In light of recent news about Lehman Brothers, Merrill Lynch, Bear Stearns, AIG and other major financial institutions, we understand you may have questions about any potential impact these events may have on investments at Amplify Financial.
Amplify Financial offers securities and insurance products through LPL Financial and its affiliates, the largest independent broker/dealer in the US. We would like to share with you some information about our relationship with Lehman Brothers, the LPL Financial business model, and our firm's financial strength.
With specific respect to the situation at Lehman Brothers, please be assured that LPL Financial has minimal exposure to Lehman. Through the planning and oversight of the its enterprise risk management department, LPL Financial is well-positioned to withstand this event with no impact to the firm. In addition, we would like to inform you of the following:
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- No Investment Banking: LPL Financial does not engage in the business practices of banks or investment banks. It does not provide loans to hedge funds or other speculators. It does not hold any securities on its books that are open to market risk. As a result, the firm withstands shocks to the markets very well. In fact, LPL Financial was upgraded by Moody's on September 5, and their press release contains some very positive comments about the LPL Financial business model.
- Strong Liquidity Position: LPL Financial has access to operating lines of credit, which provide substantial liquidity to the firm. This is in addition to cash assets that it holds on the balance sheet. Therefore, the total liquidity of the firm far exceeds any measure of what has been needed in the past or is anticipated in the future.
- No Investment Inventory: Unlike other types of brokerage firms, LPL Financial does not maintain an inventory of investments. This fact means that the liquidity of LPL Financial is not impacted by the rise and fall of the values of securities on its books, as there are none.
- Active Monitoring of Partners: The LPL Financial enterprise risk management department routinely reviews the firm's counterparty risk, as well as those with whom LPL Financial does business to limit exposure to risk. This team monitors all outstanding debits and credits and the firms that clear those trades to ensure they are healthy and do not pose a risk to LPL Financial or its clients.
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We hope this information helps you to feel the same degree of confidence we hold concerning the strength of LPL Financial. If your investment portfolios are managed at any of these above-mentioned institutions, and you would like to discuss your concerns, we would be happy to help. If you have any questions, please contact us at 512-519-5476.
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