Advisors will no longer have access to high-yield money-market funds
- Fidelity is changing its sweep account options for independent advisors
- Access to high-yield money-market funds will be cut off
- New nonretirement accounts will have to use the lower-yielding FCash account
- Fidelity is aligning with rival Charles Schwab’s sweep account system
- Fidelity’s FCash rate is higher than Schwab’s, but lower than some money-market funds
Fidelity is planning to make changes to its sweep account options for independent advisors. Later this year, advisors will no longer have access to Fidelity’s high-yield money-market funds as the sweep account option for client cash. Instead, new nonretirement accounts will be required to use Fidelity’s lower-yielding FCash account for uninvested cash. This move brings Fidelity closer in line with its rival Charles Schwab, where trades or investment income automatically flow into the firm’s low-yield sweep account. While Fidelity’s current FCash rate is higher than Schwab’s, it is still lower than some money-market funds currently available to clients.
Public Companies: Fidelity (N/A), Charles Schwab (N/A)
Private Companies:
Key People:
Factuality Level: 7
Justification: The article provides information about Fidelity’s plan to cut off access for independent advisors to using its high-yield money-market funds as the sweep account option for client cash. It also mentions that new nonretirement accounts will have to use its lower-yielding FCash account for uninvested cash. The article compares Fidelity’s move to that of rival Charles Schwab and mentions the current FCash rate. However, the article lacks some context and details about the reasons behind Fidelity’s decision and the potential impact on independent advisors and clients.
Noise Level: 3
Justification: The article provides some relevant information about Fidelity’s plan to cut off access for independent advisors to using its high-yield money-market funds as the sweep account option for client cash. However, it lacks in-depth analysis, evidence, and actionable insights. The article also includes unrelated information about signing in to read Barron’s Advisor, which is not relevant to the main topic.
Financial Relevance: Yes
Financial Markets Impacted: Fidelity, Charles Schwab
Presence of Extreme Event: No
Nature of Extreme Event: No
Impact Rating of the Extreme Event: No
Justification: The article discusses a change in Fidelity’s policy regarding the use of high-yield money-market funds by independent advisors. This change may impact financial markets and the companies involved, specifically Fidelity and Charles Schwab.
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