This month, MFI interviews Ameriprise Director of Cash Products, Chris Melin. He details the history of the company in cash, comments on the brokerage sweep marketplace and discusses major challenges, including record low rates. Melin also comments on Ameriprise's outlook. Our Q&A follows. (Note: The following is reprinted from the March issue of Money Fund Intelligence, which was published on March 5. Contact us at info@cranedata.com to request the full issue or to subscribe. Note Also: Thanks to those who attended our Bond Fund Symposium Thursday and Friday! Attendees and MFI subscribers may access the recordings and binder materials via our Bond Fund Symposium 2021 Download Center.)
MFI: Give us a little background. Melin: The company was founded back in 1894 with a cash product, a 'faceamount certificate'. Through the Ameriprise Certificate Company, we're still issuing Certificates, which are unique investment products that our advisors can offer to help clients manage their cash. Certificates are guaranteed by the Ameriprise Certificate Company.
In a more traditional sense, we've been offering money market funds and cash management accounts for decades. In 2003 we started offering sweep options with brokerage accounts -- offering money market funds, a free credit balance option and a single bank deposit program. It stayed that way until 2007, when we decided to add a multi-bank program.
As part of Money Fund Reform in 2016, we elected to change our sweep options to government funds -- not wanting to put clients at risk with institutional and retail funds where there was potential for withdrawal gates and fees. We currently offer a multi-bank sweep deposit program, a single bank sweep deposit program, two US government money funds as sweep options and a free credit balance option.
In terms of my background, I've been with Ameriprise since 1992 and with the cash team since 2012, at first working with our Certificate products. I began working with our sweep products in 2014 and continue with those responsibilities today. I also participate in the SIFMA Asset Management Roundtable and have been a co-chair of that group for the last three years.
MFI: Talk about sweeps. Melin: We're part of the IntraFi Network (formerly Promontory) for our single- and multi-bank programs and work with Dreyfus for the money funds that we use for sweep.
MFI: What are your major challenges? Melin: Low yields have impacted the environment in a couple of ways. First, investors are finding it difficult to find attractive yields for their cash allocation and we are seeing cash migrate towards products offering more liquidity. Second, low yields have led some investors to prioritizing maintaining liquidity and return of principal rather than return on principal.
MFI: What are your other priorities? Melin: Our main priority is to continue managing bank sweep capacity to ensure we continue providing clients with appropriate sweep and cash options.
MFI: What are clients saying? Melin: Clients like to understand what options they have available to manage their cash to help achieve their financial goals. To that end, we work with advisors to ensure they are aware of the cash products that Ameriprise offers and how our cash management platform may help clients meet their cash management needs.
MFI: What about your money fund offerings? Melin: We are continually reviewing our money market fund offerings to ensure we maintain a comprehensive and competitive suite of funds that our advisors can use to help clients manage their cash.
MFI: What's your outlook? Melin: Looking forward, it appears short term interest rates will remain near zero for the near future. As such, we are focused on offering advisors the training and capabilities to help meet their clients’ cash management needs in this low interest rate environment.
