Hoe many Platforms for a 7 figure portfolio?

[tug7]

For a 7 figure portfolio, which is a mix of ISA & non ISA, how many different concurrent share platforms does the membership here think is desirable? An all the eggs in one basket question.

In my mind this is linked to my pooled nominee question and thoughts of what happens if a platform has problems which could go on for months - or perhaps longer. I am not an active trader but that doesn't mean that I think that being locked out of my portfolio is a good idea.

Perhaps I should add that I have been using one platform but it has been suggested to me that I should rethink it.

[GrahamPlatt]

Five would be my thinking.
The late great Gengulphus once addressed this question and was a little more relaxed than I am.
Can’t find his post on the topic. Anyone?

[mc2fool]

More than one.

I wouldn't go mad with it, I'd say no more than three platforms. And see if you can find some logical split, esp. for reinvestment of dividends etc.

[GrahamPlatt]

More than one.

I wouldn't go mad with it, I'd say no more than three. And see if you can find some logical split, esp. for reinvestment of dividends etc.

I think that’s what Gengulphus said, three or four.

[mc2fool]

Five would be my thinking.
The late great Gengulphus once addressed this question and was a little more relaxed than I am.
Can’t find his post on the topic. Anyone?

IIRC I believe that was on TMF, although it may have been repeated here I guess.

[Dod101]

I agree with mc2fool and would say three, two as an absolute minimum. It is possible even for that sort of value that all is held in an ISA and/or a SIPP but if not I would consider at least some held as certificates and that removes the platform’ risk altogether.

Dod

[Lootman]

More than one.

I wouldn't go mad with it, I'd say no more than three platforms. And see if you can find some logical split, esp. for reinvestment of dividends etc.

Yes, I have three, and that is enough. If you have many accounts then almost by necessity you need to use some of the tiddlers, which surely have a higher risk profile.

But more generally I do not worry about platform risk, other than the risk of a temporary interruption in service.

[Darka]

2, one for ISA's and one for SIPPs.

[XFool]

...Has this not been discussed somewhere just recently on TLF?

[monabri]

In the event of a platform going under you would temporarily (1 year, say) lose all access & income. Can you live with that?

So, if you have two platforms..the risk is 50% temporary loss of access ..can you live with it?

Repeat until you CAN live with it.

(The same could be true of a 4,5,6, or even an 8 figure portfolio but at higher numbers there is a potential for capital loss)

[DrFfybes]

Depends how much you need access, and how long you can do without it. If you choose more mainsteam platforms then that reduces the risk, and also avoid using several platforms under the same umbrella (eg all the Halifax linked ones)

We use HL and ABRDN, one for SIPPs, one for everything else.

As we don't need access to either at the moment it is academic, but when we do start to take income from assets, we will take from ABRDN (looks wrong, I've forgotten which letters they aren't using this month).

On the offchance they go under and our assets are frozen, then we will have the option of the other.

If both get frozen then things will truly be in a mess, but hopefully NS&I will still be able to give us access to our Premium Bonds which will tide us over for 3 or 4 years.

Paul

[monabri]

we will take from ABRDN (looks wrong, I've forgotten which letters they aren't using this month).

Glad to see that it is not just me that has to look up which letters are omitted and in what order !


a b x r d x x n

[DrFfybes]

we will take from ABRDN (looks wrong, I've forgotten which letters they aren't using this month).

Glad to see that it is not just me that has to look up which letters are omitted and in what order !


a b x r d x x n

Ahh, it's easy now you've done that.

Or rather "No -E's -y"

Obviously not Shamen fans... E's aren't good, E's aren't good, etc.

[scrumpyjack]

One good one is enough IMO.

[wanderer]

I have 2 platforms for SIPPs and 2 for ISAs. My wife has 1 platform for her SIPP and 2 for ISAs. If I ever get to retirement age then some consolidation will be in order.

[Dod101]

One good one is enough IMO.

Indeed. But how do we define a ‘good one’?

Dod

[Dod101]

we will take from ABRDN (looks wrong, I've forgotten which letters they aren't using this month).

Glad to see that it is not just me that has to look up which letters are omitted and in what order !


a b x r d x x n

Simple: abrdn

Dod

[Itsallaguess]

Five would be my thinking.

The late great Gengulphus once addressed this question and was a little more relaxed than I am.

Can’t find his post on the topic.

Anyone?

Absolutely....

Put another way, if someone has a million and holds it all in a single account, then if they were to suffer the complete loss of that account and just get the FSCS compensation for it, their fortune would drop 91.5%, from £1m to £85k. At an assumed portfolio yield of 5%, that's an income fall from £50k to £4.25k - which could leave them struggling for enough income to live on, or even not just struggling, but with a hopelessly inadequate amount if they have too little income from other sources.

If they instead split it equally between two accounts, then if they were to suffer the complete loss of one of those accounts and just get the FSCS compensation for it, their fortune would drop 41.5%, from £1m to £585k. At the same assumed portfolio yield of 5%, that's an income fall from £50k to £29.25k - which is still quite a bit more than an average salary in post-tax terms due to definitely not paying National Insurance on it, and more so if the account is an ISA or SIPP. The loss of £20.75k of income will doubtless force them to tighten their belts quite a lot, but it won't reduce them to penury.

