It’s a question every NZ investor eventually asks: what actually happens to my money if the platform I use goes under? The answer depends on how your investments are held — and it’s more reassuring than most people expect.
Your investments are almost always held separately from the platform's own assets (in a "custodial" structure). If the platform fails, a liquidator rings-fences your assets and transfers them to another custodian or returns them to you. Your investments are generally not at risk — but there may be delays and complexity while this is resolved.
The Key Distinction: Platform vs Fund
When you invest through Sharesies, InvestNow, Kernel, or similar, there are two separate entities:
- The platform — the company you interact with (Sharesies Ltd, InvestNow Ltd, etc.)
- The fund or custodian — the legal entity that actually holds your investments
These are legally separate. The platform doesn’t own your investments — it holds them on your behalf through a custodial structure. If the platform goes bankrupt, creditors of the platform generally cannot claim your investment assets, because those assets legally belong to you (the investor), not the platform.
How Custodial Structures Work in NZ
Under the Financial Markets Conduct Act 2013 (FMCA), licensed MIS (Managed Investment Scheme) providers must:
- Hold client assets separately from their own assets
- Appoint an independent supervisor (trustee) to oversee the scheme
- Report regularly to the Financial Markets Authority (FMA)
The supervisor is a critical protection. For most NZ managed funds, the supervisor is an independent organisation (e.g. Public Trust, Trustees Executors) that monitors the fund manager and holds assets in trust for investors. The supervisor can step in if the manager breaches their obligations.
How different platforms structure this
InvestNow: Investments are held through InvestNow’s nominee service. Underlying fund managers (Vanguard’s NZ funds, Kernel, etc.) hold assets as a registered managed investment scheme with an independent supervisor. InvestNow is a Financial Advice Provider licensed by the FMA.
Kernel: Funds are registered managed investment schemes under the FMCA. Public Trust acts as supervisor for Kernel funds. Assets are held separately from Kernel’s operating business.
Sharesies: NZ and Australian shares held through Sharesies are held in a custodial account with Sharesies Nominee Ltd, a separate entity from Sharesies Ltd. US shares are held through a US broker (DriveWealth) with SIPC protection (see below).
Simplicity: A registered managed investment scheme with independent supervision. Member assets are ring-fenced.
Is There a Government Guarantee on Investments?
No. Unlike bank deposits, which are covered by the NZ government’s Crown Retail Deposit Guarantee Scheme (up to $100,000 per depositor per institution from 2024), there is no equivalent guarantee for investment losses.
The protections that exist are:
- Custodial ring-fencing (your assets aren’t the platform’s assets)
- FMA licensing and supervision requirements
- Independent supervisor oversight
- SIPC protection for US-listed securities held through US brokers
What the Crown bank deposit guarantee covers:
- Bank accounts (savings, cheque, notice)
- Term deposits
- Some call accounts
What it does NOT cover:
- KiwiSaver (separately protected through the custodial structure of KiwiSaver providers)
- Sharesies investments
- InvestNow investments
- Managed funds
- Shares held on the NZX
SIPC Protection for US Stocks
If you hold US stocks through Hatch, Stake, or a platform using a US broker-dealer, those assets may be protected by the Securities Investor Protection Corporation (SIPC):
- Covers up to USD$500,000 per customer (including up to USD$250,000 in cash)
- Protects against the broker-dealer going bankrupt — not against investment losses
- Does NOT protect against market losses; only covers the failure to return your securities
Most NZ platforms using US brokers (DriveWealth for Sharesies, Hatch’s US broker, etc.) have SIPC membership. Check the platform’s PDS to confirm.
What Would Actually Happen If Sharesies Collapsed?
Based on Sharesies’ current structure:
- The FMA would be notified and would oversee the process
- A liquidator would be appointed for Sharesies Ltd
- Sharesies Nominee Ltd (the custodial entity) would be separate from the liquidation — its assets (your investments) would not be available to Sharesies Ltd’s creditors
- The liquidator would work to transfer your holdings to another custodian or arrange for shares to be transferred to your name
- You might face delays (weeks to months) in accessing your investments during the transition
- You might lose any cash sitting uninvested on the platform if not ring-fenced carefully — avoid holding large amounts of uninvested cash on platforms
The Biggest Real Risk: Uninvested Cash
Most NZ investor protection concerns focus on the wrong thing. The real risk is cash sitting idle on a platform, not the invested assets themselves.
Some platforms pool uninvested cash in a single bank account. If the platform fails, that cash may be harder to recover than your actual investments.
Best practice: Keep cash balances on investing platforms to a minimum. If you’re waiting to invest, put cash in a savings account until you’re ready to deploy it.
How to Assess Platform Safety
When choosing a platform, look for:
- FMA licence — Is the platform a licensed Financial Service Provider or MIS manager? Check the FSPR register.
- Independent supervisor — Do funds have a named, independent supervisor (e.g. Public Trust)?
- Clear custodial structure — Does the PDS clearly explain how assets are held?
- Financial stability — Is the platform profitable or well-funded? Startup platforms with burning through venture capital are higher risk than established, profitable operators.
- Separation of nominee entity — Is there a legally separate nominee/custodian entity?
Platform Safety Ratings (2026)
| Platform | FMA licensed | Independent supervisor | Structure risk |
|---|---|---|---|
| InvestNow | ✅ | ✅ (fund-level) | Very low |
| Kernel | ✅ | ✅ (Public Trust) | Very low |
| Simplicity | ✅ | ✅ | Very low |
| Smartshares | ✅ | ✅ | Very low |
| Sharesies | ✅ | ✅ (nominee structure) | Low |
| Hatch | ✅ | ✅ (via parent Fisher Funds) | Low |
All major NZ platforms are FMA-regulated. The risk of a platform failure resulting in permanent investor loss is very low — the risk is more around temporary disruption and complexity.
Frequently Asked Questions
Is my KiwiSaver protected if my provider goes bust? Yes. KiwiSaver providers are subject to the same FMCA custodial requirements. If your KiwiSaver provider collapsed, your funds would be transferred to another provider. Your balance wouldn’t be lost.
What if the fund manager (not the platform) goes bust? The independent supervisor would step in to protect investor assets. They could appoint a replacement manager or wind down the fund and return assets to investors.
Is Sharesies safe? Sharesies is FMA-licensed and uses a nominee structure to hold client assets separately from Sharesies’ business assets. As of 2026, it is one of NZ’s largest investing platforms with over 600,000 members. It is not a government-guaranteed product, but the custodial structure provides significant protection.
Should I spread my investments across multiple platforms for safety? Not primarily for safety reasons — the custodial protections make it unlikely you’d lose investments on any FMA-licensed platform. You might use multiple platforms for other reasons (access to different funds, fee optimisation) but single-platform concentration isn’t a major safety risk in NZ.