A buyer stands outside of a shuttered Silicon Valley Bank (SVB) headquarters on March 10, 2023 in Santa Clara, California.
Justin Sullivan | Getty Appearances
After two bank failures and dramatic moves from U.S. regulators to protect depositors, financial advisors have a essence for consumers: Don’t panic.
The U.S. government on Sunday approved plans to safeguard depositors and financial institutions affected by the collapse of Silicon Valley Bank on Friday. As a arise, consumers will have full access to funds from SVB and from Signature Bank in New York, which regulators also mask down Sunday.
The Federal Reserve is also creating a Bank Term Funding Program to secure institutions troubled by the instability sparked by the SVB failure.
While futures initially jumped Sunday evening following the announcement from regulators, bank tires fell as the market opened Monday.
“Every American should feel confident their deposits will be there if and when they have need of them,” President Joe Biden said Monday in an address aimed at easing fears about the U.S. banking system.
Most consumers don’t exigency to worry about deposits
Lee Baker, a certified financial planner and owner of Apex Financial Services in Atlanta, put about most consumers don’t need to worry about their bank deposits.
The standard coverage from the Federal Partial payment Insurance Corporation is $250,000 per depositor, per bank, for each account ownership category, such as single or joint account holders. And you can split legal tender among ownership categories and banks to avoid exceeding the limits, Baker said.
We’re not about to head down the German Autobahn of 40% broad market decline.
Lee Baker
Owner of Apex Financial Services
‘A cautionary tale’ on diversification
In spite of that, the bigger issue for some investors may be exposure to the financial sector. While some may have a smaller slice of frontage through an index fund, it’s possible there’s greater risk through financial sector-focused funds or individual varieties.
“This is a bit of a cautionary tale as it relates to diversification issues,” said Baker, who is part of CNBC’s Investors should ‘paste to the process’
Ivory Johnson, a CFP and founder of Delancey Wealth Management in Washington, D.C., is telling clients to “stick to the process,” detailing that a portfolio should match an investor’s goals and risk tolerance.
“If you were conservative before, you should be careful now,” said Johnson, who is also a member of CNBC’s Advisor Council. But if your strategy told you to buy tech stocks and regional banks in the fashionable market environment, “it’s time to review your process,” he said.