What the Silicon Valley Bank and Signature Bank Collapses Mean for You
By the WHZ Advisory Team
You may have heard the recent news surrounding the Silicon Valley Bank and Signature Bank collapses. Here's what it's all about, and our thoughts on what it all could mean for the economy and your finances.
What happened to Silicon Valley Bank and Signature Bank?
On Friday, March 10, Silicon Valley Bank, a bank which services mostly tech firms and startups, was forced to raise capital and was later closed by the Federal Deposit Insurance Corp (FDIC) due to insolvency. On Sunday, March 12, regulators also took control of Signature Bank, one of the main banks used by cryptocurrency companies. The Treasury Department, Federal Reserve, and FDIC have moved swiftly and strongly to ensure that deposits in Silicon Valley Bank and Signature Bank would be accessible by customers today, with no losses borne by taxpayers, and to quell fears that this may lead to further bank failures.
Is my money safe?
Cash holdings may be considered safe and backed by the FDIC and Securities Investor Protection Corporation (SIPC). As for investments, there is potential for further market volatility across equity and bond markets as these banking issues are worked out. But although this has raised concerns and scrutiny of other banks, we do not believe it is indicative of a systemic risk to the financial and banking sectors. President Biden has said he will ask Congress and banking regulators to strengthen the rules for banks to “make it less likely this kind of bank failure would happen again.”
These events do, however, illustrate why it's so important to have a strategic, long-term financial plan built on solid strategy and a diversified portfolio that assumes an appropriate amount of risk for your particular situation and goals.
What's the economic outlook after the Silicon Valley Bank and Signature Bank collapse?
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There is no question scary headlines will roil markets in the near term as the stability of the banking industry is a new variable for the Federal Reserve to consider as they contemplate further interest rate hikes to combat inflation. While bigger banks are well capitalized and have passed “stress tests,” the Federal Reserve may choose to pause further rate hikes for the time being, to avoid causing further instability across the banking system. This may lead to a more pro-growth economic environment over time, however it is much too soon to tell.
What should I do to protect my money and investments?
It's a good idea to talk with your financial advisor if you have concerns about these recent events and how they may affect your finances both today and over the long haul. As wealth managers who act as fiduciaries, our team at Weiss, Hale & Zahansky Strategic Wealth Advisors can help you to make sense of the headlines, assist you in making prudent decisions, and monitor both the markets as a whole and your accounts in particular. Our Plan Well, Invest Well, Live Well™ strategic process is designed to reduce the stress of investing all along the way toward achieving your financial and life goals, so that you can ultimately Live Well.
If you have questions about our strategic process and how we can help you, please don’t hesitate to request a complimentary consultation with us now.
Authored by Principal/Managing Partner Laurence Hale, AAMS® CRPS®, Principal/Managing Partner James Zahansky, AWMA®, Senior Vice President and Financial Advisor Leisl L. Cording, CFP® CDFA®, Vice President and Associate Financial Advisor Michael Baum, CFP® RICP® and Associate Vice President and Wealth Manager Holly Wanegar. Securities and advisory services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. These materials are general in nature and do not address your specific situation. For your specific investment needs, please discuss your individual circumstances with your representative. Weiss, Hale & Zahansky Strategic Wealth Advisors does not provide tax or legal advice, and nothing in the accompanying pages should be construed as specific tax or legal advice. 697 Pomfret Street, Pomfret Center, CT 06259, 860-928-2341. www.whzwealth.com.
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