How to explain SVB’s collapse to clients
If a community bank fails… will you hear it on Wall Street? I think we can confidently say now the answer is yes. The world knows about Silicon Valley Bank (SVB).
Beyond that, headlines like "Second biggest bank collapse in U.S. history" are bound to scare your clients. Especially given the confusion around FDIC insurance, uninsured deposits, who's at risk, and why.
This is where you can add value and ease client fears.
We're here to help. Use the text below to email clients, treat it as a script and turn it into a video, or record it as a WealthVoice broadcast.
Last week, Silicon Valley Bank collapsed. The headlines are scary — it's the second biggest bank collapse in U.S. history. But there's a lot of misinformation going around, so I want to walk you through what actually happened.
When you deposit money at a bank, you might remember seeing a note or icon that the money is FDIC insured. That means that the Federal Deposit Insurance Corporation protects the money you deposited in the unlikely event that the bank fails. But — and this is key — the insurance only covers deposits up to $250,000.
Silicon Valley Bank — SVB for short — serves a number of technology and venture capital firms. The vast majority of its deposits were uninsured. That means many firms who had more than $250,000 deposited may lose money after regulators shut the bank Friday. A number of these accounts belong to companies funding operations and payroll, so $250,000 may not last long. Folks are concerned about contagion if companies can't pay employees or vendors.
The big question going forward is: Will SVB get bailed out? A number of high-profile investors are making a case for it. What that bailout might look like is unclear; it's possible the government will protect all of the bank's deposits.
Keep in mind: Saving or recouping client deposits is different than bailing out the bank's shareholders.
This is an important story. Given how connected our economy is, the ripple effects could be significant. However, I want to emphasize one point:
SVB's collapse DOES NOT mean YOUR money is at risk. Bank deposits up to $250,000 are FDIC insured and protected.
Questions beyond what I've covered here? Let me know; I'll do my best to keep you informed.
Have questions? Or want help building a more comprehensive communication plan for your clients? We're here to help.