Bestinvest v Cavendish

JohnnyJet

I've been looking at starting a Pension and am deciding whether I should open one with Bestinvest or Cavendish.

They both charge the same fees but how secure are both these companies? I understand that my money will be protected up to £50,000 if the company folds but what if in later years I went above this?

Also does anyone have any experience using one of these two companies? How user friendly are they?

jamesd

The FSCS protection for investments is £50,000 for the money with each firm. In the case of a pension place like those you're naming, the money is normally held in funds operated by different firms because funds are available from many different firms and it is unlikely to be best to use only the funds of one firm. So you'd get £50,000 of protection each with say Fidelity, Jupiter and so on. You'd also get the £50,000 protection for any money held in cash with the platform, whether that's Best Invest or whichever of the Cavendish sold products you use.

Beyond that, the money has to be held in segregated client accounts with daily reconciliation to ensure that there is enough money in the account to cover all of the customer liabilities if the firm was to become insolvent. These client accounts are independent of the business itself and not subject to any insolvency that it might experience. Firms have been fined as much as millions of Pounds for getting this daily accounting wrong even when there was no client loss at all.

In the case of traditional insurance company pensions a different approach has traditionally been used, with insured pension funds instead. the insurance covers the potential of loss due to more than £50,000 being in one place and there is no cap on insurance protection.

Because of the network of different fund houses and requirements to keep money in trust and/or in segregated client accounts, pension money is very well protected from anything but more than £50,000 of actual fraud at the pension platform level. If it was single employee fraud the pension firm would be expected to ensure that their client suffered no loss even if the amount was more than £50,000 so the potential risk here is if the loss is so big that the firm doesn't have the resources to do that.

berbatov10

If the funds you are looking for are on Fidelity you cane get the first year fees paid and cashback via quidco

JohnnyJet

berbatov10 wrote: »

If the funds you are looking for are on Fidelity you cane get the first year fees paid and cashback via quidco

Thanks, I saw your other thread on this. Is that offer through the Fidelity site or is it available by using Cavendish as the broker?

JohnnyJet

Thanks Jamesd, I understand now.

Has anyone got any experience using these brokers? How user friendly are they?

berbatov10

Johnny sign up for a quidco account (cashback website) and fidelity is listed on there. Its £82 for SIPP and £100 for an ISA (or vice versa)

greenglide

I see £83.33 for the SIPP and £110 for the ISA

berbatov10

even better then!!

JohnnyJet

I'm not planning on investing the £10,000 minimum to get the cash back though.

nxdmsandkaskdjaqd

jamesd wrote: »

The FSCS protection for investments is £50,000 for the money with each firm. In the case of a pension place like those you're naming, the money is normally held in funds operated by different firms because funds are available from many different firms and it is unlikely to be best to use only the funds of one firm. So you'd get £50,000 of protection each with say Fidelity, Jupiter and so on. You'd also get the £50,000 protection for any money held in cash with the platform, whether that's Best Invest or whichever of the Cavendish sold products you use.

That's interesting, So to keep your investments as safe as possible, invest only up to £50,000 in each fund. So if you had £500,000 to invest you would need to apply this across 10 different fund houses. Do I have this correct?

jamesd

Yes, if you wanted that protection. But remember that the big deal for this protection is fraud and such, not routine protection. For the routine protection all of the money is held in trust or similar arrangements and not affected by bankruptcy of the investment firm.