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About CDs and The FISN Division of Landolt Securities Inc.
What is the FISN Division?
The FISN Division of Landolt Securities, Inc. is an investment management division that specializes in conservative fixed income products. The division's objective is to search for suitable investments with attractive returns and less risks. "FISN Division" is a short name for all operations of FISN, a Division of Landolt Securities, Inc. located in Bethesda, MD. The FISN Division is an operating division of Landolt Securities, Inc. of Oshkosh, WI which was founded in 1991. Clearing, Safekeeping and custody services for the FISN Division of Landolt Securities is provided by National Financial LLC, a Fidelity Investments® company.
What are some of the things the FISN Division does?
The FISN Division offers FDIC insured certificates of deposit (CDs), corporate bonds and other income investments opportunities that meet the needs of curtomers for income and yield. Daily list are published of CD and other income investments that are available to nationwide investors and suitable for most of our customer base. The rates are published online every business day at www.fisn.com.
What is Landolt Securities, Inc.?
Landolt Securities, Inc.is is a registered securities broker dealer, registered with United States Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), and in most states and the District of Columbia. Landolt first became registered with FINRA and the SEC in the 1991.Registration does not imply endorsement or approval by FINRA or the SEC of Landolt, FISN or the products and services they offer.
How do I open a new account at the FISN Division of Landolt Securities, Inc.?
Call during Bethesda, MD, business hours (M-Th 8:30-5 and F 8:30-4) to have an Account Executive help you with your questions and assist in the completion of the new account application. The accounts application and other forms are available on the FILES page as PDF files which can be filled out online and then printed out. Go to the Getting Started section at the top of the page and follow the directions there.
What does a FISN Division broker do for me?
- Opens, approves and monitors your account by obtaining, verifying and retaining your account information and documents.
- Provides investment recommendations suitable for you.
- Accepts orders and other instructions from you regarding your account, and promptly and accurately transmits those orders and instructions to the FISN Division's clearing and execution firm.
- Operates in compliance with all applicable laws, rules and regulations relating to activities within your account.
- Maintains the required books and records.
- Investigates and responds to any question you have about your account.
Is my securities account insured or protected?
Securities in the FISN Division of Landolt Securities, Inc. accounts are carried by National Financial Services LLC ("NFS"), a Fidelity Investments® company, are protected in accordance with the Securities Investor Protection Corporation ("SIPC") up to the $500,000 per investor. The $500,000 total amount of SIPC protection is inclusive of up to $250,000 maximum protection for claims for cash, subject to periodic adjustments for inflation in accordance with terms of the SIPC statute and approval by SIPC's Board of Directors. NFS also has arranged for coverage above these limits. Neither coverage protects against a decline in the market value of securities, nor does either coverage extend to certain securities that are considered ineligible for coverage. For more details on SIPC, visit www.sipc.org or call 202-371-8300.View the SIPC brochure here.
In addition to SIPC protection, NFS provides for brokerage accounts additional "excess of SIPC" coverage from Lloyd's of London together with other insurers. The "excess of SIPC" coverage would only be used when SIPC coverage is exhausted. Like SIPC, excess of SIPC protection does not cover investment losses in customer accounts due to market fluctuation. It also does not cover other claims for losses incurred while broker-dealers remain in business.
Total aggregate "excess SIPC" coverage available through NFS's excess of SIPC policy is $1 billion. Within NFS's excess of SIPC coverage, there is no per account dollar limit on coverage of securities, but there is a per account limit of $1.9 million on coverage of cash awaiting investment. This is the maximum "excess of SIPC" protection currently available in the brokerage industry. See the NFS brochure - A Guide to Your Brokerage Account.
Note: Certain items are not eligible for SIPC protection. Among the assets typically not eligible for SIPC protection are commodity futures contracts, currency, and precious metals, as well as investment contracts (such as limited partnerships) and fixed annuity contracts that are not registered with the U.S. Securities and Exchange Commission under the Securities Act of 1933.
The FISN Divisiion and Landolt Securities are not banks and do not issue CDs themselves. The firms sell CDs issued by FDIC inured banks that can be held in a brokerage account. CD principal and interest are protected by FDIC insurance when held and regestered according to FDIC rules. In cases of bank insolvency, althought the return of principal by the FDIC is usually quite prompt, in some cases it can be a lengthly process.
What is the role of National Financial Services LLC?
Landolt Securities, Inc. has entered into an agreement with National Financial Services LLC (NFS) to provide certain back office functions. This agreement includes to the FISN Division. NFS is a Boston-based, Fidelity Investments company and a nationwide leader in securities administration. Click here to review the Financial Statements of National Financial Services LLC.
NFS is responsible for the following functions of the FISN Division:
- Execution, clearance and settlement of securities transactions.
- Preparation and distribution of periodic statements of securities accounts, transaction confirmations and tax documents.
- Custody and safekeeping of funds and securities in customer accounts.
- Receipt and delivery of funds and securities in customer accounts.
- Extension of margin credit.
- Maintaining required books and records.
Is Landolt Securities, Inc. registered with the Securities Exchange Commission and other regulatory agencies?
Yes, Landolt is fully registered with all the appropriate federal and state regulators. Click here to Verify our registration with any of the applicable regulatory groups. Registration with Regulators does not imply that the Regulator approves or endorses the firm, its products or services.
What do you charge for commissions and other fees?
Commissions are not typically charged on fixed income transactions--as there would be on a stock trade. The firm earns a sales credit from the issuer and/or sells investments net to the buyer.
Accounts held at FISN Division have a set of administrative fees and commission charges for stock transactions. Administrative Fees are listed and explained on the Fees page in the Notices section link at the bottom of the home page.
Stock commissions start at 10 ¢ per share with a minimum of $50 per trade for online trades. Stock commissions using a broker for assistance depend upon how much research and analysis is requested. You can ask your broker what the commission for your trade will be before your broker places it for you.
Mutual fund sales and purchases have a $50 fee per buy or sell transaction, whether done online or broker assisted.
What is myStreetscape®?
myStreetscape® is an internet-based system developed for the individual investor to help manage their entire portfolio from a home or office computer via the internet 24 hours a day, 7 days a week. Investors can view their account online including recent confirmations, monthly statements and tax reports. Stock and mutual fund transactions can be entered online for execution during business hours.
How do I get a myStreetscape® account?
- You must have a FISN Division securities account.
- Request a sign-on user name & temporary password as either a view only account or a full-trading for equities and mutual funds customer.
- Logon and enter the temporary password. Then change the password to a personal one that only you know.
- Read the agreements and accept the terms.
- You are now activated.
Why invest in a CD?
Certificates of Deposit appeal to a more risk adverse investor. The FDIC insurance is unique to bank deposits and for all practical purposes no other fixed income investment carries such a guarantee of safety of principal. CD rates have typically out paced those offered by US government securities--although there have been times when CD rates were lower than Government sercurities. In general, banks need to offer higher, if only slightly higher, rates to attract depositors who might otherwise invest in a US government security or a bond.
How safe is my money in a CD?
Provided that your investment falls beneath the FDIC set limit of $250,000 per CD and the FDIC registration rules are met, you will have a return of your deposit. To ensure the safety of our client's money, the FISN Division places CDs with banks that are FDIC insured. The FDIC covers individual accounts up to $250,000 and joint accounts up to $250,000 per individual per bank. IRA accounts are separately insured up to $250,000 per bank. CD deposits in multiple banks can be used to extend coverage because the FDIC insurance is per bank and not per person or brokerage account. FDIC insured CDs are backed by the full faith of the U. S. Government. Check the Electronic Deposit Insurance Estimater (aka EDIE) at the FDIC website to check your insurance coverage.
Why not invest in my bank's CDs?
You should certainly ask your bank about its CD rates. However, you may find that the length of term you need is not offered or the rates are "teaser" rates good--for a short time only and not always for the full life of the deposit. If you have more than $250,000 you may find that you would exceed your FDIC insurance coverage limits with your local bank. The FISN Division offers multiple banks to extend the limit on federal deposit insurance, while any one bank or thrift can provide only $250,000 in insurance per depositor. The FISN Division helps spread deposit funds among different banks, at no more than $250,000 per insured institution, to keep your funds insured.
