Investment platform diversification

[derenner]

Hello stachers. Long time follower first time poster.

As a card carrying member of the stache clan in the UK I have the majority of liquid net worth in Vanguard LifeStrategy funds invested via Vanguard's own platform offering (vanguardinvestor.co.uk).

I am wondering how much time others have put to diversifying the platforms with which they invest, for example, spreading their money invested across different platforms, for example I am considering opening a second investment account with Fidelity UK.

My main reason for diversification is redundancy of market access and security, but I am interested to know how others have thought about this.

For context, these are all for investments outside of the usual tax sheltered offerings in the UK (of which I have maxed out annually).

[reeshau]

There was a similar discussion in a recent thread, although US-focused:

https://forum.mrmoneymustache.com/investor-alley/entire-nest-egg-in-one-financial-institution-all-eggs-one-basket/

[RWD]

Diversifying across platforms is unnecessary.
https://jlcollinsnh.com/2012/09/07/stocks-part-x-what-if-vanguard-gets-nuked/
https://jlcollinsnh.com/2020/04/22/investing-with-vanguard-for-europeans-2020-update/

[YttriumNitrate]

Diversifying across platforms is unnecessary.

I would change that to "diversifying across platforms is unnecessary so long as your platform is sufficiently large."

Vanguard's about as big as they get, so I wouldn't be concerned about having everything in there.

[Retire-Canada]

My main reason for diversification is redundancy of market access and security, but I am interested to know how others have thought about this.

I have all my investments with one brokerage firm in Canada. I do have ~6 months in cash at my bank and another ~6 months worth of spending as a line of credit at my bank. If there were to be a problem with my brokerage firm I figure that buys me enough time to see it resolved.

[maizefolk]

My main reason for diversification is redundancy of market access and security, but I am interested to know how others have thought about this.

I have all my investments with one brokerage firm in Canada. I do have ~6 months in cash at my bank and another ~6 months worth of spending as a line of credit at my bank. If there were to be a problem with my brokerage firm I figure that buys me enough time to see it resolved.

To echo what RC said (and what was discussed in the other thread reeshau linked to), there is an argument to be made that you might end up locked out of your accounts at a single institution for a period of time. Much less of an argument to be made that you might actually lose your investments (see the links RWD posted).

My non retirement investments are with a single company. My bank accounts are with two others. I figure that's plenty of insurance against the risk I might temporary lose access to any one account and find myself short of cash.

[derenner]

Thanks for the reply all.

I think the refinement about access to capital is a useful way to think about things additionally. I spent some time thinking about that, and while I'm in the accumulation phase of life it shouldn't be a huge deal to be locked out of an individual account. From a security perspective, I still like having some diversification so I will be setting up a second investment account.

Once into the draw down phase of life one thing I've realised is that it is useful to retain my UK "offset mortgage", as that becomes a very quick line of credit should I need capital and for some reason not be able to withdraw from my investment account.