Comment by dmoy
1 year ago
Yes, it's the same basic principle going on at Wealthfront/etc.
It's possible (probable?) that they have better accounting controls. But I personally wouldn't keep anything above SIPC limits at Wealthfront (or any near competitor like Robinhood, M1, etc). And I'd be keeping records on my own.
And I'd make peace with the fact that SIPC resolution is a completely different ballgame from FDIC turnaround for assets held directly at an insured bank (which is like single business day don't-even-notice fast). I.e. not use it as the sole source of emergency funds, have months of expenses at a different institution, etc.
> same basic principle
Well yes and no - synapses pass-through-banking wasn't covered by SIPC, and neither would wealthfronts comparable product. But keeping it just in a standard Wealthfront (or synapse even) sweep account with no underlying banking shenanigans happening, is different from SIPC's perspective.
Just keeping stocks (up to $500k) or sweep (up to $250k) at a SIPC broker is probably okay, even if it's a new fintech. Fooling around with their weird passthrough stuff, less so.