Invest in just one fund!!

stphnstevey

Alexland wrote: »

I agree many people are probably carrying this risk without even considering it. On these forums we regularly hear of people with large amounts of money invested with a single platform and/or fund manager and make them aware of the low probability / high impact risk they are taking for what is probably a marginal fee saving relative to the value invested.

For a few hundred quid a year extra I run two similarly sized pensions (they are both very low cost anyway) and once I get to your valuation level I would have a third pension going. It would be impractical to stick strictly to the £50k compensation limit. We also keep my wife's two pensions elsewhere and our ISAs elsewhere. Collectively it gives us quite a spread across the investment industry.

Alex.

So £600k over 3 platforms. Are you really that much better off? You will be compensated upto £150k instead of £50k, but still could potential lose £450k (opposed to £550k)

As mentioned, over £200k it becomes impractical to realistically manage 4+ pension accounts, let alone any ISA, LISA, Trading and VCT accounts as well. Along with 4+X the cost

Why the compensation can't just be a maximum amount over any number of platforms

stphnstevey

If the fund was a tracker covering a magnitude of companies shares, that might still give some diversity without any admin and trading cost burden. Actively managed funds would have cherry picked a much smaller number of companies, which substantially decreases your diversity. However you may feel the performance is worth that, but you may also be able to predict the future then!

Alexland

stphnstevey wrote: »

So £600k over 3 platforms. Are you really that much better off? You will be compensated upto £150k instead of £50k, but still could potential lose £450k (opposed to £550k)

Sure if you get a failure across all three unrelated providers which is much more unlikely - the key point is that you have flattened the risk profile. By having 3 providers it's actually more likely the risk will occur but the impact would be manageable, frustrating but not devastating.

stphnstevey wrote: »

As mentioned, over £200k it becomes impractical to realistically manage 4+ pension accounts, let alone any ISA, LISA, Trading and VCT accounts as well. Along with 4+X the cost

If you have a few million you should be able to afford a few extra account fees especially if some of them have no activity on platforms such as the XO SIPP or iWeb ISA that have no ongoing charges (ok there is a charge on the XO SIPP but it's refunded).

Alex

firestone

Surely the £50,000 limit for compensation is to cover the unlikely event of fraud but if your fund platform was to run into business problems such as not having the money to run the business your invested money would be safe as its in a nominee account with each fund manager and your cash would be with a bank? (he says fingers crossed)

jamei305

I'd far rather have £590K with iWeb which is wholly owned by Lloyds Bank than say, split across 6 platforms one of which might be a smaller company with no big backers that carries a risk of doing a Beaufort.

grey_gym_sock

jamei305 wrote: »

I'd far rather have £590K with iWeb which is wholly owned by Lloyds Bank than say, split across 6 platforms one of which might be a smaller company with no big backers that carries a risk of doing a Beaufort.

yes, i think how robust the platform(s) you use are is at least as important as how many.

whether a platform has a big backer is 1 factor.

also, just how big it is. 1 issue with beaufort is that the costs for sorting out the assets held may be a significant percentage of the value of those assets, because there are relatively few assets with them, compared to bigger platforms.

another issue is whether a platform is mostly making money from being a platform, or that is just a sideline from other activities they hope will be more profitable. again, for beaufort, it seemed to be a sideline from other activities (which, as it happened, may have been very dodgy activities, which is worse, but this would be an issue even if they weren't).

and just: is a platform making or losing money?

my thinking is to decide whether platforms appear robust. and if they don't, either avoid them or strictly stay under £50k with them. and if they do appear robust, be prepared to go a long way over £50k, but if you are doing, use at least more 1 than platform - but never more than a small number.

bobhopeful

Alexland wrote: »

Seriously you want £590k on a single platform /fund manager when the FSCS compensation limit will be £50k?

I don't understand why you are concerned that the fund manager could have problems during the 2-3 months but are relaxed about the long term platform risk. Personally I would split the SIPP across 2-3 platforms /fund managers and the ISA with another unrelated platform /fund manager. Sure it might cost a bit more in fees but at least the potential loss would be manageable.

I prefer one fund per account where possible as it makes things simpler in my lifetime (and hopefully afterwards).

Alex.

Is that right - so if you have a SIPP on one platform e.g. A J Bell you can open another SIPP account on another platform e.g. iWeb and can transfer 50% of the funds in specie from one platform to another, and have the SIPP investments split between 2 platforms?

AnotherJoe

bobhopeful wrote: »

Is that right - so if you have a SIPP on one platform e.g. A J Bell you can open another SIPP account on another platform e.g. iWeb and can transfer 50% of the funds in specie from one platform to another, and have the SIPP investments split between 2 platforms?

Yes that's right

Alexland

Although remember that AJ Bell do the administration of the Halifax / iWeb SIPPs so you would be better splitting your money across unrelated products.

stphnstevey

Alexland wrote: »

Although remember that AJ Bell do the administration of the Halifax / iWeb SIPPs so you would be better splitting your money across unrelated products.

So which companies compensation scheme does the SIPP fall?