Is Swell Investing Safe and Legitimate? Is Pacific Life\Swell Investing Scam? Swell Investing Complaints and BBB Rating.



Overview of the Safety of Swell Investing


Swell Investing is a new investment company that is trying to change the way people invest. Founded in 2016, the firm provides separately managed accounts (SMA’s) that have socially-conscious themes. Because the business is relatively new, some investors may have questions about its safety. Let’s take a look at these concerns.


Swell Investing Better Business Bureau (BBB) Rating


Swell Investing is owned by Pacific Life Insurance Company. Swell does not have any reviews at BBB (the investment firm is only 1 year old), but Pacific Life does. The insurance company’s profile page shows that it has been in business for 81 years, although Pacific Life was founded in 1868.

Pacific Life has had 4 complaints in the last five years through the Better Business Bureau. All of these complaints have been closed. In order for a complaint to be closed, the consumer must either fail to respond, or accept the business’s response. There is one negative review on BBB’s profile page for Pacific Life.

Pacific Life has an A+ rating at BBB, the analyst’s highest rating. This grade is based on how well BBB thinks the operation is to interact with its customers. The insurance company has a composite score of 3.68 out of 5 stars. Two thirds of this grade is based on the BBB rating (the A+ score), and the other third is based on customer reviews.

Pacific Life is not accredited by the Better Business Bureau. This means the insurance company has not paid a fee to be reviewed or monitored by BBB, and the agency has not determined if the entity meets accreditation standards. These include such topics as transparency, accurate marketing, and trust with customers.


Financial Strength of Pacific Life


The parent company of Swell Investing is a Fortune 500 company. It has billions of dollars in assets, billions of dollars in insurance policies, and billions of dollars in annual revenue. Some of the largest companies in the United States are clients of Pacific Life. An investment advisory firm, Pacific Life Asset Management, is an affiliated company, although it does not have a relationship with Swell Investing.


Is Swell Investing SIPC Insured?


Swell Investing is an investment advisor. It uses Folio Investments as its broker-dealer and custodian. All funds deposited with Swell are held with the custodian. Folio is a member of SIPC. Therefore, all brokerage accounts with Swell are insured by SIPC up to $500,000. Of this amount, $250,000 may be used for cash.

If Folio Investments ever declared bankruptcy and SIPC coverage wasn’t enough to protect its clients’ assets, the broker-dealer has a supplemental insurance policy with Lloyd’s of London. Like SIPC, this private insurance only covers the number of securities in an account and not market price. The Lloyd’s of London policy is good for $10,000,000 per account with a $900,000 maximum on cash balances.

This supplemental insurance policy is smaller than TD Ameritrade’s, which offers $149.5 million of coverage, of which $2 million can be used to insure cash.

Vanguard has a supplemental policy through Lloyd’s of London and London Company Insurers. The broker is able to protect client accounts up to $49.5 million each, of which $1.75 million covers cash. There is an aggregate maximum of $250,000,000.


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Is Swell Investing FDIC Insured?


Folio Investments has a bank-sweep program where it moves free cash balances to participating banks. The broker uses up to 18 FDIC-insured banks. This policy results in a maximum of $4.5 million in insurance for individual accounts and $9 million for joint accounts.

Folio’s FDIC-sweep system is quite a bit more generous than many other programs. Schwab customers, for example, only get the standard $250,000 protection. And Fidelity provides a maximum of $1,250,000 of insurance for individual accounts.


Is Swell Investing Regulated by FINRA and the SEC?


Swell Investing and Folio Investments are both registered with the Securities and Exchange Commission. Swell’s SEC registration number is 801-108656. The firm’s SEC profile page does not show any negative events, although it’s only been registered since 2016. It is registered in all 50 states and the District of Columbia.

Folio’s SEC registration number is 52009. It is also registered in all 50 states and DC. It has been in business 15 years longer since Swell, having been incorporated in Virginia in 2000. It has six disclosures on its license page. Four of these instances were regulatory events, while the other two were settled in arbitration.

Folio was fined $50,000 in 2014 for submitting inaccurate documents to the SEC and FINRA, and for having an inadequate audit system in place. Folio did not deny or admit any wrongdoing.

Folio Investments also has a membership in FINRA, which is tasked with overseeing the American brokerage industry. Its FINRA membership ID is 48015. FINRA ensures compliance with legal and ethical standards.

In 2008, Folio was fined $13,000 by FINRA for failing to report the time of execution of certain Nasdaq stocks. It also failed to report the sales of some Nasdaq small-cap stocks. These mishaps took place between 2002 and 2004.


Swell Investing Review


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Summary


Swell Investing, its parent company Pacific Life Insurance Company, and its broker-dealer and custodian Folio Investments are all legitimate businesses in the American financial scene. Pacific Life is the biggest of the three and has been in business over a hundred years. Folio is seventeen years old and has had a few sanctions, but they don’t seem too serious. It also provides a very generous FDIC-sweep program for uninvested cash. Swell Investing is the youngest company with less than in a year under its belt, but it offers an interesting form of impact investing at low cost that may appeal to some traders.


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Updated on 8/9/2017.



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