Maximum amount to put in any one Investment Platforms

2021

I understand that the Financial Services Compensation Scheme (FSCS) protects investors for up to £85,000.
However, many investment platforms talk about having portfolios with them which go well above £85,000. 
If the FSCS can only compensate for £85,000, should investors be investing more than £85,000 in any one investment platform?
Thanks.

green_man

There is a distinction between a trading platform and a fund manager.   If you have say £200k with iWeb invested across 10 different funds you haven’t actually got the money with iWeb you have it with 10 different fund managers. So really it’s the fund managers you might want to be carful with.  

 The only aspect that could be a concern is if someone from the platform provider commits fraud and in fact your funds were never invested where you expected. What level of risk this is with a well know platform I don’t know, but it will be minuscule.

Linton

Some people on this forum have nX £100K invested in a single platform without being worried.  The circumstances in which FSCS compensation would apply are exceedingly unlikely provided you use mainstream platforms and mainstream investments - the normal risks of investing at all are far higher and are not covered by the FSCS.

Albermarle

If you read through the forum you will see this same question asked on almost a daily basis .
https://forums.moneysavingexpert.com/discussion/comment/78165458#Comment_78165458

dunstonh

If the FSCS can only compensate for £85,000, should investors be investing more than £85,000 in any one investment platform?

Why would you restrict yourself to £85k unless you are going with some niche/obscure/unprofitable platform?

JamesRobinson48

I choose to divide my (substantial) funds between several platforms. The way I see it, if one platform's system is unavailable for any reason at a time when I wish to invest new money or urgently sell S&S, I can always use another platform instead.  Also, if one platform exhibits signs of diminished customer service levels, or makes very unjustified price increases, I could more readily transfer my investments on it to another platform. Finally, I'm reluctant to allow any one platform to have sight of all of my S&S holdings.  But of course, the downside is having to pay several sets of platform fees - which however for some investors might be insignificant in the greater scheme of things.

underground99

JamesRobinson48 said:

I choose to divide my (substantial) funds between several platforms. The way I see it, if one platform's system is unavailable for any reason at a time when I wish to invest new money or urgently sell S&S, I can always use another platform instead. 

Makes sense;  if you might want to access an S&S ISA or unwrapped investments for some reason, you're very unlikely to have two platforms have issues at the same time. Less relevant if the 'substantial' funds are investing in a pension where you can't touch it for decades anyway, so I have most of my pension in one place.

Also, if one platform exhibits signs of diminished customer service levels, or makes very unjustified price increases, I could more readily transfer my investments on it to another platform. 

It's really easy to open a SIPP, ISA or unwrapped account at a moment's notice online. You don't need any 'history' with them to make it more efficient. But at least if you had been using them for a while you would have some practical experience of whether the platform was any good, rather than just making a knee-jerk reaction to move to the cheapest one you could find.

But of course, the downside is having to pay several sets of platform fees - which however for some investors might be insignificant in the greater scheme of things.

Some platforms offer fee breaks or are more efficient per pound invested, the more money you have with them, and it's easier to rebalance to a target allocation if most of the money is in the same big pot. So there are some tradeoffs in splitting it.

 Finally, I'm reluctant to allow any one platform to have sight of all of my S&S holdings.  

Do you fear they will 'steal your ideas' on how to build a portfolio?
Or send people round to protest outside your house if they see that you are holding some companies they don't like?

Seems less merit in this reason than your others

Albermarle

Do you fear they will 'steal your ideas' on how to build a portfolio?
Or send people round to protest outside your house if they see that you are holding some companies they don't like?

Maybe it is more about not letting one provider see how well off you are ? In case they target you as a HNW client and bombard you with offers of advice etc .?

ColdIron

This question is asked every few days and the answers are always the same. Search the forum for many threads. You could look at this thread started yesterday and dunstonh's reply

https://forums.moneysavingexpert.com/discussion/comment/78165160/#Comment_78165160

dunstonh

Makes sense;  if you might want to access an S&S ISA or unwrapped investments for some reason, you're very unlikely to have two platforms have issues at the same time.

Not necessarily.  Over 70% of the platforms are powered by just three software providers.  The front ends are controlled and coded by the platforms but the backend all uses the same software.      One in particular dominates.

So, it the objective is to avoid platforms having issues at the same time, you would need to make sure they are on different software providers and not on the same one.

2021

How do I respond to individual replies?

Thank-you for your reply and for the really helpful distinction between a trading platform and a fund manager.
Does this, then, mean that if Person A has 3 different Vanguard LifeStrategy funds that none of these 3 funds combined should go above £85,000 or that EACH of these funds can contain up to £85,000?

The funds I am talking about are Vanguard LifeStrategy 40% Equity, Vanguard LifeStrategy 60% Equity and Vanguard
LifeStrategy 80% Equity. The Fund company is Vanguard and the name of the company is Vanguard Investments UK, Limited.

Thank-you.