by Debra Light, Principal

Target. Sony. JP Morgan Chase. With the recent upswing in data breaches, it seems there is no business too large to be completely ‘impenetrable.’ Nonetheless, every time there is a breach, the question is raised—“How can I prevent it from happening to me?”

At Moneta, we believe that it’s not just a question of prevention but also, and maybe more importantly, a question of how you are protected if a data breach occurs?

There are three main entities in the mix that work diligently to protect Moneta Group clients’ assets: Moneta Group Investment Advisors, LLC and the custodians of our clients’ assets, the primary two being, Charles Schwab Institutional and Fidelity Investments.

Moneta Group—The Gatekeeper

Although Moneta does not hold any clients’ assets, we are an important part of the gate-keeping mechanism that maintains client security. For example, many clients request distributions from their accounts. While that client could contact their custodian directly, we don’t recommend this approach for two reasons. The first is convenience—we are here to make your lives easier and are happy to do the work for you. In fact, both Schwab and Fidelity have staff dedicated specifically to Moneta. As a result, our clients commonly enjoy special share classes with reduced expense ratios and other special options. Without access to these contacts, there are a myriad of departments and different rules that may cause a negative experience.

More importantly, we know our clients personally. Schwab and Fidelity do not have close relationships with our clients, so we have instructed the respective companies to notify us when releasing any funds in order to verify and monitor the transaction. This means that we serve as a watchdog of your money and we are diligent about protecting it.

  • We undergo constant training for protocol on the latest malicious techniques used to falsely access accounts.
  • We have strict hiring practices in place and personnel requirements.
  • We do not share personal information with any other entities or industry groups except as necessary to provide services to you.
  • We have a strict policy on where and how money can be transferred out of client accounts [for example, we will not transfer monies to a third party based upon an email request without talking to the client and recognizing their voice].
  • We cannot send money to a destination other than the account of record without in-depth scrutiny and verification.
  • For our clients’ protection, we recommend that checks for deposit be made payable directly to the client’s custodian (e.g. Schwab or Fidelity) and not payable to Moneta. If we receive a check payable to Moneta, that check will be returned to the client so that the client may reissue the check payable to the custodian.

These are just a few examples of the procedures we have in place to protect you and your family from data breaches.

Custodians—Schwab and Fidelity

As previously mentioned, we custody some of our clients’ accounts with Schwab and some of our clients’ accounts with Fidelity. The selection of a custodian is, however, left to our clients. By giving our clients the ability to select their custodian, our clients are able to obtain the benefits of working with one advisor, one firm, one tax scenario and a consistent and truly diversified investment plan, which wouldn’t be possible if clients felt the need to “diversify their advisors.” If we were to learn someday that a particular custodian was experiencing problems that might threaten the security of our clients’ accounts, our policy will allow our clients to transfer their assets seamlessly from one custodian to another.

Both of our recommended custodians, Schwab and Fidelity, have provided formal policy statements that guarantee they will reimburse their clients’ accounts for any losses due to unauthorized activity. Their guarantees can be found here: Schwab and Fidelity.

Finally, Schwab or Fidelity, like many most other custodians, are covered by the Securities Investor Protection Corporation (SIPC). Although Moneta monitors the financial stability of Schwab and Fidelity, the continued security of any institution cannot be guaranteed, and in such a case clients utilizing Schwab or Fidelity, or any other custodian covered by SIPC, would be afforded certain protections.  Currently, if events were to trigger SIPC’s involvement, SIPC would first attempt to move the individuals’ assets to another brokerage firm. Failing this, it would cover up to $500,000 in each separate capacity (i.e., joint, or trust or IRA account, etc.) including up to $250,000 in cash.

It is our hope that hearing this information helps to ease our clients’ minds. That being said, regardless of how much protection Moneta, Schwab, and Fidelity can offer it is still very important that our clients take action to protect themselves. Look forward to another blog post about New Identity Theft Precautions to Take Now, next week on the blog.



© 2015 Moneta Group Investment Advisors, LLC.  All rights reserved.  The information contained herein is derived from sources deemed to be reliable. However, the accuracy of such information has not be independently verified and, therefore, no representations or warranties are made with respect to such information. This material is for informational purposes only and do not take into account your individual circumstances and, therefore, should not be relied upon in making any investment related decisions.