The Fed has been working quickly to stem a US banking crisis following the rapid collapse of Silicon Valley Bank, the 16th largest bank in the country. In response to these headlines, our team at Mundorf Wealth Management wants to make sure all clients know that we only work with systemically important banks, and Silcon Valley Bank is not a systemically important bank.
We are working closely with our team of investment experts at Brookstone Capital Management, specifically with CIO, Mark DiOrio who wants to remind clients that "client accounts are held in a segregated account and are safe."
It’s important to make a distinction between an account at a bank and an investment account. When a customer deposits money at the bank, it becomes a liability of the bank (i.e. put on the bank’s balance sheet to loan). This is why there is FDIC insurance for depositors to protect the depositor from the bank’s balance sheet risk. On the other hand, an investment account held by the major custodians (TD, Schwab, Fidelity, etc.) are held in a segregated account for you and do not become part of the firm’s balance sheet.
Of course, we understand this developing story can make investors feel anxious. We expect the markets to be volatile in response to the Silicon Valley Bank failure, but remember, we have planned for this and any other market volatility. However, if you would like to talk through any of these headlines, we would be happy to find time to connect. Simply call or text 830-476-2505 or schedule a chat at www.LongLiveMyMoney.com.