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Why your stocks and investment portfolio need financial protection

October 6, 2020
Financial protection for stocks and investment portfolio need

The democratization of online trading.

Online trading platforms democratized investment by providing access to it for everyone. In the past, this was primarily a privilege of professional brokers. These days, many people with various professional backgrounds and jobs are investing in online stocks and have their own stock portfolios. Some do it as a hobby, while others include it as a strong part of their passive income, viewing their investment portfolios as a means to achieve financial independence or as part of their retirement planning.

This big shift is supported by numerous online trading platforms, which pop up like mushrooms. Even fintech companies operating in other domains such as banking services are starting to enable their customers to invest in stocks and commodities.

Despite the mixed opinions, I think this trend is very positive. No, it’s not black and white, but let’s face it:

  • It allows the average person who is not a professional broker to potentially profit from the stock markets – and has made the process very easy for users!
  • It is a source of fresh capital for many companies on the stock exchanges, as now many more people can buy stocks and invest in these companies.

However, there is one important risk related to this trend.


Does your mother know about your stocks and portfolio?

With credit to ABBA back in 1979, we ask the same question as in their song. Jokes aside, there is a lot of stuff behind this question, and this “stuff” is quite serious.

In many cases, even the partners of people who invest are not entirely familiar with the investment portfolios and stocks they own. And usually family members other than their partner, such as children, siblings, and parents, are largely unaware of the existence of these investment portfolios.


Wait! Then what will happen to my stocks if something happens to me?

Exactly. Removing the lipstick from the pig, the blunt answer is very simple – and scary: your stocks and investment portfolios will stay in someone else’s pocket. Or, to be more precise, they’ll stay in the asset management companies which operate with them.
You can’t help but ask: how is that possible? The answer is simple.

Asset management companies don’t have the legal obligation to notify your family members if something happens to you. Yes, you heard correctly. And that holds true even if they have the contact details of your family members.

And yes, you understood it correctly: that means that your company stocks and investment portfolios will just stay in these asset management companies.

Wait, it can’t be so bad!

Ok, in some countries, there is a legal requirement for institutions holding your assets to classify them as unclaimed and to return them to the country. Often the deadlines for this are 10-15 years. And even after this period, your money is not returned to your family members.

It is transferred from the companies, which used it free of charge for 15 years, to the government, which will use it free of charge most probably indefinitely – unless someone from your family starts the official procedure to track your unclaimed assets after 15 years, when they are returned to the government. So yes, there is an “alternative.” Your family members can wait 15 years and eventually find your assets in government funds managing unclaimed assets.

What a great alternative. I’m sure you feel much better now … me too!


Is this problem related only to company stocks?

Definitely not. This holds true for almost any type of asset – bank accounts, life insurances, etc. It’s a bit easier for family members to track some of these assets (does your mother know that your bank account is in Bank X?), but stocks are really complicated to track, especially for elderly parents, young children, or simply family members who are not financially proficient.


How big is the problem?

Quite big. Actually, enormous. (Should I say HUGE?) Currently, so-called unclaimed assets have reached $100B in the USA alone, with an alarming increase of $5B per year.

In the UK, they are £77B. While there are no global statistics, from these two numbers, we can estimate that we are talking about a trillion-dollar problem – which is growing rapidly every year.


These are just statistics; how can this affect my family?

While the statistics look horrible, the personal stories behind them are even worse. Apart from the obvious grief and stress of losing a loved one, being unaware of the person’s assets or not knowing how to identify and locate them often results in long and desperate searches. This has a significant impact on the quality of life of the affected families – apart from the obvious unfairness of the situation.


So how can I implement financial protection for my stocks and investment portfolio?

The good news is that there is a way to implement financial protection for your stocks and investment portfolio. Even better news is that you can do it easily and cheaply. The digital inheritance and asset protection service DGLegacy offers easy financial protection for your assets, such as company stocks, RSUs, ETFs, insurance policies, and bank accounts.
DGLegacy enables people to catalog their assets in a fully encrypted environment with bank-level security, to designate their loved ones as beneficiaries, and to indicate whether the assigned beneficiaries should be notified at the moment of designation or only if something happens to the user.

DGLegacy has a mechanism to detect unforeseen events. It has a custom-engineered Heartbeat protocol which detects whether anything unforeseen has happened to you. Upon detection, your loved ones are notified, both by email and by phone, to ensure that they are aware of your assets and can identify and locate them.


Is that all?

No. DGLegacy offers much more support for your loved ones. This includes legal support for your family members to guide and inform them in the process of identifying and locating your assets, legal support to claim ownership of the assets, asset insurance, and various other asset and financial protection capabilities.

The goal is to enable people to implement financial protection for their assets and ensure their families are financially secure. If you want to learn more about how you can protect your assets and your loved ones with DGLegacy, and use the service free of charge, check here.

Peter Minev
Co-founder of DGLegacy®, the digital legacy planning and inheritance app that protects your assets and secures your family when it matters the most. Author of the book Building TECH. Learn more: https://topstrengthener.com/about-the-book/