Fidelity Investments, the nation's largest mutual fund company, has raised the protection of its brokerage account assets to $100 million from $50 million.
Currently, basic account coverage in the brokerage industry is $500,000. This amount is provided by the Securities Investor Protection Corp., an agency that insures investors against loss in the event of financial failure of a broker or dealer.
The excess coverage of $99.5 million will be provided to Fidelity by Asset Guaranty Insurance, a subsidiary of Enhance Services Group.
A Fidelity spokesperson wouldn't disclose how many of its customers actually require this new level of coverage, but he said the move gives Fidelity a competitive edge over other brokerages since most have lower protection limits.
The increase was dismissed by one brokerage executive as a marketing gimmick. Gerald Thomas, president of Investment Network Inc., the broker- dealer subsidiary of St. Paul Federal Bank, said Fidelity's increase was "unnecessary."
Mr. Thomas said he would not expect brokerages to follow suit and raise their protection limits, as there aren't that many investors who really need such a high level of coverage.
"It's great to have $100 million in coverage but most people are never going to have $100 million in an account," Mr. Thomas said.