Independent Investment Checking

Jan 2019


Last week I saw in an announcement by an investment firm that they were rolling out a new product that would pay three percent on checking and savings accounts. The company further stated that even though this money was not insured by the Federal Deposit Insurance Corporation (FDIC), it was protected by the Securities Investors Protection Corporation (SIPC). SIPC protects cash and securities that are held by individuals in a SIPC brokerage house. SIPC does not protect customers from market losses, nor does it protect against bad investment advice or for recommending inappropriate investments. That being said, it was intriguing to me that a brokerage house could offer three percent on cash and have that money insured. After all, most other financial institutions are paying one percent or less for the same type of accounts. Of course, after doing some research, it became clear that the cash accounts were not covered under SIPC.

I bring this up because it is important that we all remember that in today’s world, anyone can say anything they want and get away with it whether it’s true or not. The internet, TV and even the print media is filled with false and misleading information to deceive and confuse us, and it is up to us to weed through it.

For as long as I’ve been involved in the investment world I’ve always lived by a number of rules, and one of those rules is that I never invest in anything that I can’t check out independently. If I can’t check out an investment independently, I’m walking away from it. I recognize that I am going to walk away from some attractive investment opportunities. However, my philosophy is that I’m willing to give up something on the high end, not to be hit on the low end. I know that many of you may be thinking there are some investments opportunities that are so new that there are not independent sources available to review the investment. My philosophy is that those are not investments, but rather flyers which are different than an investment. I consider a flyer no different than gambling. When I put $10 down on the blackjack table I assume I’ve lost that $10 as soon as I put it down. The same thing applies when I take a flyer on something. My philosophy is if you can’t check something out independently, you have to think of it as more of a gamble than an investment.

In today’s world, the majority of us do our research on the internet. Unfortunately, because the internet is what it is we have to be cautious as to the sites we use and depend upon. We need to make sure the sites we use are independent and not biased. Remember, anyone can put up a web site that looks professional-don’t fall for it. Just because a site looks professional does not make it a legitimate site. That is why when it comes to checking things out I want to look for at least two to three independent sources. If I can’t find adequate independent sources, I am walking away from the investment. Some of the best investments I have made are investments that I walked away from.

As a side note, the financial institution that has been advertising three percent on checking and savings accounts has withdrawn its offer as they realized the money was not covered by SIPC. It seems to me that they didn’t do their homework before they started advertising. Unfortunately, in today’s financial world this has become more of the norm.

One last note and that is to remember if something sounds too good to be true it’s probably something you should walk away from.

Good luck!


Rick is a fee-only financial advisor.  If you would like Rick to respond to your questions, please email him at