![]() ![]() So what SIPC reports to us is the vast majority of broker-dealer failures, even when they do occur, no assets are missing. How well has SIPC, or S-I-P-C, protected investors in the past? So I know clients are going to ask this question. In that situation, the account will receive a pro-rata share of all of the assets in the broker-dealer that have been segregated, and the $500,000 worth of SIPC insurance is there to cover any assets that might be missing.ĭEMETRA: Okay. The insurance is just there in the unlikely event that there were some assets missing and the broker-dealer fails. So they’re segregated for the benefit of clients. They’re not commingled with Schwab’s assets on the broker-dealer. The key point to remember here is that these assets are the client’s. ![]() Can you talk a little bit more about that? So it’s great to know that that insurance coverage is there, but 500,000 doesn’t seem like that much. In that situation, SIPC provides up to $500,000 worth of protection against any of those missing assets, including $250,000 in cash against uninvested cash balances.ĭEMETRA: Okay. And the SIPC protections are activated in the rare event that a broker-dealer fails and client assets are missing. And what it provides is protection for securities and cash in brokerage accounts, including those held by clients of our investment advisors at Schwab Advisor Services. S-I-P-C, or SIPC, stands for the Securities Protection Corporation. Can you explain what that is, and why is it even needed if the client’s assets are theirs? So clients have probably heard about S-I-P-C, or SIPC insurance. They remain the client’s assets.ĭEMETRA: Okay, that’s really reassuring. They’re protected from any other creditor claims. In the very unlikely event that Schwab should become insolvent, those segregated assets are not available to general creditors. There are reporting and auditing requirements to assure that brokerages comply with this rule to segregate client assets. At Schwab, client’s fully paid securities are segregated from the firm securities and they’re held at a third party depository institution, such as the Depository Trust Company and Bank of New York. The SEC Security Protection Rule safeguards client assets at brokerage firms by preventing those firms from using customer assets to finance their proprietary business. The first thing for clients to remember is that their securities at Schwab are theirs. How are client’s investments, so their mutual funds, ETFs, stocks, bonds, other securities, how are those protected at Schwab? So since clients primarily come to Schwab to invest, and roughly 90% of the 7 trillion or so assets we have at Schwab is at the broker-dealer, let’s start there. We also make a small number of loans out of Schwab bank.ĭEMETRA: Okay, that helps a lot. More recently, we started Schwab Bank, managed very conservatively, to provide clients with access to checking accounts, debit accounts, and other ways that they can move their money. That’s where we assist clients with their investments, their wealth management, and we custody their securities. That’s been our core business for over 50 years. At Schwab, it all starts with the brokerage business. Can you explain at a high level for our clients what the difference is? So I’d like to start at one of the more foundational spaces, and that is that Schwab is both a bank and a broker-dealer. ![]() And so that’s what we’re going to talk about today. So in my role, I lead people who talk to clients every day, clients of all different ages, asset levels, investment styles, and one of the most common questions that comes up, especially in uncertain times, but even in more stable times, is how their assets are protected at Schwab. It’s great to have our chief risk officer here to have this conversation. What questions are most common from our clients about asset protection.ĭEMETRA SULLIVAN: Thank you, Rick, and thank you, Nigel, for joining me today. I’ve invited Demetra Sullivan, a leader with deep client experience across all wealth levels, and Nigel Murtaugh, our Chief Risk Officer. In that spirit, I’ve invited two experts at Schwab to have a conversation about asset protection. One way to build that trust is to ensure clients know how their assets are protected here at Schwab, not just today, but every day. In my role, I talk to clients every day, and what I know from those conversations is that trust and transparency are paramount. RICK WURSTER: Hi, I’m Rick Wurster, President of Charles Schwab.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |