Jan 20, 2016
If you have pensions or investments, what if your provider fails? Do you lose everything? What protections are there in place? In this week’s show, I’ll be looking at what happens when it all goes wrong.
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Today’s financial landscape is more complex than it has ever been. We’ve got platforms, wrappers, funds, trusts, and lots of different levels of investment. You might hold some shares within a fund, within an ISA held on a platform. That’s four levels of custodianship!
But what happens if one or other of those providers goes belly up? While unlikely, it cannot be discounted, as the financial crisis of 2007/8/9 taught us. Prior to that, this ‘what happens if’ question was largely theoretical. But then people started losing money in Icelandic banks, and stuff got real.
So we need to understand what protections are in place for investors - UK investors of course - and look at some principles for making sure you’re as protected as possible, wherever you live.
I think that as with all things to do with worst-case scenarios, you should be knowledgable, but not let any of it drive your actions too much. It can be pretty hairy, handing over your hard-earned dosh to someone else to look after, but we do live in a developed part of the world with various protections in place. You must exercise caution and do your research, and then, to a certain extent, trust the system to look after you, as it has for countless people before you.
If you’re concerned about anything - either email me or leave a comment below.