Broker Check
How are investments and cash insured in the United States?

How are investments and cash insured in the United States?

| March 13, 2023

The recent bank closures have raised some questions with investors about their own funds. While it does not appear that these closures will be a systematic risk to the economy, it is still a good opportunity to understand your asset coverage. Many people have cash in savings and checking accounts at their prefered bank as well as a variety of other investments. But, do you know how a FDIC-insured bank or a SIPC-insured investment protects you? We explain the basics.


FDIC-Insured Deposits

Federal Deposit Insurance Corporation (FDIC) is an independent U.S. government agency that provides insurance to depositors in case their bank fails. FDIC insurance covers deposits of up to $250,000 per depositor, per bank, for each account ownership category. This means that if a bank fails, the government will ensure that your deposit up to $250,000 is safe and you won't lose your money. If you have more than $250,000 to deposit, it's recommended to spread it across different banks to ensure full insurance coverage.


SIPC-Insured Investments

Similarly, the Securities Investor Protection Corporation (SIPC) is a non-profit organization that provides insurance to investors in case their brokerage firm fails. SIPC insurance covers up to $500,000 per individual, including up to $250,000 in cash, for each account ownership category. However, SIPC insurance doesn't cover any losses in the value of your investments, just the value of the missing securities up to the coverage limit.


Additional Coverage for Broker-Dealer Clients

However, larger financial institutions often have additional coverage in excess of the SIPC limits through private insurers which can extend the protection we provide to clients. For example, our firm Cetera Advisor Networks partners with BNY Mellon's Pershing as one of the custodians that safeguards our client's brokerage accounts. In addition to SIPC protection, Pershing provides coverage in excess of SIPC limits from certain underwriters in Lloyd's insurance market and other commercial insurers.

The excess of SIPC coverage is valid through February 10, 2024, for Pershing LLC accounts. It provides the following protection for Pershing LLC's global client assets:
- An aggregate loss limit of $1 billion for eligible securities—over all client accounts
- A per-client loss limit of $1.9 million for cash awaiting reinvestment—within the aggregate loss limit of $1 billion*

Overall, SIPC and FDIC provide important protection for investors and bank customers. However, it's important to understand the limitations of this coverage and take additional precautions to protect your investments.

It's important to note that not all financial products are insured by the FDIC or SIPC. For example, mutual funds, annuities, and life insurance policies are not FDIC or SIPC-insured. The FDIC and SIPC are in place to provide a safety net for depositors and investors, but it's important to be aware of the coverage limits and to diversify your accounts if you have more than the coverage limit.


CONTACT our financial advisors with any questions.

 Read more about the recent bank collapse from the Cetera Investment Management team here: LINK´╗┐




Explanatory brochure available upon request at