Bank drama = wealth advisory drama
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Bank blowups reverberate far and wide. Ever since Silicon Valley Bank cratered last Friday, financial markets and economic watchers have been increasingly nervous. So have many advisors who work at the collapsed institutions, and retail investors who worry about the safety of their cash.
SVB Financial Group, the California bank’s parent company, is the largest of the recent collapses, which include crypto-friendly lender Silvergate Capital Corp. and Signature Bank of New York.?The demise of the $209 billion SVB, the nation’s 16th-largest bank, is the biggest industry implosion since Washington Mutual bit the dust in 2008.?
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And the aftershocks just keep coming. Shares in troubled Credit Suisse, in the midst of a major restructuring, went into freefall on Wednesday, and First Republic Bank in San Francisco was downgraded to junk status. Five other FDIC-covered lenders that were placed on watch by ratings agency Moodys on Monday could potentially be next.
With the exception of Silvergate, all of these banks have private banking and wealth management arms staffed by scores of financial advisors.
One burning question in wealth management now: What are Silicon Valley Bank’s advisors planning next?
Meanwhile, the collapses are casting a spotlight on the inner workings of an obscure — and essential — element of the wealth management industry: cash.
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