Economic Outlook, Financial Planning

Why Banks Are Still The Safe Choice

April 12, 2023

Thomas Beirne III, CFP®
Vice President, Senior Wealth Planning Officer
Washington Trust Wealth Management

The recent collapse of two regional U.S. banks have left some people wondering, “Is my money safe?” The answer is “yes,” when it comes to keeping your money safe, banks are still your best choice.

Why is my money safe in the bank?

Banks are a cornerstone of the financial industry and are some of the most well-established financial institutions in the world, built on a reputation for stability and reliability. The FDIC reports that although bank failures are not uncommon (there were 563 bank failures from 2001 through 20231), no depositor has ever lost a penny of insured deposits since the FDIC was created in 1933.2 And analysts agree that those banks that have failed have typically been vulnerable, not well-capitalized, or engaged in risky investments, such as cryptocurrency.3 FDIC member banks provide deposit insurance up to $250,000 per depositor; joint accounts are insured up to $500,000. Banks not only keep your money safe; they offer a wide range of services – from checking accounts to mortgages, credit cards, and investment opportunities – to help you manage and grow your personal and business wealth.

While banks in general are secure, it’s important to choose the right one.

Why should I bank with Washington Trust?

At Washington Trust, we’ve been here for depositors, borrowers, and investors for more than 222 years. As the nation’s oldest community bank, we’re proud of our long history of strength and stability. Through prudent and disciplined management, we remain well-capitalized, have strong credit quality and liquidity, and consistently rank as one of the region’s top-performing banks. We manage risk effectively, avoiding risky trends such as cryptocurrency, and recognize growing long-term value is better than chasing short-term gains. As an FDIC-insured bank, your deposits are insured up to $250,000 per depositor, and we offer you additional FDIC insurance for larger deposits through multiple programs.

In addition, banking with Washington Trust is good for your community. As a community bank, we’re committed to doing what’s right for our employees, our customers, and our communities. Local banking is good for local business; we care about our neighbors, families, friends, and local businesses because we’re a local business, too.

How are assets managed at a bank versus a wealth manager?

Banks and wealth managers are distinct entities. When you open a bank account and make a cash deposit, it becomes an asset of the bank. As a depositor, you are in essence a creditor of the bank, with the agreement that it will pay you back. Only a small portion of your deposits at a bank are held as cash at the bank. The rest of your money (the majority of the bank’s assets) is invested by the bank into vehicles such as consumer or business loans, government bonds, and credit cards.

A wealth manager, on the other hand, manages your assets on your behalf; your assets do not become the bank’s assets.

Why should I entrust my money to Washington Trust Wealth Management?

At Washington Trust Wealth Management, we work collaboratively with you to create a personalized wealth plan and customized investment to help meet your immediate needs, prepare for the future, and minimize risk. We operate as a Registered Investment Advisor and Trust Company, with the expertise and resources to manage investments effectively and provide essential services such as acting as corporate trustees and guiding your philanthropic planning, retirement planning, estate planning, and more, including:

Commission–Free Advice

We are a fee–only firm and charge based on assets under management. We never receive “extra fees” for recommending specific investments or proprietary solutions.

A Fiduciary Standard

As a fiduciary, we operate at the highest level of ethical standards which requires us to put our clients’ interests above our own. These standards are much more rigorous than the “best interest” or “suitability” measures that govern other advisors.

Comprehensive and Coordinated Solutions

Our relationship with our clients goes beyond financial planning and investment advice. We can help our clients implement a complete solution including trust services, lending, and banking so their entire financial life is well coordinated, working together to meet their goals.

Washington Trust Wealth Management is here and ready to put our strength, stability, and expertise to work for you.

Connect with a wealth advisor

No matter where you are in life, we can help. Get started with one of our experts today. Contact us at 800-582-1076 or submit an online form.

Contact us

This document is intended as a broad overview of some of the services provided to certain types of Washington Trust Wealth Management clients. This material is presented solely for informational purposes, and nothing herein constitutes investment, legal, accounting, actuarial or tax advice. It does not take into account any investor's particular investment objectives, strategies, tax status or investment horizon. Please consult with a financial counselor, an attorney or tax professional regarding your specific financial, legal or tax situation. No recommendation or advice is being given in this presentation as to whether any investment or fund is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors, or markets identified and described were, or will be, profitable.

Any views or opinions expressed are those of Washington Trust Wealth Management and are subject to change based on product changes, market, and other conditions. All information is current as of the date of this material and is subject to change without notice. This document, and the information contained herein, is not, and does not constitute, a public or retail offer to buy, sell, or hold a security or a public or retail solicitation of an offer to buy, sell, or hold, any fund, units or shares of any fund, security or other instrument, or to participate in any investment strategy, or an offer to render any wealth management services. Past Performance is No Guarantee of Future Results.

It is important to remember that investing entails risk. Stock markets and investments in individual stocks are volatile and can decline significantly in response to issuer, market, economic, political, regulatory, geopolitical, and other conditions. Investments in foreign markets through issuers or currencies can involve greater risk and volatility than U.S. investments because of adverse market, economic, political, regulatory, geopolitical, or other conditions. Emerging markets can have less market structure, depth, and regulatory oversight and greater political, social, and economic instability than developed markets. Fixed Income investments, including floating rate bonds, involve risks such as interest rate risk, credit risk and market risk, including the possible loss of principal. Interest rate risk is the risk that interest rates will rise, causing bond prices to fall. The value of a portfolio will fluctuate based on market conditions and the value of the underlying securities. Diversification does not assure or guarantee better performance and cannot eliminate the risk of investment loss. Investors should contact a tax advisor regarding the suitability of tax-exempt investments in their portfolio.