How Concerned Should I Be??

coyrls

_pete_ said:

dunstonh said:

davethebb said:

Thanks everyone for your responses. Although i do have an emergency fund the point about IT issue etc is a vey valid one so I will perhaps look to move some over to a different platform. Again, many thanks.

What if you spread across three platforms and all three platforms are using the same software?   They would all suffer the same problems at the same time.

I agree with this.  I naively spread my pot between IWeb and A J Bell to mitigate IT risk.  Turns out they have the same back office.

I think that's the case for the iWeb SIPP, which is administered by AJ Bell, but not for other iWeb accounts.  Halifax share dealing and iWeb are however different badges on the same product.

bostonerimus

If you are on a mainstream regulated platform then don't worry about having all your investments with them. What you must do is to make sure your money is spread around different asset classes so that you have enough cash to ride out the bad times, enough stocks to "make hay" in the good times and that the allocation will cover your income needs.

dunstonh

Eco_Miser said:

davethebb said:

I am due to be redundant very soon and financially I should be OK (£900k in savings and a SIPP). However all my investments are with Interactive Investor (in various GIA, ISA's and my SIPP). What are the risks in having all my money within the II umbrella and should I be splitting it up, say with HL or similar?

In the very unlikely event that the platform goes into administration, the administrators fees can be taken from the client accounts in proportion to their value. The FSCS covers this up to £85k per person (if eligible). With upwards of £800k there is a chance that the share of fees will exceed the FSCS cover.  It's a remote risk, but easily mitigated by splitting between providers.

It's different with investments and precedence exists.    The cost of the administrator's fees is taken from the £85k FSCS protection per person pro-rata.   Not the consumer's investments. Only if the total cost exceeds the 85k would there be the potential to access the funds.

If the platform is heavy in illiquid assets, the administrator's fees could end up being heavy.   If the platform is light in illiquid assets, the fees will be much reduced.   A platform that is heavy in mainstream unit linked funds with little or no illiquid assets would be easily sold without loss to the investors.   

Platforms with low operating capital and loss making and/or with higher levels of illiquid or niche investments should be avoided full stop.   Spreading around platforms doesn't really help if you pick multiple platforms with poor financials.     Some people worry about 0.0x% a year in fees but that could be the difference between picking a cash heavy, profitable platform running mature software that is mostly investing in liquid assets and one that is not.


 

LHW99

dunstonh said:

Some people worry about 0.0x% a year in fees but that could be the difference between picking a cash heavy, profitable platform running mature software that is mostly investing in liquid assets and one that is not.


 

Can you expand on that a little more, as I had assumed that a platform didn't invest as such, rather that it was the platform's customers that invested through the platform. So do you mean that some platforms would have a high proportion of customers with illiquid assets, and it is those that should (perhaps) be avoided? If so, how can you know what assets a platform holds?

dunstonh

Can you expand on that a little more, as I had assumed that a platform didn't invest as such, rather that it was the platform's customers that invested through the platform. 

Correct.  However, the platform needs to be solvent to continue trading.   Some platforms have never been profitable and are eating cash.   How long can than last before the backers say enough is enough.

So do you mean that some platforms would have a high proportion of customers with illiquid assets, and it is those that should (perhaps) be avoided? If so, how can you know what assets a platform holds?

That is a secondary issue to the platforms own finances.   If you look at the history of platforms that have had financial issues. those that allowed themselves to be homes for the less savoury investments (often illiquid assets that cannot be traded).    it also means that if that platform fails, the administrator is going to be around a very long time incurring costs over a longer period. No buyer will be interested and wind down will have to take place.      Whereas a platform wth liquid assets will find a buyer easily (long before an administrator is needed or any hint of financial issues).  Even if administration was an outcome, liquid assets can be moved very easily and cheaply.

I don't know what sort of data is published on the DIY platform side.  it's probably there but not on easy display or an easy read.

dunstonh

Following on...
There has just been a court ruling against an execution only platform that made it responsible for the selection of unregulated investments that it did not recommend.  An unregulated third party did and used the platform to facilitate it.

https://www.ftadviser.com/opinion/2021/04/12/carey-ruling-goes-after-unregulated-relationships/?utm_campaign=FTAdviser news&utm_source=emailCampaign&utm_medium=email&utm_content=

LHW99

dunstonh said:

Following on...
There has just been a court ruling against an execution only platform that made it responsible for the selection of unregulated investments that it did not recommend.  An unregulated third party did and used the platform to facilitate it.

https://www.ftadviser.com/opinion/2021/04/12/carey-ruling-goes-after-unregulated-relationships/?utm_campaign=FTAdviser news&utm_source=emailCampaign&utm_medium=email&utm_content=

I wonder if there would be any ramifications from this for the "best buy" lists put out by a number of SIPP platforms? Probably not, as those are not put out as "advice", neverthess it could make the compilers of such lists think a little more deeply than perhaps they have in the past.

dunstonh

LHW99 said:

dunstonh said:

Following on...
There has just been a court ruling against an execution only platform that made it responsible for the selection of unregulated investments that it did not recommend.  An unregulated third party did and used the platform to facilitate it.

https://www.ftadviser.com/opinion/2021/04/12/carey-ruling-goes-after-unregulated-relationships/?utm_campaign=FTAdviser news&utm_source=emailCampaign&utm_medium=email&utm_content=

I wonder if there would be any ramifications from this for the "best buy" lists put out by a number of SIPP platforms? Probably not, as those are not put out as "advice", neverthess it could make the compilers of such lists think a little more deeply than perhaps they have in the past.

Although this platform wasn't giving advice either.

Thrugelmir

LHW99 said:

dunstonh said:

Following on...
There has just been a court ruling against an execution only platform that made it responsible for the selection of unregulated investments that it did not recommend.  An unregulated third party did and used the platform to facilitate it.

https://www.ftadviser.com/opinion/2021/04/12/carey-ruling-goes-after-unregulated-relationships/?utm_campaign=FTAdviser news&utm_source=emailCampaign&utm_medium=email&utm_content=

I wonder if there would be any ramifications from this for the "best buy" lists put out by a number of SIPP platforms? Probably not, as those are not put out as "advice", neverthess it could make the compilers of such lists think a little more deeply than perhaps they have in the past.

I've never seen a "best buy" list.  Always been the case that investors should perform their own due diligence before parting with their money.  No one wants to pay for advice, or do their own research legwork. By default fund investing far too often ends up as simply a case of herd investing. What's done well over X historic period being the most popular route. As the available choice is bewildering.