If they instead split it equally between three accounts, then if they were to suffer the complete loss of one of those accounts and just get the FSCS compensation for it, their fortune would drop about 24.8%, from £1m to about £751.7k. At the same assumed portfolio yield of 5%, that's an income fall from £50k to about £37.58k - which is still well over an average salary even in pre-tax terms. And that income drop is little worse (if worse at all) than what the pandemic has inflicted on many HYPers this year, and what the financial crisis did a bit over a decade ago.

Putting a great deal of effort into reducing the potential size of a loss further doesn't make sense if it has an extremely low chance of happening and one is accepting much higher chances of similar-size losses by being invested in the stockmarket at all! So in principle, if one has a million in one's HYP, I would regard an equal split between two or three accounts as perfectly adequate for reducing the potentially-devastating size of losses from massive fraud / broker failure, bearing in mind the extremely low chance of those risks actually materialising (*). For considerably larger sums, I might upgrade that by one, to three or four accounts, and circumstances can force the split between accounts not to be equal, which might upgrade it by a few more - e.g. if someone's wealth arrives very rapidly, e.g. from a Lottery win or major inheritance, it might take quite a lot of years to grow their tax-sheltered accounts to anything like the same size as their unsheltered accounts. But anything beyond about half a dozen accounts would IMHO almost certainly be complete overkill for managing massive fraud / broker failure risks even in pretty extreme circumstances.

Or much more briefly, reducing massive fraud / broker failure risks by splitting one's portfolio across multiple accounts is subject to a strong law of diminishing returns, with the first few extra accounts getting most of the benefits.

https://www.lemonfool.co.uk/viewtopic.php?f=15&t=26584&p=363299#p363299

It will probably be worth the OP reading the whole of the above linked thread...

Cheers,

Itsallaguess

[scrumpyjack]

One good one is enough IMO.

Indeed. But how do we define a ‘good one’?

Dod

Large, profitable, well capitalised. I've gone for Hargreaves Lansdown.

[Dod101]

Five would be my thinking.

The late great Gengulphus once addressed this question and was a little more relaxed than I am.

Can’t find his post on the topic.

Anyone?

Absolutely....

Put another way, if someone has a million and holds it all in a single account, then if they were to suffer the complete loss of that account and just get the FSCS compensation for it, their fortune would drop 91.5%, from £1m to £85k. At an assumed portfolio yield of 5%, that's an income fall from £50k to £4.25k - which could leave them struggling for enough income to live on, or even not just struggling, but with a hopelessly inadequate amount if they have too little income from other sources.

If they instead split it equally between two accounts, then if they were to suffer the complete loss of one of those accounts and just get the FSCS compensation for it, their fortune would drop 41.5%, from £1m to £585k. At the same assumed portfolio yield of 5%, that's an income fall from £50k to £29.25k - which is still quite a bit more than an average salary in post-tax terms due to definitely not paying National Insurance on it, and more so if the account is an ISA or SIPP. The loss of £20.75k of income will doubtless force them to tighten their belts quite a lot, but it won't reduce them to penury.

If they instead split it equally between three accounts, then if they were to suffer the complete loss of one of those accounts and just get the FSCS compensation for it, their fortune would drop about 24.8%, from £1m to about £751.7k. At the same assumed portfolio yield of 5%, that's an income fall from £50k to about £37.58k - which is still well over an average salary even in pre-tax terms. And that income drop is little worse (if worse at all) than what the pandemic has inflicted on many HYPers this year, and what the financial crisis did a bit over a decade ago.

Putting a great deal of effort into reducing the potential size of a loss further doesn't make sense if it has an extremely low chance of happening and one is accepting much higher chances of similar-size losses by being invested in the stockmarket at all! So in principle, if one has a million in one's HYP, I would regard an equal split between two or three accounts as perfectly adequate for reducing the potentially-devastating size of losses from massive fraud / broker failure, bearing in mind the extremely low chance of those risks actually materialising (*). For considerably larger sums, I might upgrade that by one, to three or four accounts, and circumstances can force the split between accounts not to be equal, which might upgrade it by a few more - e.g. if someone's wealth arrives very rapidly, e.g. from a Lottery win or major inheritance, it might take quite a lot of years to grow their tax-sheltered accounts to anything like the same size as their unsheltered accounts. But anything beyond about half a dozen accounts would IMHO almost certainly be complete overkill for managing massive fraud / broker failure risks even in pretty extreme circumstances.

Or much more briefly, reducing massive fraud / broker failure risks by splitting one's portfolio across multiple accounts is subject to a strong law of diminishing returns, with the first few extra accounts getting most of the benefits.

https://www.lemonfool.co.uk/viewtopic.php?f=15&t=26584&p=363299#p363299

It will probably be worth the OP reading the whole of the above linked thread...

Cheers,

Itsallaguess

Once again, IAAG many thanks for that. Gengulphus had a wonderfully clear mind to set out that as he did. I suppose we could all work it out but he has it all set out for us in an easily readable style.

Dod