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Markets in Focus: Why Recent Banking System Failures Raise Questions for Investors

On Friday, March 10, news came that government regulators shut down Silicon Valley Bank after it was unable to meet withdrawal requests from depositors. It represents the second-largest bank failure in U.S. history.

On Sunday, March 12, another bank followed suit. U.S. regulators took over Signature Bank for insolvency, caused partly by failed bets on cryptocurrency. Federal regulators have acted swiftly to maintain confidence in the banking system.

Putting It into Context for Investors

At OneDigital, we know the whirlwind of headlines and news stories about bank takeovers may be unsettling and confusing. As investors, you may be concerned about how this could potentially affect your money and if it indicates more bad news for the financial services industry.

Our team of financial professionals and investment advisers is working hard to fully understand the long-term impacts this event could have on the economy, markets and portfolios.

We believe the United States banking system is sound, and regulators are motivated to ensure that depositors are safe. Even though depositors are still protected, there are still risks to holders of equity and bonds in these financial institutions that fail. It’s important to know that the banks under the most pressure right now have a specialized client base and are connected heavily to tech start-ups and cryptocurrencies.

Our advice to investors remains the same now as before. Remain calm and stay the course in times of market volatility.

We also recommend that you follow these principles of sound investing:

  • Maintain a diversified portfolio

  • Invest in a way appropriate for your time horizon

  • Avoid making rash decisions based on headlines

While we can never predict exactly what the markets will do, there are ways to stay more at ease during market downturns. Ultimately, you want to avoid making decisions you might regret later.

  • Now is not the time to make hasty decisions about your investments. Instead, revisit your financial plan and review your investments periodically so that you can remain calm in times of volatility.
  • Consider rebalancing your portfolio if you have not already done so to ensure it is appropriate. We recommend that your portfolio rebalancing aligns with when portfolio managers rebalance the models.
  • If the volatility stresses you out and you don’t have a financial plan, now is a great time to get organized. One of the benefits of working with an investment adviser is the peace of mind that comes from knowing you have a customized plan in place to help you reach your goals.

Are you interested in learning more about saving for retirement during volatility? Check out Market Volatility and Your Retirement Savings for a few reminders about the ups and downs of the past.


Investment advice offered through OneDigital Investment Advisors LLC, an SEC-registered investment adviser and wholly owned subsidiary of OneDigital. The materials and the information are not designed or intended to be applicable to any person’s individual circumstances. There is no guarantee that a diversified portfolio will enhance overall returns or outperform a non-diversified portfolio. Diversification does not protect against market risk.

These statements do not constitute an offer or solicitation in any jurisdiction. If you are seeking investment advice or recommendations, please contact your financial professional.