I haven’t got a huge amount saved, but enough that I don’t want to loose lol. So my question is to those with bigger portfolios is, do you invest in just one provider such as IE, to get maximum long term compounding, or spread over maybe two or three providers, thus diluting compounding? I understand that we are protected upto £85000 per provider. I have a 20 year runway so still plenty of investment time. I am also unclear about IEs books and balances, so basically are they going to get bought out in the future like Freetrade, are they profitable, and what happens if there’s some kind of bank run like we saw in the US in 2023? Any thoughts regarding this? Thanks
I am not sure having multiple pots reduces compounding does it as long as the amount is the same?
Eg, let’s say you get 5% p/a. One pot of £100,000 = £5000.
Four pots of £25,000 generating 5% p/a is £1250. £1250 x 4 = £5000
So there is no difference in the returns. As for the protection above £85k that is a different matter but I guess it makes sense to spread if you’re near the threshold just for peace of mind. Bear in mind though that a lot of banks/providers come under the umbrella so the parent company might still be the same.
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Having 1 just makes managing it easier, but multiple can give you a little extra comfort e.g. if you trouble accessing or withdrawing from an account all money isn’t in one place.
I believe if IE or another provider goes bust your funds are held separately from the provider and will eventually be transferred to another provider for you.
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For me, if you are in cash ISAs, it can make sense to spread it around (if >85k), as your risk is with that one institution.
If you are in diversified funds, the risk is spread anyway.
As indicated, you take ‘platform risk’ if they fold, but you get access to your money the other side.
Personally, I wouldn’t incur the costs of other platforms for spurious peace of mind, other than some cash elsewhere for the interim, in the unlikely event of a platform failure.
Also as indicated, your returns compound as long you leave them invested and reinvest any pay-outs, doesn’t really matter how many platforms you use - unless you choose some higher-cost platforms and give them some of your returns instead.
I do use other platforms, but that is for a fully-functional SIPP and some fixed-term investments- things IE is not so good at or doesn’t provide.
Freetrade is an issue for shareholders, but investors using the platform are not affected. It does illustrate: generally the biggest risk to capital preservation is what you invest in, rather than the platform used.
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@Gandalf
Morning 
,
This article from the excellent Monevator blog addresses quite nicely as to why someone might want to use more than one provider / platform, linking accounts of members of the same family for instance so one can take care of the investments of/for an elderly/ill family member for instance or the availability of Junior ISA’s being only 2 reasons.
With regards to IE and profitability:
They file accounts with Companies House and these are publicly accessible - have a looksee:
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Thanks for all the insightful answers and I will just stick with IE for the foreseeable future. It’s not as though I have a big portfolio anyway. So really isn’t a problem.
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