tool allows investors to track performance, analyze asset allocation, and even receive recommendations on how to rebalance. Morningstar also provides valuable research on individual investments, allowing you to make data-driven decisions.
• Sharesight: Designed specifically for investors, Sharesight integrates with numerous brokerages and offers tools to track portfolio performance, dividends, tax reporting, and capital gains across multiple accounts. It's especially useful for international investors with holdings in multiple countries.

By using these tools, you can avoid the hassle of manually consolidating data, making performance analysis easier and more accurate.

3.2 Consolidating Data Manually

For those who prefer a more hands-on approach, manually consolidating data from different brokerages is also an option. This process involves downloading reports and statements from each brokerage and inputting the data into a central spreadsheet or personal financial management tool. Tools like Microsoft Excel or Google Sheets are commonly used for this task.

While this approach can be more time-consuming, it offers the flexibility of customization and can be adapted to suit an investor's specific needs. By organizing the data into categories such as asset class, purchase date, current value, dividends, and capital gains, investors can manually calculate total return, portfolio allocation, and risk-adjusted return.

3.3 Using Brokerage Reports and Statements

Many brokers provide detailed monthly or quarterly reports that include investment performance, dividends, interest, and realized/unrealized gains. While these reports are usually specific to each individual account, they can provide a helpful snapshot of performance within a given brokerage.

For investors with multiple accounts, it's important to regularly download or save these reports and compare them against each other. This will help identify discrepancies or areas of underperformance, allowing for timely interventions.

3.4 Rebalancing and Monitoring Asset Allocation

Rebalancing is an essential aspect of maintaining a well-diversified portfolio, and doing so across multiple brokerages requires a clear overview of asset allocation. With the help of portfolio management tools or spreadsheets, you can track the proportion of different asset classes in each brokerage account and monitor how they contribute to your overall portfolio.

Rebalancing involves shifting investments to maintain the desired allocation. For example, if stocks have grown disproportionately in one account, you may want to sell some of those shares and buy bonds in another account. This process ensures that you remain aligned with your long-term goals and risk tolerance.

Tax Considerations

Tracking investments across multiple brokerages also has tax implications. Each brokerage account may have different tax treatments depending on the type of investment (e.g., tax-advantaged accounts like IRAs or 401(k)s vs. taxable brokerage accounts). When tracking performance, it's essential to consider the tax impact of your investment decisions.

4.1 Capital Gains Tax

Capital gains tax applies to the profits made from selling investments that have appreciated in value. If you are holding investments in multiple brokerage accounts, it's important to monitor the gains and losses across all accounts to ensure proper reporting. Consolidating this information can help you minimize taxes by offsetting gains with losses (tax-loss harvesting).

4.2 Dividend Income Tax

Dividend income is another factor to track, as it may be taxed at different rates depending on whether it's qualified or non-qualified. Some brokerages may provide tax forms like 1099-DIV that summarize dividend income, while others may require you to calculate it manually.

Tax-efficient portfolio management is key to minimizing your overall tax burden, and tracking dividend income across multiple brokerages ensures that you don't miss out on tax-saving opportunities.

Best Practices for Efficient Tracking

5.1 Set Clear Investment Goals

Establish clear goals for each investment account and across your entire portfolio. These goals should align with your risk tolerance, time horizon, and financial objectives. By having a clear understanding of your investment strategy, it will be easier to track performance, rebalance, and make informed decisions.

5.2 Regularly Monitor and Adjust

Investments require regular monitoring to ensure they are performing in line with expectations. Schedule regular reviews of each brokerage account and your overall portfolio performance. Monthly or quarterly reviews are a good starting point, but more frequent checks may be needed if market conditions are volatile.

5.3 Leverage Automation

Automating the process of tracking and rebalancing investments can save time and reduce the risk of error. Many portfolio management tools allow for automatic updates of account balances and performance data. Additionally, some brokerages offer automated rebalancing services to ensure that your portfolio stays aligned with your goals.

Conclusion

Tracking investment performance across multiple brokerages can be a challenging task, but with the right tools, strategies, and metrics, it becomes manageable. Whether using portfolio management software, consolidating data manually, or relying on brokerage reports, the key is to have a clear overview of your investments, asset allocation, and performance.

By actively tracking your investment performance, you can make informed decisions, adjust your strategy as needed, and ensure that your portfolio remains aligned with your financial goals. With proper monitoring, you'll not only enhance your investment strategy but also maximize the potential of your diverse brokerage accounts.

View Product