Investor Protection

Diversifying Provider Risk

1

After finding a reputable broker to deal with, you still need to be aware that your investments are only covered up to £85,000. Much like with investment risk, the best thing to do with provider risk is to diversify.

2

In order to diversify broker risk, you just need to open multiple broker accounts with multiple providers. This can makes investing a bit more complicated but it is worthwhile if you can fully protect your money.

3

Investing with multiple brokers can marginally increase the cost of investing as investors need to pay an annual custody fee to their broker – it’s a fee investors pay to brokers for looking after their investments.

4

With that in mind, it’s important to open new broker accounts at the right time, perhaps when your investments are close to £85,000 in value. Though, It’s noteable that custody fees are usually affordable.

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