If you’re nearing or in retirement, you’ve probably thought about working with a professional to help manage your savings. However, one question often arises: “Where is my money held when I work with a Registered Investment Advisor (RIA)?” This is an important question and one that deserves a clear answer. Understanding where your money is held and how it’s protected can give you the peace of mind to trust the process and focus on enjoying your retirement.

The Role of the Custodian: Safeguarding Your Assets

When you work with an RIA, your money isn’t held by the advisors themselves—a third-party custodian holds it. Think of a custodian as the financial institution that acts as a secure vault for your investments. Standard custodians include well-known companies like Charles Schwab, Fidelity, TD Ameritrade, and Pershing.

The custodian’s main job is to hold your funds, safeguard your assets, and execute transactions like buying or selling investments on the instructions of your RIA. This setup ensures that your money is always protected and that there’s a clear separation between your investments and the advisor’s business.

How Your Money Is Protected: Key Safeguards in Place

• Segregated Accounts: Your retirement savings are kept in a separate account under your name, not mixed with the advisor’s or custodian’s assets. This legal separation means that your funds are secure and protected even if the custodian or your RIA faces financial troubles.
  
  

• SIPC Protection: Most custodians are members of the Securities Investor Protection Corporation (SIPC), which provides limited protection against the loss of cash and securities in the event of custodian failure. SIPC protection covers up to $500,000 per account, including a $250,000 limit for cash. This protection is designed to restore your assets if the custodian goes bankrupt—not to cover investment losses from market declines.
  
  

• Additional Custodian Protections: Many custodians carry additional insurance that exceeds SIPC limits, adding another layer of security. This extra coverage often comes from private insurers and serves as a backstop in case of financial failure.

Why This Structure is Safe: Ensuring Checks and Balances

• Separation of Duties: Reducing Fraud Risk: Using a third-party custodian means your RIA doesn’t have direct access to your funds. They can make investment decisions on your behalf but cannot withdraw money themselves. This clear separation dramatically reduces the risk of fraud and misuse of your assets.
  
  

• Transparency and Regular Reporting: You receive statements directly from the custodian, giving you an independent view of your account’s balance, holdings, and transaction history. This transparency allows you to cross-check information and verify that your investments align with what your RIA is telling you.
  
  

• Oversight and Security: Custodians are heavily regulated and adhere to strict security standards to protect your money. Their systems are designed to monitor account activities, detect unusual behavior, and provide secure access to your funds.

What This Means for You: Confidence in Your Retirement Savings

Understanding that your money is held by a third-party custodian—not your RIA—adds an essential layer of security to your retirement plan. This structure ensures that your savings are protected, transactions are transparent, and all activities are independently verified.

• Peace of Mind: Knowing your money is safely held in your account and not directly controlled by your advisor helps build trust and confidence in your financial plan.
  
  

• Direct Access: You can log in to your custodian’s platform at any time to view your accounts, check balances, and track performance without relying solely on updates from your advisor.
  
  

• Independent Oversight: With a separate custodian, multiple layers of oversight ensure your money is managed responsibly and securely.

Conclusion: Protecting Your Financial Future

As you approach or enjoy retirement, understanding where your money is held and how it’s protected is key to feeling secure in your financial journey. With an RIA and a third-party custodian, you can rest assured that your retirement savings are in safe hands, protected by rigorous safeguards and transparent oversight.

At Fulcrum Wealth Advisors, we work closely with trusted custodians to ensure your investments are secure and managed with the highest level of care. Ready to feel confident in your retirement plan? Contact us today to schedule a consultation and learn more about how we can help you achieve your retirement goals.