Investing with multiple brokers?

D

Dmac47

Registered User
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6
Hello guys,

Do you think it's worth having your investments spread out across 2 brokers in order to mitigate risk of a broker going bust/fraud?

Thanks
 
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- Even if broker goes bust holdings are in trust, so it should not be an issue
- Even if you use two brokers, the changes are that they use the same nominees
- If there is fraud all bets are off
 
If you're trying to mitigate your risk in relation to a broker going bust, surely you'd allocate to more than one broker?

In any event, I don't believe it's a worthwhile exercise; your assets are segregated away from the broker's. At most, I'd ensure that I was dealing with a firm where victims of a sizeable fraud would be made whole again, no questions asked.
 
I use 2 different online brokers but not for risk of one going bust. Its just that I opened a second one because it offered me european investments that I could not buy with the first US broker. I think most brokerage accounts are insured now like deposit accounts are since the 2008 crash. The Cork broker that went bust was in 2006 before the widespread guarantee of brokerage accounts by governments, remember in 2007 there was also the northern rock collapse where the UK government stepped in to backstop the bank.
 
Logo said:
Google W&R Morrogh, Stockbrokers, Cork. In 2006 they "went into receivership with a total loss of an estimated €7,000,000." Also see http://www.askaboutmoney.com/thread...f-my-losses-in-morroughs.188451/#post-1395366
Maybe the share certificate route is more secure?
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As I understand it, there was fraud involved. Also, €7m is a pittance in the context of a larger institution. An advert for dealing with the UBSs of this world rather than Billy the Broker from down the road. Share certs are dangerous.
 
Dmac47 said:
Do you think it's worth having your investments spread out across 2 brokers in order to mitigate risk of a broker going bust/fraud?
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I think the original poster suggested two brokers in case of a broker going bust or a fraud.
Gordon Gekko said:
Also, €7m is a pittance in the context of a larger institution.
Click to expand...
I was on the same way of thinking until a friend had stocks tied up for a few years and share prices plummeted (even today he'll make a paper loss). Meanwhile he still has a €5,000 loss.
Gordon Gekko said:
Share certs are dangerous
Click to expand...
Can you explain why?
 
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Thanks for all the input guys.

I am currently with a reasonably new broker, which makes me feel a bit uneasy.
 
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This is where cheapest isn't always best. Look for a well established broker with reasonable fees. Remember, if they are as cheap as chips, they need huge volumes of transactions to stay in business. It's a very competitive space, so they are at greater risk of going bust. If it does, who is the regulator, where is it based?


Steven
www.bluewaterfp.ie
 
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