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Cents and Sensibility

BY GUY STEELE

Registering securities in
firm’s name is great benefit

In this day and age of $150 designer purses, $50,000 cars and $1 million homes, bargains can be difficult to find. One bargain that's no secret, however, is registering securities in a firm's name.

When you register securities in a firm's name, a bank or brokerage firm takes physical possession of and manages the day-to-day responsibilities associated with your securities. Even though you no longer physically hold your stock or bond certificates, you retain control of the securities and can do with them as you wish.

Registering securities in a firm's name is a bargain when you consider this service typically costs little or nothing and could offer many advantages.

When securities are registered in a firm's name, the bank or brokerage firm that takes possession of your certificates:

>> Collects all interest and dividends from the securities for you;
>> Provides regular updates on the status of your securities;
>> Notifies you whenever your bonds are called or mature; and
>> Furnishes one simple annual tax-reporting form.

All of these are attractive services; however, the biggest advantage of registering securities in a firm's name is the safety this service provides. When your securities are registered in firm name, you no longer have to worry about them being lost, stolen or accidentally destroyed.

Consider, for example, this true story of a Washington investor. This self-made millionaire invested regularly in bonds. Although he registered some of his bonds in the firm's name, he didn't trust his investment firm's computer system with all his bonds.

Unfortunately, this proved to be a costly mistake. When a group of children started a fire while playing with matches, the local fire department couldn't control the inferno. When the last ember had died, an entire apartment complex and 32 homes, including the home of the bond investor, were completely destroyed, even though the fire department was just two blocks away. Fortunately, no one was injured in the fire, but the bond investor lost $1.2 million worth of securities in the blaze. Of course, the bonds could be replaced, but the cost of doing so was about $24,000. That's an expensive lesson.

Some investors think it's safer to hold onto stock and bond certificates. If you insist on holding your securities, remember to keep written re- cords of all certificates. Record the description, amount and certificate number of each security before placing it in a safe-deposit box. Then be sure to keep a close eye on the financial news to be on the lookout for bond calls, mergers, etc., in case you overlook your mail.

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Guy Steele is a financial planner and head
of the Pali Palms office of Edward Jones. Send
planning and investing questions to him at 970
N. Kalaheo Ave., Suite C-210, Kailua, HI, 96734,
or by email at: gsteele2@pixi.com