HSBC Securities USA provides clients with access to managed portfolio accounts and asset allocation programs. The U.S. securities division of HSBC Bank manages more than $3.08 billion in assets. Read on for more about its financial advisory services.
HSBC Securities USA Background
HSBC Securities USA 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.
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 $25,000||1.00%, plus|
|Assets in excess of $500,000||0.50%|
What to Watch Out For
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 Securitiesa and Exchange Commission (SEC), HSBC Securities USA must abide by its fiduciary duty to act in the best interests of its clients.
Within the past 10 years, HSBC Securities USA has been the subject of four legal or disciplinary events and has entered into settlements with regulators and other third parties. We provide brief details of some of these events:
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.
On May 20, 2010, the firm consented to a sanction of censure, taking several actions and a $375,000 fine. With this FINRA allegation, the firm "violated certain NASD, FINRA, and MSRB rules by making negligent misrepresentations and omissions of material facts to clients concerning the safety and liquidity of Auction Rate Securities (ARS), among other claims" between May 31, 2006 and Feb. 28, 2008.
To learn more, you can find the firm's Form ADV on the SEC’s Investment Advisor Public Disclosure website.
Tips for Finding the Right Financial Advisor
- Want to invest in a broader range of assets than HSBC Securities offers? Use our pro matching tool to find an investment advisor who has a more open investing architecture. The tool provides up to three recommendations, based on your area and preferences.
- 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.