Thank you. I'll edit to make it more clear. My intention was that your broker should automatically be holding your securities separately thus not putting them at risk.
Thanks, but what does it mean for the broker to hold them separately? As far as I can tell, they are already "separate": each security is its own line on my statement.
And, more important, is there any action item for me to take to ensure they are being held separate?
No action item. Edited to "Thanks to the Customer Protection Rule, your broker should be automatically holding your underlying securities separately and they would be recoverable in the event your broker collapsed. Assuming they are members SIPC."
LMK if that is clear! Appreciate the question, it is an important clarification.
How about financial institutions like Wealth front? They also sweep balances to partner banks
That is a good option. One reader emailed me and brought up a good point regarding the sweeps.
Because FDIC is per member bank, you would want to be careful that the sweep isn’t pushing you over the threshold at one of the banks.
Ie if you have $100k with Chase, then Wealthfront sweeps $200k into chase. You could unexpectedly be over the FDIC limit (based on my understanding).
Got it!
Fingers crossed! I hope there's no domino effect from this one.
Another great post, thank you.
I'm not sure what you mean by "Your underlying securities held at a broker should be kept separate". Can you please elaborate?
Thank you. I'll edit to make it more clear. My intention was that your broker should automatically be holding your securities separately thus not putting them at risk.
Thanks, but what does it mean for the broker to hold them separately? As far as I can tell, they are already "separate": each security is its own line on my statement.
And, more important, is there any action item for me to take to ensure they are being held separate?
No action item. Edited to "Thanks to the Customer Protection Rule, your broker should be automatically holding your underlying securities separately and they would be recoverable in the event your broker collapsed. Assuming they are members SIPC."
LMK if that is clear! Appreciate the question, it is an important clarification.
That's great, thanks!