Platform Concentration Risk ?
Posted: January 16th, 2020, 5:21 pm
Is there a risk in being too consolidated onto a single platform/distributor?
We have about 60% of our ISA savings on one of the big distributor platforms (2 accounts between myself and my wife). I am comfortable that the savings are well diversified between fund providers, funds, geographies, assets types etc. But I am becoming a bit concerned that we may have an exposure to the Platform itself. Few of the funds we are invested in are from the Platform's own Provider though.
To make matters worse, my largest occupational pension wound-up a few years ago and my pension was transferred to the same Distributor Platform. I also have a SIPP which I opened a few years ago with the same Platform. The end result is that 50% of my Pension assets are now with the same Platform as well.
Am I exposed to the Platform going bust ?
I guess that there are some people who will argue that diversification is essential at every level and would perhaps advise that I spread out over a couple more Platforms. There are consequences to diversification though in that fees are likely to be higher and there will be more overhead in Platform management and use (security, familiarity, avoiding mistakes etc) and possibly an increased risk of fraud as a result – I cant remember all of those passwords!
What should I do?
We have about 60% of our ISA savings on one of the big distributor platforms (2 accounts between myself and my wife). I am comfortable that the savings are well diversified between fund providers, funds, geographies, assets types etc. But I am becoming a bit concerned that we may have an exposure to the Platform itself. Few of the funds we are invested in are from the Platform's own Provider though.
To make matters worse, my largest occupational pension wound-up a few years ago and my pension was transferred to the same Distributor Platform. I also have a SIPP which I opened a few years ago with the same Platform. The end result is that 50% of my Pension assets are now with the same Platform as well.
Am I exposed to the Platform going bust ?
I guess that there are some people who will argue that diversification is essential at every level and would perhaps advise that I spread out over a couple more Platforms. There are consequences to diversification though in that fees are likely to be higher and there will be more overhead in Platform management and use (security, familiarity, avoiding mistakes etc) and possibly an increased risk of fraud as a result – I cant remember all of those passwords!
What should I do?