Disadvantages and qualifications associated with "professional investor" status?
Posted: February 29th, 2024, 1:56 pm
In a recent thread here I was interested in buying a Vanguard US ETF.
I went as far as opening an account with Charles Schwab (US broker) ... only for my plans to be scuppered because Vanguard VUG has no KIID, meaning that the only European people who can be permitted to buy such a terrifying KIID-free product are "professional investors".
I also have the impression, reinforced by a remark or two from a contributor here who is a professional investor, that US ETFs are often cheaper, in terms of OGCs, etc. Poster hiriskpaul also explains here https://www.lemonfool.co.uk/viewtopic.php?p=649014#p649014 that there is also a fiscal benefit to paying US withholding tax and getting a UK tax credit in exchange. I now have a lot in GIAs, in particular following an inheritance, so all tax-related matters have started to acquire quite a bit of significance.
In fact my impression now is that you probably don't need to have a US broker to buy such US KIID-less products, just to have this "professional investor" status recognised by a broker in the UK.
At least a couple of regular contributors here have said that they have this status, and there may well be quite a few.
I'm somewhat wary about the lack of consumer protection that would mean ... but in practice what does this really mean? Obviously those contributors here who have the status are reconciled to that. I'm also assuming that if you get professional status on one investing platform that that probably means that you lose consumer protection for **all** platforms as far as the FCA or FSCS are concerned. On the subject of FSCS, does this undermine your ability to benefit from the £85k protection for cash accounts?
The other thing is qualification: what do platforms typically need to accept you having this status?
I went as far as opening an account with Charles Schwab (US broker) ... only for my plans to be scuppered because Vanguard VUG has no KIID, meaning that the only European people who can be permitted to buy such a terrifying KIID-free product are "professional investors".
I also have the impression, reinforced by a remark or two from a contributor here who is a professional investor, that US ETFs are often cheaper, in terms of OGCs, etc. Poster hiriskpaul also explains here https://www.lemonfool.co.uk/viewtopic.php?p=649014#p649014 that there is also a fiscal benefit to paying US withholding tax and getting a UK tax credit in exchange. I now have a lot in GIAs, in particular following an inheritance, so all tax-related matters have started to acquire quite a bit of significance.
In fact my impression now is that you probably don't need to have a US broker to buy such US KIID-less products, just to have this "professional investor" status recognised by a broker in the UK.
At least a couple of regular contributors here have said that they have this status, and there may well be quite a few.
I'm somewhat wary about the lack of consumer protection that would mean ... but in practice what does this really mean? Obviously those contributors here who have the status are reconciled to that. I'm also assuming that if you get professional status on one investing platform that that probably means that you lose consumer protection for **all** platforms as far as the FCA or FSCS are concerned. On the subject of FSCS, does this undermine your ability to benefit from the £85k protection for cash accounts?
The other thing is qualification: what do platforms typically need to accept you having this status?