10 Things to Know About Your Bank, Annuity and Brokerage.

by Natalie Pace.

Includes a Bank, Insurance Company and Brokerage Stock Report Card.

In a post-bailout world, full of stress tests and fancy accounting, many investors are wondering where their money is truly safe. Below are 10 tips to help you navigate exactly where your money is currently housed, when and where FDIC insurance is provided, which banks, insurance companies and brokerages are the healthiest, and more...

1. The Fed's Stress Test.
2. AIG is Still Owned by Taxpayers.
3. Does AIG Own Your Annuity?
4. Are Banks Healthy Now?
5. Online Discount Brokerages are Healthier Than Legacy Brokerages.
6. Not All Bank Products are FDIC-Insured.
7. Annuities are Not As Safe As You Think.
8. Community Banks Were Hit Hard in the Great Recession.
9. Pay Yourself First -- Before Taxes.
10. 401k Roll-Overs.

And here is additional information on these 10 Tips...

1. The Fed's Stress Test. On March 13, 2012, the Federal Reserve Board of governors announced the results of their most recent stress test. The media quickly jumped to say that the four lowest-scoring banks, Ally Financial, Citibank, MetLife and SunTrust, "failed." The banks themselves are assuring customers and investors that they didn't "fail" the tests, but are simply in need of revising their capital plan, and limiting or eliminating their dividends and buybacks for now. The California state insurance commissioner Dave Jones issued a press release stating that MetLife "exceeds the insurance financial solvency requirements." Citi stressed, in a press statement, that it exceeds the requirements when it eliminates "proposed return of capital to shareholders." And when you look at the Bank Stock Report Card, you can see that there are two banks that have similar debt to equity ratings to Citi, which are far higher than the debt to equity ratings of MetLife and SunTrust. (Citi doesn't have the highest reported debt to equity ratio of the bunch.)
   
   
2. AIG is Still Owned by Taxpayers. The American taxpayer still owns 77% of AIG (American International Group), as of 12.28.11. AIG was not included in the Federal Reserve stress tests. Click to see a detailed report on AIG's Recapitalization Plan and relationship with the U.S. government. Review AIG's current revenue, income, debt and more in the Insurance Company Stock Report Card. Remember that the reason the debt appears lower at AIG than other insurance companies is because the company was bailed out, and is now majority owned by taxpayers. They don't owe us a lot of money because they owed so much that we now own the company.
   
   
3. Does AIG Own Your Annuity? AIG companies are (still) leading providers of life insurance and retirement services in the United States. AIG sells annuities and life insurance products under other names, including American General, SunAmerica, Chartis, Western National, and brokerage products under the names SagePoint, Royal Alliance and FSC. If you own an annuity product from one of these companies, AIG owns your annuity.
   
   
4. Are Banks Healthy Now? Though 15 major U.S. banks passed the "stress tests," all owe more than they are worth, and most had less revenue in 2011 than the year prior. Believe it or not, the beleaguered Bank of America experienced 5% revenue growth in the last quarter -- the only bank of the bunch with increased revenues year over year. Click to review the sales, income, earnings growth (or decline), debt and more of the banks in the Bank Stock Report Card.
   
   
5. Online Discount Brokerages are Healthier Than Legacy Brokerages. While the banks in the Bank Stock Report Card owe more than they are worth (sometimes a lot more), TD AMERITRADE and Schwab owe debt that is less than a third of their value. These two online discount brokerages were not a part of the financial meltdown. They both offer FDIC insurance on their investor money market and savings accounts and have the lowest trading fees in the business. Both have banks. Click on the Bank and Brokerage Stock Report Cards for a comparison of revenue, profit, debt and earnings growth in the major banks and online discount brokerages.
   
   
6. Not All Bank Products are FDIC-Insured. Insurance company products that a bank sells, including life insurance and annuities, are not covered by the FDIC. When purchasing any product from a bank, you must read the fine print to determine what safety nets are provided. Learn more in FINRA.org's page on Bank Products.
   
