Happy St. Patrick’s Day! On this day of green we have certainly seen a fair share of red in the markets – especially the shenanigans in the banking sector.
Much of the concern surrounds the smaller regional banks, as we continue to see steep declines in the wake of the abrupt failure of Silicon Valley Bank (See: Special Update: Market Volatility and Silicon Valley Bank). This has understandably rattled investors and undercut confidence in the U.S. banking system.
The four letter “F” acronym, FDIC has been thrown around quite a bit this past week. Federal Deposit Insurance Corporation (FDIC) is an independent federal agency that insures its member banks up to $250,000 per person, per bank. This is designed to protect account holders in the event of a bank failure.
Another four letter acronym, SIPC, is the Securities Investor Protection Corporation which was created by Congress to protect members in the event of a brokerage firm failure. If customer assets are unaccounted for due to recordkeeping errors or misappropriation, customer assets are made whole by SIPC – up to $500,000 per customer for all accounts held in the same capacity, including a maximum of $250,000 in claims for cash.
So what does this mean for you, and how can you best protect yourself?
Your priority as an investor is to be diligent about your portfolio. Withum Wealth offers additional expertise and resources that can protect your assets. In the rare instance of a brokerage firm failure due to instances not covered by SIPC, you may be responsible for providing documentation showing that you owned certain securities (i.e. stocks and bonds). It’s important to remember that securities are held in street name, meaning the individual who paid for the security retains ownership rights. Brokerage firms simply act as a custodian, therefore securities are owned by you and not related to FDIC and SIPC limits.
Withum Wealth Management is a true fiduciary, legally and ethically obligated to always act on behalf of our client’s best interest. We are one-step removed from the custodian-level, maintaining separate and secure transaction records – offering additional peace of mind during tumultuous times.
On this day when luck is often sought, Withum Wealth Management prefers to create our own – by being diligent and always taking a disciplined approach to protecting our client’s assets.
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