Lowest yield tier: As of April 19, clients with any cash sweep holdings got yields of 0.01%.Ĭompany disclosure language: "The information above about recent yields for the bank deposit sweep option and available money market funds is provided so that you can review the various sweep options you may have, which may, at times, pay a higher return than the interest rate paid on deposits at JPMorgan Chase Bank. Metrics displaying impact to business: At the end of 2022, the company had $198 billion in sweep deposits and $153 billion in other deposits by clients of Morgan Stanley and E-Trade in savings, checking, certificates of deposit and other money funds.Ĭompany response: "We offer numerous cash alternatives, both Morgan Stanley products and from third parties, into which clients can choose to deploy their cash," spokeswoman Susan Siering said in a statement. Morgan Stanley will sweep free credit balances above $20,000,000 into a money market mutual fund." Lowest yield tier: As of April 20, clients with up to $499,999 in cash got yields of 0.01%.Ĭompany disclosure language: Free credit balances "will be automatically deposited into deposit accounts established for you by and in the name of Morgan Stanley Smith Barney, as agent and custodian for its clients, that are demand deposit accounts at Morgan Stanley Bank, and Morgan Stanley Private Bank, each a national bank, FDIC member and an affiliate of Morgan Stanley. For a look at the importance of cash in clients' portfolios in the wake of this year's banking crisis, click here. To see the results of the queries and FP's accompanying research into the firms' cash sweep disclosures, scroll down the slideshow. What else should financial advisors know about your firm's cash sweep accounts?.How can financial advisors using your firm's brokerage and/or custodial services make use of higher-yield cash solutions for their clients?.How would the firm explain this line of business to clients asking how it's in their best interest?.In terms of percentage points or basis points, what are the latest available figures for the yields to clients from sweep accounts and the yields to the firm?. Can you state any figures about the extent of cash assets in sweep accounts by the end of 2022 and the amount of revenue and/or profits generated last year from sweep accounts?.Two other firms gave responses without permission to quote them all other firms replied to the queries selectively or declined. Only Charles Schwab provided answers to all of the questions that the firm was willing to share publicly. In terms of interest yields, the below slideshow displays the often-tiny benefits to the firm's customers.įP reached out to Morgan Stanley, JPMorgan Chase, Charles Schwab, LPL Financial, Merrill, Raymond James, Fidelity Investments, Ameriprise, Wells Fargo, UBS, Edward Jones and Pershing with a series of questions about their cash sweep businesses. The clients get liquid assets available at their command and Federal Deposit Insurance Corporation protection for their cash. Read: The wealth management industry's $1T conflict of interestĬash sweep accounts provide banks with a ready source of deposits and brokerage firms with profits on the interest rate yields. They represent an alternative to money market funds or certificates of deposits, but they usually pay much lower returns. Brokerage firms "sweep" clients' uninvested cash into accounts at internal and outside banks that hold the deposits. Two experts whose firms work with wealth management companies on their cash management programs shared the notable figure for industry-wide holdings in sweep accounts with Financial Planning. Very few wealth management firms are willing to engage with questions about their cash sweep programs, even though they represent about $1 trillion in client holdings across the industry.
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