Don’t Let the Regional Bank Crisis Go to Waste: Protect Your Assets

There has been a flurry of news articles on the collapse of Silicon Valley Bank (SIVB) coming out recently, and rightfully so. It is the largest bank to collapse since Washington Mutual failed in 2008. Silicon Valley Bank had $173 billion of customer deposits at the end of 2022 and served businesses such as Roku and Etsy. Two other banks, Silvergate (had $11.36 billion in assets) and Signature Bank (had $110.36 billion in assets) have also failed. While there may be contagion to other small community/regional banks, the systemically important banks like JP Morgan Chase and Bank of America are very unlikely to follow in SIVB’s footsteps. The SIVB situation is another example of the market volatility we can expect as global monetary policy tightens and liquidity wanes.

While we can get into the weeds into why these failures occurred, all three banks have failed because of a lack of diversification in their balance sheets. While we don’t believe there’s going to be widespread contagion, this does serve as a reminder to review your Federal Deposit Insurance Corporation (FDIC) coverage. Here’s a link to use to confirm your FDIC coverage. If you are concerned about not having sufficient FDIC coverage, we have multibank programs that offer an option for clients seeking full FDIC insurance on balances up to $100 million per single Tax ID.

We are in close communication with our custodians (Schwab and Fidelity) to ensure our clients’ brokerage accounts are protected from any undue risk and firmly believe in the strength and resilience of our custodians. Investments held at the custodians are not commingled with assets at their banking divisions. I would also encourage you to read the statement on Schwab’s financial stability found here from the founder and CEO. In addition, for your brokerage accounts, Securities Investor Protection Corporation (SIPC) provides up to $500,000 of protection for brokerage accounts held in each separate capacity (i.e., joint tenant or sole owner), with a limit of $250,000 for claims of uninvested cash balances. Schwab and Fidelity both have additional protection through Lloyd’s of London and other London insurers.

We believe that our client’s assets are safe and that the potential for widespread disruption in the banking system has been greatly reduced by the government’s forceful and timely actions. There has been and will always be some news to stir the pot and spook investors. The SIVB news is just the latest installment. Changing market environments are factored into our clients’ financial plans as a fundamental element of our overarching investment thesis to maintain downside protection for our clients amidst volatility. 

Please give us a call at 714-282-1566 or email us at to schedule a time to revisit your financial plan or discuss FDIC coverage. Thank you.

Disclosure: BFSG does not make any representations or warranties as to the accuracy, timeliness, suitability, completeness, or relevance of any information prepared by any unaffiliated third party, whether linked to BFSG’s website or blog or incorporated herein and takes no responsibility for any such content. All such information is provided solely for convenience purposes only and all users thereof should be guided accordingly. Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment or investment strategy (including those undertaken or recommended by Company), will be profitable or equal any historical performance level(s). Please see important disclosure information here.