Investment News recently wrote an article entitled, "Carson Group advisers will soon be able to offer clients banking accounts," which discusses the latest "fin-tech" entrant to try and challenge the brokerage, bank deposit and money market mutual fund system with a product to "provide white-labeled, FDIC-insured cash accounts." The piece tells us, "Carson Group announced several new products and services at its annual Excell conference, including a mobile-only banking service that advisers can offer clients. Through a partnership with financial technology firm Galileo, the 108 firms supported by Carson Group will be able to offer accounts that mimic traditional checking and savings accounts with no monthly service fees."
They write, "The first type of account, Galileo Money+ Spending, offers 1.24% annual interest and is intended for everyday purchases, paying bills, peer-to-peer money transfers and withdrawing money from ATMs. Galileo will custody the assets with Bancorp Bank, and up to $2.5 million will be insured by the Federal Deposit Insurance Corp., said Andrew Rogers, Carson Group adviser solutions manager."
Investment News explains, "The second type, Galileo Money+ Reserve, acts as a savings account and pays 2% interest. Mr. Rogers said Carson Group and Galileo are "exploring" exactly what these accounts will look like, and whether they are FDIC-insured savings accounts or a brokerage account invested in low-risk Treasury funds."
They add, "Mobile brokerage startup Robinhood sparked a backlash late last year when it announced checking and savings, with critics arguing the fintech company wasn't being transparent enough about the fact that the accounts were not FDIC-insured. Mr. Rogers said Carson Group is making sure it avoids anything similar."
A press release, "Galileo Announces Money+ and Signs Carson Group as Its First Partner," further explains, "Galileo Money+ empowers financial advisors to compete for the $10 trillion in low- or no-interest U.S. bank deposits by offering their customers supercharged, white-labeled accounts for spending and wealth accumulation, featuring market-based interest rates tied to the Effective Federal Funds Rate. Account functionality includes online and in-store shopping and access to 32,000 no-fee ATMs; a mobile app for moving money, including paying bills; and FDIC insurance -- all offered with no monthly service fees."
Galileo CEO Clay Wilkes comments, "Last year Americans paid billions in bank fees while getting the bare minimum rate of return on their deposits. How can that still be happening? In partnership with financial advisors, which have a fiduciary responsibility to their clients, we've launched a scalable, sustainable banking solution that puts people before profit and offers market-based interest rates. We're ready to begin this journey with Carson and, together, to make a real impact on people's lives."
Ron Carson, CEO and founder of Carson Group, adds, "Every decision we make -- and every partner we consider -- must always bring us a step closer to doing what's right for our clients.... By extending our menu of services into cash management solutions with Galileo Money+, we'll offer our advisors -- and their clients -- an instant alternative to low-interest, high-fee bank accounts, positioning them for more optimal returns and reducing the risk of underperforming assets. It's a value-add for our advisors, an added benefit for their clients and it furthers our mission to make the complex simple for the more than 25,000 families we serve."
Galileo's release also says, "The Galileo Money+ Spending Account, which currently offers 1.24 percent APY interest, is for everyday financial activities, like purchasing groceries or a cup of coffee, paying bills, getting pocket cash from ATMs and transferring money to friends and family. The Galileo Money+ Reserve Account, currently offering 2.00 percent APY interest, is for wealth accumulation."
Finally, Wilkes states, "The average high net worth household keeps $450,000 in bank checking, savings and CDs, and keeping those accounts with brick-and-mortar banks is leaving money on the table.... That money should be under the financial advisors' guidance. With Galileo Money+, financial advisors can offer white-label services to finally compete with brick-and-mortar banks in a meaningful way."
For more on "fin-tech" and cash management, see these Crane Data News stories: "Inv News on Fin-Techs Invading Cash Mgmt" (5/13/19), "Wealthfront Cash Brings in $1 Billion" (4/29/19), "Wealthfront Cash Targets Deposits" (2/20/19), "MarketWatch Has More on Robinhood" (1/3/19), "SIPC Concerns About Robinhood" (12/17/18) and "Robinhood Stealing Millennial's Cash" (12/14/18).
