Fidelity Investments plans to implement changes in February that will affect how cash within non-retirement brokerage accounts is managed. According to ThinkAdvisor, the sole core sweep option for these accounts will be FCASH, a move that reflects a broader trend among financial institutions to optimize revenue from clients’ uninvested cash.
Currently, Fidelity’s SPAXX fund is employed for retail clients’ sweep balances, boasting a 7-day yield of 4.27%. This contrasts with anticipated below-market rates, a practice that has previously led to legal challenges against firms such as JPMorgan Chase and Merrill.
Investment strategist Michael Kitces underscores the importance of understanding the implications of utilizing “free” RIA custodial services, noting on social media that such services often extract value indirectly from clients.