Sometimes I wake up in the morning and I wonder why firms like mine in the independent RIA community don’t have one hundred percent of the wealth management industry’s AUM. Maybe it’s still too early and the knowledge gap among clients is too wide.

Jason Zweig at WSJ:

Starting Sept. 4, Bank of America Corp.’s Merrill Lynch brokerage unit will no longer sweep its customers’ cash into money-market mutual funds, moving it instead into deposits at affiliated banks.

In communications distributed to its staff on Monday, the brokerage said money-market funds “will no longer be available as a sweep choice for most new accounts.” Instead, clients’ uninvested cash will be automatically routed to bank deposits. For six months, these so-called bank sweep accounts will earn a “transitional yield” equal to that on a money-market fund; after May 2019, the yields on those deposits are likely to drop to market rates below that level.

The yield on 100 large money-market mutual funds averages 1.77%, according to Crane Data of Westboro, Mass., which tracks returns on cash investments. Bank sweep accounts at brokerage firms tend to pay about 0.25% on average, according to Crane.

Merrill’s brokers will still be able to place their customers’ cash in higher-yielding money-market funds, but only by purchasing them manually.

You have to ask for the money market rate on your cash now. It won’t just be assumed. Your advisor has to specify. They’re hoping enough accounts won’t get around to it, so they can pass on less and keep more. It’s not new for a bank to be looking for ways to nickel and dime customers. But that doesn’t mean the intent behind isn’t still surprising after all these years.

Imagine the decision-making committee that spent an afternoon coming up with a way to chip off more of the pie for the firm rather than focusing on how to grow the pie and please more customers. It’s like they want to piss people off.

Napoleon said “never interrupt your enemy when he is making a mistake.” Woodrow Wilson had his own twist on the maxim a hundred years later: “Never murder a man who is committing suicide.”

Carry on, mes amis.


Merrill Lynch Joins Brigade Downplaying Money-Market Mutual Funds (Wall Street Journal)


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