SIPC insurance covers only up to $500k in the event of brokerage firm failure. Does anyone here split into multiple accounts if your overall account size is $500k+? Thanks.
Risk for $500k+ assets in single brokerage account?
- Thread starter turkeyneck
- Start date
Not me. I only split up my multi million dollar fortune to protect from technology disasters preventing trading at a brokerage firm.
Do you think that Warren Buffet worries about SIPC coverage for his $300 billion in stocks and $140 billion in cash?
The only traders that need to be very careful about large accounts are futures traders that have zero insurance for their futures accounts.
Do you think that Warren Buffet worries about SIPC coverage for his $300 billion in stocks and $140 billion in cash?
The only traders that need to be very careful about large accounts are futures traders that have zero insurance for their futures accounts.
If a brokerage firm fails, the client assets will be taken over by another firm under the supervision of regulators. Think back to 2008, no investor lost money in a brokerage account due to brokers failure.
SIPC only comes into play in the case of fraud.
Also, I’m pretty sure it works just like FDIC at a bank, meaning if you have multiple accounts under the same registration, totaling more than the limit, there’s no advantage, you are covered as a person uptrend the limit.
SIPC only comes into play in the case of fraud.
Also, I’m pretty sure it works just like FDIC at a bank, meaning if you have multiple accounts under the same registration, totaling more than the limit, there’s no advantage, you are covered as a person uptrend the limit.
warren buffet holds his securities with his company in his name. So not a proper comparison.
But even in the Great Recession no SIPC broker went under. The accounts are too valuable. Just like no depositor in a bank lost money.
And mind you that's $500K of cash and securities which only includes stocks, options, bonds, notes, CD's, mutual funds, treasuries and all other investments defined as "securities". It does not cover futures and forwards (unless they are held in a special portfolio), forex, and warrants. And the cash is only limited to $250K so if you have $500K all in cash with a broker if the broker is a SIPC member and if it goes down, your other $250K is gone.
Me, I diversify and spread my trading capital across multiple brokers but not because of the SIPC limit but because of different kinds of brokerage services that I can get from different brokerages. If I really have any solvency concern of a brokerage, I wouldn't have put my money with this broker in the first place. This SIPC is a last-resort compensation mechanism that you can get to recoup your losses so you won't lose everything; it's still best to do due diligence to do business with a broker that is financially sound and has prudent risk management practices.
Be careful on the advice you receive from anyone other than your broker or retirement custodian.
Look at how previous failure have been handled. Madoff, Lehman, MFG and the other failures.
Consider what disaster(s) you are concerned over.
Truly large accounts generally use a custodian bank. You'll notice that accounts like IRAs are carried by an arm's length custodian or pure outside custodian.
Look at how previous failure have been handled. Madoff, Lehman, MFG and the other failures.
Consider what disaster(s) you are concerned over.
Truly large accounts generally use a custodian bank. You'll notice that accounts like IRAs are carried by an arm's length custodian or pure outside custodian.
Senior broker tells junior the truth about what advice to give to clients.
This is making my day!!!
I don't think that's exactly correct. The wording for SIPC insurance is for "cash and securities which become "missing". If the broker goes bankrupt, customer assets are not supposed to be impacted, as they were required to be "segregated" at all times.
My info is from waaay back. Somebody correct if I'm wrong.