Are IRAs available to hold CDs?
Yes, CDs can be held in an IRA account. The FISN Division can establish IRAs for its clients as long as the minimum investment amounts per transaction are met. Typically we are asked to transfer funds from an existing IRA to a FISN Division IRA. Or, we are asked to accept funds from a 401k plan or a pension plan into an IRA rollover. In either case, you need to complete an IRA application that, among other things, allows you to name the beneficiaries. Next, we will need you to sign a transfer form and supply a current statement from the existing IRA administrator. IRS rules dictate that trades can not be accepted in an IRA until the transfer is completed.
Is the FISN Division a bank?
No, the FISN Division and Landolt Securities, Inc. are not a bank and do not issue CDs. The FISN Division is not FDIC insured, but, the deposits of its customers, invested in FDIC insured CDs according to the FDIC rules, are. CD investments are held at the FISN Division broker dealer, Landolt Securities, Inc., thorugh its clearing firm National Financial Services LLC, which provides clearing, custody and safekeeping services.
Why trust the FISN Division?
The FISN Division can be found on the internet but operates in a traditional manner, person to person and on the telephone from its offices located in the adjacent Washington, DC suburb of Bethesda, MD. The internet is the best way for us to be found by potential clients and to publish our daily rate offerings. The vast majority of our clients conduct buisness with their personal FISN Representative over the telephone. Our Reps are glad to discuss the current offerings on the website, offer other investments that meet your needs or advise you on what products and services might fit your investment objectives. Of course, for the do-it-yourselfers, you can purchase and sell equities and mutual funds online from your brokerage account.
Click on the Verify button to check on the registrations of Landolt Securities, Inc. with any of the regulatory agencies that monitor the securities industry - we are proud of our record. (Registration does not imply endorsement or approval of FISN, Landolt or any product or service by the Regulator.)
Can I construct a CD Portfolio by myself?
Perhaps, but if you have a large CD portfolio you might have to make it a full-time job, hire an experienced financial staff to help you and design computer reports to help you track your CDs and their interest payments. But you would probably only identify comparable CD issuers that the FISN division would have recommended anyway, at the expense of your time and telephone bill.
How does it work? What is the process?
You tell us what amounts and maturities you prefer. We will quote terms for each CD, normally in an amount below the $250,000 FDIC insurance limit, so that the interest and principal are both FDIC insured. We will provide you with wire instructions which you give to your bank to wire funds to your FISN Division brokerage account. The FISN Division of Landolt Securities brokerage accounts are held at National Financial Services LLC, which provides clearing, custody and safekeeping services. Your CDs are purchased in the brokerage account after funds are received and we obtain your approval for the purchases. You will receive a confirmation for each security purchased and statements will be sent monthly or quarterly if there has been no activity in the account.
What is a CD?
A Certificate of Deposit (CD) is a contract with a bank to pay a contractual rate of interest over a specified period of time. The FISN Division recommends only CDs at or below the FDIC insurance limit of $250,000, which pay interest and are issued by FDIC insured banks. All insured banks are regulated by the U.S. Government, periodically examined by their Federal Regulator and audited by independent accountants. Read the Standard CD Disclosure Statement applicable to insured CDs held at a broker dealer
What is a Callable CD?
Callable CDs pay interest to the depositor at the contractual rate of interest over the life of the CD, BUT they have a "call feature". These CDs have a period of time during which the CD cannot be called--meaning the issuing bank cannot cut short the CD and give back the deposit. At the end of the non-callable period, typically a short time from the issue date, the CDs may be called (redeemed) for the full amount of the original deposit plus any accrued interest.
There is no simple way to predict when a call will occur. However, when interest rates decline, the probability of a fixed rate deposit being called increases. Conversely, when interest rates rise, it is usually less certain that a deposit will be called by the issuer. Only the issuer and not the depositor may call a CD. If the CD is not called, the CD will continue to pay interest at the contracted rate until the next call date. Call dates are fixed at the time of the CD issue so that you will know the possible callable dates before you purchase your CD. Call dates typically fall on an interest payment date. Issuers normally announce the exercise of their call privilege in advance, allowing you time to contemplate your re-investment options.
