Safeguarding Client Assets
In a world that has seen the damage caused by unsavory individuals like Bernie Madoff and Allen Stanford, the safety of your money is top priority. It is important for you to know where your funds are held and who is actually handling your assets. This is one of several reasons that we create a firewall between ourselves and our clients assets. The following is a detail of the investor protection provided by our Broker/Dealer WFG Investments, Inc. Our client funds are held at Fidelity.
As a full-service financial institution, our clients range in nature from individual, corporate, retirement, to state and federal government(s).Therefore, the safety and security of our customer’s assets is always one of our primary concerns.
We will constantly be evaluating the comprehensiveness of our coverage, our electronic systems, and compliance procedures for potential improvement in this area. Thank you for allowing us to be your financial services firm, we will work hard to earn your business.
How are your assets protected?
WFG Investments, Inc. and our custodian firms have established several levels of insurance coverage and client asset protection for WFG client assets custodied by Fidelity’s National Financial Services (NFS) and Bank of New York’s Pershing LLC. The various forms of coverage aim to protect client assets from insolvency of the financial institution, theft, or fraudulent activity by an employee and electronically- initiated loss of assets.
Such protection includes standard and excess SIPC coverage, additional coverage of a fidelity bond, sophisticated fire wall systems and constant improvement of our compliance procedures.
Securities Investor Protection Corporation (SIPC)
SIPC is a non-profit, membership corporation, created to protect customers of its member brokerage firms during the insolvency of a member firm. WFG Investments and its clearing firms, NFS and Pershing, are SIPC members and subsequently carry SIPC coverage of $500,000, including cash claims limited to $100,000.
WFG Investments’ classification with FINRA requires all client assets be deposited directly with the designated custodian (NFS or Pershing). It is WFG Investments’ policy not to accept monies or securities in its name. Therefore, all money submitted to WFG Investments for deposit with the respective clearing firm is made payable to that clearing firm (NFS or Pershing) and deposited directly into an NFS or Pershing bank account. All securities physically delivered to WFG are sent via overnight mail directly to the clearing firm. Any monies related to vendor products (such as variable annuities, mutual funds, etc.) are made payable to them and mailed immediately to the respective vendor.
By complying with such policies, the SIPC coverage of NFS and Pershing applies to all WFG Investment client assets. Therefore, the liquidation of the broker/dealer has no effect on the customer assets as they are fully custodied at the clearing firm.
Both Pershing and NFS subscribe to an Excess SIPC Surety Bond that provides such additional coverage should the clearing firm fail to meet its obligations and is separate from any coverage the broker/dealer provides. With excess SIPC coverage, securities are covered up to an aggregate loss limit of $1.9 billion for all customer claims, of which $1.9 million may cover cash awaiting reinvestment at the individual account level.
Note: SIPC and excess SIPC do not protect against any decline in the market value of your investments. For more information and an explanatory brochure, visit SIPC’s website at www.sipc.org.
A second client asset protection coverage provided by the financial services industry is the fidelity or financial institution bond. This coverage is designed to cover non-insolvency problems such as employee or systems theft, fraud, or loss of assets. Both WFG and its clearing firms subscribe to the coverage but at different levels.
WFG Investments, Inc. carries a broker/dealer fidelity bond which covers asset movement of its clients up to the $1,000,000 level. Additionally, WFG Investments’ procedures dictate that any transfer of assets transferred to an outside custodian, must be transmitted to an account with the same name, address, and tax ID as the existing account held by NFS or Pershing (exceptions would require an approved Letter Of Authorization).
WFG’s clearing firms, NFS and Pershing, provide fidelity bond coverage up to $1 billion through a consortium of insurance carriers led by Lloyds of London. That coverage applies to any assets held at the clearing firms on behalf of WFG clients. Any asset movement for a WFG client that has been approved by NFS and Pershing becomes the liability of the clearing firm and if proven to be fraudulent, is covered by the clearing firm’s fidelity bond.
It is therefore a requirement of WFG to have any client asset movement over $100,000 be approved by NFS or Pershing before it is enacted. A Letter of Authorization (LOA) is required by WFG from the client requesting the transfer and this LOA is then transmitted to the clearing firm for approval.
Note: Fidelity Bond coverage does not insure against any decline in the market value of your investments.
Sophisticated Fire Wall Systems
The only other fraudulent act that can occur regarding client’s assets is one not initiated by fraudulent instructions, but one initiated electronically from an anonymous source. The first line of defense for this is extensive and sophisticated fire wall systems built and maintained by both NFS and Pershing as the custodian level and by WFG Investments at the broker/dealer level.
Additionally, the compliance procedures of all firms require a thorough review of all transfer requests and other actions throughout the system.
Any successful fraudulent act generated from any source upon the assets of WFG clients held with NFS or Pershing as the custodian would be covered by the clearing firm at the $100 million level.
At each level of coverage, the WFG Investments’ compliance procedures are designed to provide our clients with the optimal amount of protection. By implementing policies to accept no money or securities in the broker/dealer’s name and to verify custodian approval of all asset transactions, our client’s assets are not only protected by our insurance, but that of our custodian firms as well.
Securities offered through WFG Investments, Inc., member FINRA and SIPC