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 $80B 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 services offer easy financial protection for your assets, such as company stocks, RSUs, ETFs, insurance policies, and bank accounts. Other option is using secure digital vaults. Let's review these.

Protection through digital vaults

Digital vaults have a few very distinctive characteristics:

• they have a very high level of security

This is required because of the sensitive and confidential data stored in them. 

• they are online

The primary goal of the vaults is to be accessible from anywhere. 

• their access is strictly restricted to the owners

While they are accessible from anywhere, access to them is granted solely to the owners. 

Digital vaults are very similar to banks: they store confidential information, they are very secure, and access to them is granted to the owners but is almost impossible to be granted to other people, including family members.

While secure digital vaults serve their purpose of storing confidential records and making them accessible to the vault account owner from anywhere, there is one area where these vaults fall short. It is the area of so-called digital inheritance. Put simply, this means making the vault account records accessible to family members or other beneficiaries should anything happen to the account owner. 

The reason why vaults don’t serve that purpose well lies in their inherent design to restrict access to anyone but the account owner. That characteristic is at the heart of the very nature of vaults, and adding digital inheritance capability to such a system is not a trivial task.

Protection through digital inheritance 

Digital inheritance services enable people to securely 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. 

The most important part is that the digital inheritance services have a mechanism to detect unforeseen events. Upon detection, your loved ones are notified, both by email, post and phone, to ensure that they are aware of your assets and can identify and locate them.