What is a Callable, Step-Up or Bonus Rate CD?
Callable, Step-Up CDs are Certificates of Deposit whose interest rates increase over the life of the CD on a predetermined schedule. Step-Up CDs are callable CDs in which the interest rate increases over the life of the CD to higher rates of interest. Step-Up CDs have a period of time in which they may not be called (redeemed). At the end of the non-callable period, usually a short period from the issue date, the CDs may be called for the amount of the original deposit plus any accrued interest. If the CDs are not called, or cut short, the issuer must pay the new, higher, interest rate for the next non-call period. The CDs are usually callable on each subsequent interest payment date.
Like a fixed rate callable CD, it is difficult to project when a CD might be called. Business sense would usually indicate that if interest rates rise, a Step-Up CD will less likely be called - if the interest rate to be paid is less than a current rate for the same term. Only the issuer and not the depositor may call a CD. Issuers normally announce the exercise of their call privilege in advance, allowing you time to contemplate your re-investment options.
Who can call a Callable CD?
Only the bank can call a "Callable CD". The CD investor has, in effect, given the right to to the bank to call the CD, that is pay it back early. The bank's right to call the CD has considerable value. Thus, the bank issuing the CD pays the investor a higher interest rate than he would receive from investing in a non-callable CD of a similar term, in exchange for this right to call the issue before maturity.
How does the Current CD Rate differ from the Theoretical APY?
All certificates of deposit (CDs) earn the contractual rate of interest the issuer agrees to pay for the time of deposit. This is known as the Annual Percentage Rate (APR). It is also referred to as the "interest rate" or coupon rate". This interest rate can be paid out periodically, such as monthly, or it can be paid at maturity. Banks often compount their rates adding to the amount of interest that is paid on the CD.
The Truth in Savings Act is a federal law that was passed on December 19, 1991. The Truth in Savings Act requires the clear and uniform disclosure of rates of interest, the Annual Percentage Yield or APY. All CD offerings must display the APY as well as the interest rate 9or APR). The APY takes into consideration the benefits of any compouding of the interest. This allows customers to compare the full yield of a CD with the same itnerest rate but different rates of compounding. The CDs held in the FISM Division securities accounts DO NOT COMPOUND
- For time accounts with a stated maturity greater than one year that do not compound interest on an annual or more frequent basis and that require the consumer to withdraw interest at least annually, the annual percentage yield may be disclosed as equal to the interest rates. Most brokerage CDs pay semi-annual interest but some do pay on a monthly quarterly or annual basis. With a few exceptions, CDs with terms of less than one year pay interest at maturity.
- CDs with call features (where the bank can end a CD early based on a pre-determined redemption schedule) and where the intereest rates paid are variable, stepped up or in some way not the same over the life of the CD will have a "theoretical" APY based upon the maturity date. This is considered "theoretical" because the investor may not actually receive this APY if the CD (or another callable security) is called before the maturity date. The investor can, however, calculate the actual APY received based upon the actual number of days the security was held and the actual amount of interest received. Your FISN Division broker will be glad to help you with this calculation
What is the difference between Annual Percentage Yield and the Average Annual Yield (AAY)?
There is significant difference between these terms. The APY calculation formula was established by the Board of Governors of the Federal Reserve System for the uniform quotation of deposit interest rates and yields. It is a standard dictated by the government designed to clarify deposit yields.
Average annual yield is used by some to confuse CD investors. It is not a legitimate comparison figure used by banks. It distorts the actual yield expressed by the standard APY calculation. In fact, the longer the term of the CD, the more it distorts the true picture. For these longer term CDs, it gives the false and exaggerated appearance of a higher return for the same interest rate. Although the AAY is used less frequently, if your are quoted an "Average Anual Yield" - ask what the actual interest rates and the Annual Percentage Yield (APY) is. You want to know the ANNUAL YIELD no an AVERAGE return. The FISN Division does not use average annual yield calculations.