   
7. Annuities are Not As Safe As You Think. If AIG had declared bankruptcy, tens of millions of AIG annuity holders would have been forced to turn to their state guaranty funds in hopes of recovering some of their retirement money. It is very important to purchase your insurance and annuity products from companies that are well-managed and financially stable because these products are not FDIC-insured. Learn more about how the AIG bailout affected consumers at the NAIC web page.
   
   
8. Community Banks Were Hit Hard in the Great Recession. 427 banks have failed since 2008. Most were community banks. The trend has slowed substantially this year, however. Only 13 banks failed in 2012 (as of St. Patrick's Day). Consumers with FDIC-protected deposits were unaffected by the failures. Others with uninsured deposits above the federal limits, like IndyMac customers, had to wait to receive their share of funds generated from the sale of the former bank's assets. For more info on how the IndyMac Bank failure was handled, read the FDIC Q&A sheet.
   
   
9. Pay Yourself First -- Before Taxes. FINRA.org recommends that "most investors should consider an Equity-Indexed Annuity and other annuity products only after they make the maximum contribution to their 401(k) and other before-tax retirement plans." Why? Because 401Ks are pre-tax investments that reduce your taxable income and allow you to defer taxes on your contribution and investment gains. Learn more in FINRA.org's Investor Alert on Equity-Indexed Annuities.
   
   
10. 401k Roll-overs. There are qualifying events where you can rollover your 401K into an online discount brokerage IRA, without penalty. (Check with your CPA for tax guidance on this and with your employer for qualifying event information.) Options include: 1) When you leave your job, 2) When you turn 59 1/2, 3) Certain employer contributions, 4) Post tax contributions, and 5) When the employer changes 401K providers. This is an important option, especially if your investment options are limited in the 401k, if your employer is paying you in company stock and/or if you just want greater control over where your money is invested. You have the universe of stocks and funds available to you at the online discount brokers, whereas the 401K provider may only offer you a handful of fund choices. Also, in cases where your employer pays you in company stock, you may be over-reliant on the company's performance, instead of properly diversified. A general guideline is to have no more than 10% of your nest egg in your own company's stock. Employees at Enron lost far more than they should have, simply by holding too much Enron stock in their 401Ks.

Now that you know more about how FDIC Insurance works, what products are and are not covered and how to check on the fiscal health and debt of your bank, brokerage and insurance company, you are in a position to make more informed choices. May your bottom line be beautiful and your assets always covered.

About Natalie Pace:
Natalie Pace is the author of You Vs. Wall Street and Put Your Money Where Your Heart Is. She is the founder and CEO of the Women’s Investment Network, LLC (a global financial news, information and education site), where she has been adding a splash of green to Wall Street and transforming lives on Main Street for more than a decade. She is a blogger on HuffingtonPost.com and a repeat guest on national television and radio shows such as Good Morning America, Fox News, CNBC, ABC-TV, Forbes.com, NPR and more. As a strong believer in giving back, she has been instrumental in raising tens of millions for public schools, financial literacy, the arts and underserved women and girls worldwide. Follow her on Facebook.com/NWPace. For more information please visit NataliePace.com.

Please note: NataliePace.com does not act or operate like a broker. We report on financial news, and are one of the most trusted independently owned and operated financial news corporations in North America. This article is intended to educate and inform individual investors, and, thus, to give investors a competitive edge in their personal decision-making. The publicly traded companies mentioned in this article are not intended to be buy or sell recommendations.

ALWAYS do your research and consult an experienced, reputable financial professional before buying or selling any security, and consider your long-term goals and strategies.   Investors should NOT be all in on any asset class or individual stocks. Your retirement plan should reflect a long, safe strategy, which has been designed with the assistance of a financial professional who is familiar with your goals, risk tolerance, tax needs and more. The "trading" portion of your portfolio should be a very small part of your investment strategy, and the amount of money you invest into individual companies should never be greater than your experience, wisdom, knowledge and patience.  

Information has been obtained from sources believed to be reliable however NataliePace.com does not warrant its completeness or accuracy. Opinions constitute our judgment as of the date of this publication and are subject to change without notice. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. Securities, financial instruments or strategies mentioned herein may not be suitable for all investors.