Crane Data Subscribers
New Kiplinger's Discusses Brokerage Sweep in "Little Guys vs. Brokers". The April issue of Kiplinger's Personal Finance magazine includes a reader question on Wells Fargo brokerage's new policy sweeping cash into a lower-paying bank option instead of a money market fund. The reader says Wells indicates that this is an industrywide trend and asks if this is true and whether there is anything that he can do. Contributing Editor Kimberly Lankford responds, "It's true. The trend started in 2000, when Merrill Lynch switched its customers' sweep accounts from money-market funds to lower-yielding, money market bank accounts. Since then, most brokerage firms that own banks have made the change, says Peter Crane, publisher of Money Fund Intelligence." Brokerages have responded to lower trading commissions by seeking other sources of revenue. The piece says, "[T]he average brokerage sweep account for balances of $50,000 to $100,000 was earning 1.05% [now 0.89%], says Crane, while the average money-fund account was earning 3.78% [now 3.46%]." Kiplinger's adds, "But you don't have to settle for a measly 1%. You just need to make the effort to move your cash into a money-market fund." Says Crane, "This really is a penalty for laziness." E-mail pete@cranedata.com to see our most recent Brokerage Sweep Intelligence, which tracks brokerage bank, money fund and CD rates.
