Charles Schwab Reassures Clients of Asset Safety
In the wake of the recent failures of Silicon Valley Bank and Signature Bank, many Americans have become concerned about the safety of their assets held at other institutions. Even some of our clients expressed concerns about the security of their investments held by Charles Schwab Corp., our custodian.
We carefully vetted Schwab in selecting them as a custodian and are satisfied that their best practices help safeguard our clients’ assets. Schwab recently addressed such concerns and went on record to reassure customers about the stability of their investments. This article shares some of the major points of the company’s press release. We also invite you to reach out to us if you have any remaining concerns.
No Commingling
In a perspective dated March 13, 2023, Charles Schwab highlighted the strength and resilience of the company, emphasizing that investments held at the broker-dealer are not commingled with assets at Schwab Bank. This distinction is crucial in assuring clients of Registered Investment Advisors like our firm that their investments are safely separated from the bank’s assets.
Founded over 50 years ago, Charles Schwab reported that it built a reputation for being a safe, secure, and strong financial institution thanks to its "Through Clients Eyes" strategy and disciplined risk management practices.
The company emphasized that it has “capital well in excess of regulatory requirements, a high-quality and relatively small loan book, and a conservative investment portfolio that is 80% comprised of securities backed by the U.S. Treasury and various government agencies.”
Over 80% of client cash held at Schwab Bank is insured dollar-for-dollar by the FDIC, which is among the highest percentages of the top 100 U.S. banks. Additionally, Schwab has access to over $80 billion in borrowing capacity with the Federal Home Loan Bank (FHLB), providing the firm with significant liquidity and ensuring that money is available when clients need it.
Finally, Charles Schwab has no direct business relationship with Silicon Valley Bank or Signature Bank, meaning that the company does not have exposure to any direct credit risk from either institution.
Final Thoughts
Our RIA firm conducted thorough research into Schwab and its practices before selecting them as our custodian, and we continue to monitor them. Even if the banking side of the company were to have issues, our clients’ assets remain separate from that operation.
As fiduciaries, we actively monitor situations like the banking collapse of Silicon Valley Bank to determine any necessary actions we need to take. We believe that Charles Schwab remains a high-quality custodian of our clients’ wealth.
You can read the Schwab perspective in full here. You can also watch CEO Walt Bettinger’s interview on CNBC’s “The Exchange” on March 14.
If you have any concerns or questions, please do not hesitate to contact us.
We offer a complimentary 15-minute call to discuss your financial situation and concerns and share how we may be able to help.
This material was generated using artificial intelligence (ChatGPT) and edited by Kaleido Inc. from information derived from sources believed to be accurate. This information should not be construed as investment, tax, or legal advice.
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