A couple in their mid-fifties has done a good job in amassing $1.3 million in their investments but they need to pay off a loan and clean up and consolidate their holdings.

Ben and Cassandra are in their mid-fifties and would like to retire in a few years. Things look good for them. The couple collectively earns an income of $140,000 a year, and has amassed an impressive $1.3 million in their investment portfolio.

The problem is their portfolio is all over the map. Its confusing to navigate.

For near retirees, Ben and Cassandra are aggressive investors. The couples portfolio has 88 per cent in stocks and 12 per cent in fixed income. They are considering cutting back this exposure.

Some of their investments are with a full-service brokerage firm. They have just over $300,000 in mutual funds they bought through a financial advisor. Another portion of their assets is at a discount brokerage. And the couple also has a $373,000 investment loan.

The Star asked Robyn Thompson, president and fee-only planner at Toronto-based Castlemark Wealth Management, to work with the couple.

Priority number one is getting rid of their loan, Thompson says. She notes that 29 per cent of their assets are leveraged, a dangerous proposition for a couple earmarking retirement. The loan has served them well, but at their age, the time for speculation is over, she explains.

Ben and Cassandra have more than enough investments to sell the amount of the loan. They will, however, need to pay capital gains on the growth of those investments, close to $85,000, Thompson notes. Half of any capital gain must be included in income and is taxed at their marginal tax rate, she says.

To lower the tax bill a bit, the couple should first use any capital losses from the sale of assets to offset gains.

Next, they should contribute to their RRSPs this year to reduce their marginal tax rate. They should speak to an accountant before making this election to ensure they are contributing only enough to reduce the taxes to the lowest possible level, Thompson says.

Once the couples investment loan is discharged and taxes are paid, the couple will be left with approximately $900,000 in their portfolio.

Given their moderate risk tolerance, Thompson recommends they reduce their portion of stocks from 88 per cent to 50 per cent. The equity portion should be spread out among blue-chip, dividend paying stocks, preferred shares, and exchange-traded funds, she says.

The remaining 50 per cent should go towards fixed-income investments such as bonds and GICs.

With any asset allocation changes, the couple will also need to maximize tax efficiency. For example, investing in interest bearing and U.S. securities attract the biggest tax bite. Those investments should generally be held in RRSP accounts. Higher-risk stocks are best stored in TFSAs, while tax-advantaged securities work best in non-registered accounts, Thompson says.

Ben likes to trade and play the market. Thompson recommends he just use the couples TFSAs for this purpose.

In general, the couple has too many investment products what Thompson calls a rookie mistake. Ben and Cassandra own 17 mutual funds and more than 80 individual stocks.

Twenty stocks are enough to diversify away the maximum amount of market risk, she notes. More is not better.

Multiple advisors are also not a good idea because no one person is receiving the couples complete financial picture. That means what one advisor recommends may be in conflict with what another advisor suggests.

I call this too many cooks in the kitchen, Thompson says. Its like having Gordon Ramsay cook one side of the steak and Jamie Oliver cook the other side it just doesnt make sense, and your steak will end up being a mess.

Multiple advisors can also mean excessive fees. Thompson notes that the financial advisor who managed their mutual fund portfolio, for instance, delivered a year-to-date return of 6.13 per cent, a return that was -3.30 percentage points below the FPX Growth Index. Fees with this advisor are on average 2.39 per cent to six per cent in deferred sales charges too high, Thompson notes. It is imperative to use a benchmark with your advisors. This is how they quantify their value. You pay them to beat the market.

By consolidating their assets with a professional money manager, Ben and Cassandra will have a clear and disciplined approach to investing and benefit from reduced management fees. With the amount of assets they have, the couples maximum fees should be no more than 1.25 per cent to 1.5 per cent of assets annually.