Market Volatility -
We at Cornerstone understand that during these unprecedented times of market uncertainty, it can be confusing and unsettling. In an effort to make this difficult situation as easy on you as possible, we have created this informative page to provide insight and answer questions you may have. Of course, if you still have any concerns, we encourage you to contact your advisor directly. Also, if there are topics that you think we should address, please let us know by emailing [email protected].

Articles and Additional Information

Forced Selling Hits Municipal Bond Market Once Again
Forced liquidations resulting from the latest round of financial markets turmoil were the primary driver but money market mutual fund fears and poor liquidity also played a role. On a positive note, the current underperformance was more liquidity driven than credit related.
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Helping Manage Risk Through Asset Allocation
The goal of every investment portfolio is to produce the most optimal outcome over a specific of period of time. However, each investor’s preferences are different. If we all desired the same balance of safety, performance, maintenance, and cost, we would all drive the same type of car. Achieving investment goals requires knowledge of what outcome would define success, whether that objective is realistic, and how to construct an asset allocation designed to meet that objective.
Click here to read (140KB PDF)

At LPL Financial, Your Account Carries SIPC and Excess SIPC Coverage
Worried about your account security at LPL? LPL addresses this question.
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Riding Out the Bumps
While short-term fluctuations may make you nervous, looking at the bigger picture can help you ride out the bumps and eventually reach your goals.
Click here to read (291KB PDF)

What SIPC Covers...
and what it does not
Click here to read (18KB PDF)

Seven Questions Investors Ask Most Often
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Frequently Asked Questions Regarding Excess SIPC Insurance
How are customer assets held at securities firms protected?	Customers Assets are separate from firm’s assets Securities regulations protect your funds and your securities when you keep them at a broker/dealer. The Securities and Exchange Commission requires broker/dealers to deposit customer funds in a separate account, distinct from the firm’s own money. Securities held by clients in “street name” are kept securely with the Depository Trust Company, separate and distinct from the assets of securities firms. Regulated by the SEC and the Federal Reserve, the depository is a national clearinghouse for settling trades and a custodian of securities. Regulators and independent auditors periodically review firms’ financial records to ensure that clients’ assets are accurately tracked and held separately from the firms’ own holdings. Customer Assets are Protected by SIPC In addition, Congress created the Securities Investor Protection Corporation (SIPC) in 1970 to protect customers of member broker/dealers that may fail or be liquidated. If any securities or cash are missing from eligible customer accounts, the corporation steps in to replace those securities and cash. This protection is limited to $500,000 per customer, including up to $100,000 in cash. SIPC does not protect customers against market risk. (Losses resulting from a fall in a security’s value are not covered.) See www.sipc.org for more information about SIPC. Customer Assets may be Protected by “Excess SIPC” Most securities firms offer additional account protection beyond SIPC’s limits (commonly referred to as “Excess SIPC”). This coverage is provided through private arrangements between securities firms and insurance companies. Since the protections vary from firm to firm, clients should talk with their broker/dealer to learn about what is provided.
How does SIPC Protection Work?	Customers can have confidence that, given the very high percentage of client assets that are recovered during liquidation, SIPC coverage is adequate for nearly all customer accounts. Consider: First, federal securities law requires that customer assets be segregated from a firm’s own assets. The law is backed by internal and external audits and regulatory examinations. Second, most customer assets are held in book-entry form at industry depositories and not in physical possession by the firms themselves. Third, SIPC reports that 99.7 percent of eligible investors have been made whole in the 306 failed brokerage firm cases that it has handled over the past 32 years. None of these cases required a payment under excess SIPC coverage. The remaining 0.3 percent of investors had claims in excess of the SIPC limits, but LPL Financial understands that these claims were filed by clients of broker/dealers that did not carry excess coverage. Fourth, SIPC funds are used to make investors whole after all customer assets held at the brokerage firm have been recovered. The SIPC limit of $500,000 ($100,000 cash) per account does not mean that the account will receive only up to $500,000. Rather, in a SIPC customer proceeding, the account will receive a pro-rata share of all client assets recovered in liquidation and then will receive up to $500,000 from SIPC to make up any difference that may still exist.
How does SIPC Protection compare with FDIC insurance?	The Federal Deposit Insurance Corporation (FDIC) protects deposits up to $100,000 in most, but not all, U.S. banks and savings associations in the event that the institution becomes insolvent. FDIC does not cover securities, mutual funds, or similar types of investments. For more information about FDIC insurance, see www.fdic.gov.
I am an investor with an account value at a broker/dealer that is higher than $500,000. What should I do?	Ask your brokerage firm representative to explain the protection that is available for you account above the SIPC limits and to discuss the firm’s internal controls and financial strength. Knowing that you are with a well run, financially stable firm is your best assurance that your assets are safe and protected.
What is the LPL Financial Excess SIPC coverage and who is the carrier?	LPL Financial has Excess SIPC protection from Lloyd’s of London. The firm’s coverage limit is $750,000,000 in the aggregate.