Investor Protection

Diversifying Provider Risk

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. 

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. 

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. 

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 notable that custody fees are usually affordable. 

Copyright © 2021 Methodology

That's wrong - try again!