Where is My Money?

Asset Management, Companies and Industries, Our Firm March 27, 2020

Where is My Money?

One of the important choices an investor faces is where to custody their investment assets. Nelson Roberts Investment Advisors does not take custody of our client assets, but instead partners with third-party custodians for the safekeeping of our client assets. A custodian is a financial institution that holds clients’ securities in physical or electronic forms. In addition to holding securities, custodians also perform other services, like the collection of interest and dividend payments, tax support, and money movement.

As an individual investor, there are three primary ways to hold your securities:

  • Physical Certificate — The security is registered in your name on the issuer’s books, and you receive an actual, hard copy stock or bond certificate representing your ownership of the security.
  • “Street Name” Registration — The security is registered in the name of your brokerage firm on the issuer’s books, and your brokerage firm holds the security for you in “book-entry” form. “Book-entry” simply means that you do not receive a certificate. Instead, your broker keeps a record in its books that you own that particular security. A majority of our client accounts have their securities held in street name.
  • “Direct” Registration — The security is registered in your name on the issuer’s books, and either the company or its transfer agent holds the security for you in book-entry form.

For many of our client relationships, Nelson Roberts utilizes Charles Schwab or TD Ameritrade as our custodial partner. On November 25, 2019, Charles Schwab announced they have entered an agreement to acquire TD Ameritrade, a combination that will result in a company with 24 million brokerage accounts and more than $5 trillion in client assets.

The transition to a combined company will take some time. The deal is expected to close in the second half of 2020, with the integration of the two firms starting immediately after the close. One of the more surprising details of the merger will be the moving of Schwab’s corporate headquarters from its longtime home in San Francisco to the Dallas-Fort Worth area.

The combination of the brokerage firms does not change the goal of Nelson Roberts to recommend the best custodial relationships for our clients’ assets. We will be diligent in determining whether the combined enterprise will:

  • Be a financially healthy custodian dedicated to the highest standards of security when it comes to the safeguarding of client assets.
  • Provide access to the capital markets and best execution practices able to deliver the best pricing for our client transactions.
  • Offer competitive account services that support our ability to serve the needs of our client relationships.
  • Include access to resources and educational opportunities that support the business of Nelson Roberts Investment Advisors.

Individual investment positions detailed in this post should not be construed as a recommendation to purchase or sell the security. Past performance is not necessarily a guide to future performance. There are risks involved in investing, including possible loss of principal. This information is provided for informational purposes only and does not constitute a recommendation for any investment strategy, security or product described herein. Employees and/or owners of Nelson Roberts Investment Advisors, LLC may have a position securities mentioned in this post. Please contact us for a complete list of portfolio holdings. For additional information please contact us at 650-322-4000.

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