Fidelity Investments published a press release saying the company will use a money market fund for new brokerage customers' sweep assets. An unwieldy and oddly-worded press release, entitled, "Fidelity Investments Takes Another Strong Step to Provide Investors Unparalleled Value," tells us, "Fidelity Investments, the largest retirement and brokerage firm with nearly $8 trillion in total client assets, today announced it has challenged conventional industry practices by automatically directing investors' cash into higher yielding options available for brokerage and retirement accounts as well as providing product choice -- all without any minimum requirements. Fidelity's approach is contrary to typical industry practices of defaulting customers' cash into a low-yielding product -- often at an affiliated bank -- with no other option in what the industry calls a 'cash sweep.' Recent customer research shows that many investors don't focus on the rate paid on their cash when they open an account and, too often, they don’t take action later. Fidelity has made it easy for customers by automatically giving them the higher yielding option at account opening, while also providing other investment options for those customers who prefer it. With Fidelity's commitment to providing investors with unparalleled value and choice, cash investments at Fidelity could earn 47x more than TD Ameritrade, 10x more than Charles Schwab, and 27x more than E*TRADE cash sweeps." Kathleen Murphy, president of Fidelity Investments' personal investing business, comments, "Some firms have removed the option of a higher yielding money market fund as an option for their cash sweep, thereby forcing investors to take additional steps to get a better rate for their cash. By offering choice at account opening and directing cash into the higher yielding option when investors don’t make a choice, we are once again ensuring clients receive more value with Fidelity. It is unfortunate that millions of investors lose." Currently, Fidelity Government Cash Reserves is yielding 1.91%, versus 0.28% for Crane Data's Brokerage Sweep Intelligence Average (for $100K balances). See also, AdvisorHub's "Fidelity Stokes New-Account War, Offering 1.9% on Client Cash".

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