Asset Protection at Schwab

Recent headlines on the banking crisis have most likely brought up questions on the safety of your money and assets. This blog will hopefully clarify those concerns.

Charles Schwab, like all federally registered regulated banks, has insurances in place to offer additional protection to their customers. In summary, there is SIPC insurance which covers up to $500,000 in cash and securities per account holder - $250,000 limit for cash. SIPC covers account holders if the firm fails and cannot return assets and covers unauthorized trading or theft of their securities. Additionally, Schwab has FDIC insurance which traditionally covers up to $250,000 per account holder in deposit accounts like bank sweep products and CD’s should a bank fail. In the case of Silicon Valley Bank, FDIC made exceptions and guaranteed ALL deposits – so the limit of $250,000 is up for interpretation. Lastly, Schwab has in place “excess SIPC” insurance of $600M for securities and cash if the first two programs are exhausted.

Here is a link that explains the account protections that Schwab has in place: Is my money safe - Account Protection | Charles Schwab

Additionally, securities held in your account are truly yours, registered in your name. They are not commingled with Schwab’s other accounts or account holders nor are your assets used for Schwab’s proprietary businesses. You are not a shareholder within a pool of investment assets. Your assets are segregated from Schwab’s assets. If something were to happen to Charles Schwab, your securities are not available to creditors and are protected from creditors’ claims.

We purposefully chose Schwab twenty years ago as our recommended custodian and broker-dealer after considering a range of factors. Today, we continue to recommend Schwab for their industry leading custody services, best in class technology, but most importantly for the financial strength and stability.

 

 

Commentary Disclosures: Covington Investment Advisors, Inc. prepared this material for informational purposes only and is not an offer or solicitation to buy or sell. The information provided is for general guidance and is not a personal recommendation for any particular investor or client and does not take into account the financial, investment or other objectives or needs of a particular investor or client. Clients and investors should consider other factors in making their investment decision while taking into account the current market environment.

Covington Investment Advisors, Inc. uses reasonable efforts to obtain information from sources which it believes to be reliable. Any comments and opinions made in this correspondence are subject to change without notice. Past performance is no indication of future results.