Security
Is investing with Empodering safe?
- Hello Albert. I have doubts about the safety of my financial investments. Can I ask you a few questions?
- Go ahead, Tina!
- I have received an email from Empodering with my Personalized Investment Plan, after having filled out their questionnaire on investor profile.
- Seems correct. What’s wrong?
- Well, I’ve wondered whether Empodering is safe or not? Could I lose my money?
- It is good to ask yourself these questions before signing any type of contract. But what exactly do you mean by “losing your money”?
- Well, if the bank keeping my financial assets goes bankrupt. This topic matters to me because my grandfather lost his savings with the Spanish preferred stocks scandal.
- Now I understand you better! What matters to you is not so much whether the markets go up or down, but the reliability of the custodian bank of your investments, right?
- I care about everything… but yes, let’s say so.
- It’s good to be precise! We have already analyzed the risks related to the markets in how much will I earn by with Multi-Strategy?. So let’s focus on the reliability of the bank, okay?
- Okay. Go ahead.
- First, there are two different things: one is that you don’t want your bank to go bust…
- Exactly.
- … and the other is that if your bank goes bankrupt, someone will compensate you for your losses.
- Yes, of course, but the first one is more important than the second.
- I agree! But let me start with the second one: your Personalized Investment Plan recommends you opening a securities account at Inversis, right?
- Yes, but I have no idea what Inversis is.
- Inversis is a regulated Spanish bank, and therefore is subject to the Investment Guarantee Fund, which covers you up to 100.000 euros in the event that your bank goes bankrupt. All Spanish banks are the same.
- Yes, I had already heard about that. But what really matters to me is that my bank doesn’t go bankrupt. And since I don’t know Inversis, I feel uncomfortable about it.
- I understand you! Inversis only provides services to other financial entities, not to end customers. And for that it is not known by the general public.
- And why does Empodering tell me that I will open an account wtih Inversis, if I can’t do it, according to you?
- Because you will open your Inversis account through Empodering, the financial entity that is an Inversis client.
- Okay. But I still don’t know Inversis. Is it a safe bank? How does it compare to other banks I know?
- Inversis is part of the Banca March group. As of mid-2022, Banca March has an A2 credit rating from Moody’s, which is the highest among all Spanish banks, tied with three others.
- What is a credit score? Who is Moody’s? And what does A2 mean, is it good or bad?
- The credit rating is like an “exam grade” given by a prestigious company in the sector, such as Moody’s. The better the credit rating, the less likely the bank will fail.
- And since the Banca March group has a high credit rating, it is unlikely that I will lose my money with Inversis, right?
- You got it!
- … and Empodering?
- How could Empodering make you lose your money?
- Well, in the same way that my grandfather lost his savings with the Spanish preferred stocks scandal, when the savings banks went bankrupt, right?
- Well no! You will have an account with Inversis, not with Empodering.
- Oh right? How does Empodering do it, then?
- Empodering advises you and facilitates your investment. But who buys, sells, and transfers money is you and only you.
- Hmm…
- Empodering doesn’t even know your Inversis account password.
- Hmm…
- Therefore, if Empodering goes bankrupt, your Inversis account would continue to be perfectly operational.
- But if Empodering goes bankrupt, what would happen to the Empodering Multi-Strategy investment fund? Could I lose my money?
- No! The fund would continue to operate normally. The manager, which is responsible for the fund, is Inversis Gestión (a fund manager owned by the Banca March group), not Empodering.
- Got it.
-And finally: Empodering is a financial company regulated by the CNMV, which is positive from a security point of view.
- Thank you, Albert, you have answered my questions well. See you soon!
- See you soon, Tina, and good luck!