HSBC Securities USA provides clients with access to managed portfolio accounts and asset allocation programs. The U.S. securities division of HSBC Bank manages billion in assets for individual and institutional clients. Read on for more about its financial advisory services.
HSBC Securities USA Background
HSBC Securities USA was formed as a broker-dealer in 1969. It became a registered investment advisor (RIA) in 2005. Today, it’s a wholly owned subsidiary of HSBC Markets USA Inc. and an indirect wholly owned subsidiary of HSBC Holdings Plc.
The firm is a Delaware corporation based in New York City.
HSBC Securities USA Client Types and Minimum Account Sizes
The firm works with individuals, high-net-worth individuals, trusts, estates, charitable organizations, retirement accounts, corporations, limited liability companies and other business entities.
For its separately managed account (SMA) and unified managed account (UMA) services, HSBC Securities USA requires a minimum investment of $250,000. For access to its asset allocation programs, the firm requires a minimum account size of $25,000. The firm may reduce or waive these requirements at its discretion.
Services Offered by HSBC Securities USA
HSBC Securities USA provides clients with separately managed accounts (SMAs) and unified managed accounts (UMAs) through its managed account program.
Through an SMA, a separate investment advisor outside the firm would manage your portfolio based on a single strategy. This account may invest in mutual funds, exchange-traded funds (ETFs) or individual securities in accordance with your risk tolerance and investment goals.
A UMA allows you to invest in multiple strategies based on a model portfolio recommended by a third-party investment manager. These also may invest in mutual funds and ETFs or individual securities.
Additionally, the firm offers individual clients access to its asset allocation programs. Through these programs, a third-party investment advisor would analyze your financial profile while considering factors like investment objectives and risk tolerance. The advisor would then recommend an asset allocation and certain funds to invest in.
HSBC Securities USA Investment Philosophy
HSBC Securities USA works with third-party investment advisors to help clients meet their investment goals. In doing so, advisors gather certain information about the client such as financial situation and risk tolerance. Based on this information, they recommend investing strategies, which may include buy-and-hold strategies or short-sale strategies. The firm utilizes proprietary and third-party investment products when aiming to meet these goals.
Fees Under HSBC Securities USA
HSBC Securities USA charges managed account program fees based on a percentage of client assets under management. The firm doesn’t publish the current fee schedule for these services, but they are available through a wrap-fee program. In a wrap program, one fee covers advisory, most administrative, custodial and brokerage fees. It does not, however, cover the expenses of funds.
For its mutual fund or ETF asset allocation wrap program, which the firm calls Spectrum, the fees generally follow this tiered schedule:
| Spectrum Programs Annual Wrap Fees | |
| Average Assets | Annual Rate |
| First $250,000 | 1.50%, plus* |
| Next $250,000 | 1.00%, plus |
| Assets in excess of $500,000 | 0.50% |
*If less than $250,000 is invested with the firm then there is a minimum fee of $375.
In dollar terms, here's how much you would approximately pay in fees for the firm's Spectrum programs:
| Estimated Investment Management Fees at HSBC Securities USA* | |
| Your Assets | HSBC Securities USA Fee Amounts |
| $500K | $5,000+ |
| $1MM | $5,000 |
| $5MM | $25,000 |
| $10MM | $50,000 |
What to Watch Out For
HSBC Securities USA has several disclosures of legal and regulatory events on its most recently filed Form ADV.
On June 30, 2017, without admitting or denying the findings, the firm agreed to a censure and fine of $1,500,000 regarding the Financial Industry Regulatory Authority's (FINRA) allegation that it failed to maintain electronic brokerage records in a format designed to prevent the alteration or destruction of such records which are stored electronically.
The following year, HSBC Securities USA paid a $1.6 million fine after the U.S. Commodity Futures Trading Commission alleged a trader in the firm's New York office engaged in the practice of "spoofing" -- "bidding or offering with the intent to cancel the bid or offer before execution." The firm terminated the trader's employment and "implemented a variety of enhancements to detect and deter similar conduct," according to the firm's Form ADV.
It should also be noted that HSBC Securities USA’s principal business is that of a broker-dealer. So it's primarily a dealer in corporate bonds, U.S. and international equities and other investment products. Also, it doesn’t offer any non-proprietary or third-party advisory products. So you’re limited to a certain extent when it comes to investment products.
Additionally, advisors may also be broker-dealer representatives. This dual role can present potential conflicts of interest. That said, as an investment advisor registered with the U.S. Securities and Exchange Commission (SEC), HSBC Securities USA must abide by its fiduciary duty to act in the best interests of its clients.
Tips for Finding the Right Financial Advisor
- Want to invest in a broader range of assets than HSBC Securities offers? Finding a financial advisor doesn't need to be hard. SmartAsset's free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
- Ask prospective advisors if they are fiduciaries. Some advisors uphold a fiduciary standard only sometimes. If they are brokers or insurance agents, for example, they are required to recommend only what's suitable, rather than what's in a client's best interest, when acting in those capacities. For more pointers, check out our article on the questions to ask your financial advisor.
All information was accurate as of the writing of this article.
