Asset management account

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Asset management account

Account at a brokerage house, bank, or savings institution that integrates banking services and brokerage features.

Asset Management Account

An account at a bank or other financial institution that allows the account holder to place money for both banking and investment services. When money is placed into the account, it is automatically placed into a money market account, which carries a higher interest rate than normal checking or savings accounts. The account holder can then direct the money to various banking and investment services. Asset management accounts were allowed after the passage of the Gramm-Leach-Bliley Act, which allowed financial institutions to offer both banking and investment services for the first time since at least the Great Depression.

asset management account

A comprehensive brokerage account that includes checking, a credit or debit card, margin loans, and the automatic sweep of cash balances into a money market fund. Examples of brokerage asset management accounts include Cash Management Account® by Merrill Lynch (the first firm to offer this type account), Financial Management Account® by Smith Barney, and Schwab One® by Charles Schwab. Features and fees vary by firm. Also called central assets account, sweep account.

Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.

Asset management account (AMA).

All-in-one asset management accounts provide the financial advantages of an investment account combined with the convenience of an interest-bearing checking account.

AMAs generally offer check-writing and ATM privileges, credit cards, direct deposit, and automatic transfer between accounts, as well as access to reduced-rate loans and other perks. There are usually annual fees and minimum account requirements.

AMAs are offered by many brokerage firms and mutual fund companies, and are also known as central asset accounts (CAAs) or cash management accounts (CMAs).

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Edstrom has amassed more than 20 years of expertise in bank products, FDIC insured sweep accounts, and cash management strategies through his various successes at well-respected financial firms.

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Schwab Bank's deposits grew a relatively modest 3.8% in 2017 to $169.7 billion, as the company deliberately limited bulk transfers out of money market sweep accounts in order to remain below the $250 billion consolidated asset threshold that would impact its bank regulatory requirements.

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"Except for sweep accounts, in the absence of any change in regulation, we don't expect the vast majority of this money to remain in money market funds," he said.

Further Changes for Money Funds?

As firms analyze how the final regulation applies to them and develop compliance strategies, they should keep in mind how they and their advisers use sweep accounts. Almost certainly, changes are necessary to meet the requirements of available exemptions.

Don't Forget About Sweep Programs

This hurts the net interest margins they earn on money market funds and cash sweep accounts, making these operations less profitable than anticipated.

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If the custodian gives you favorable pricing in return for your use of their proprietary mutual funds, ETFs or cash sweep accounts (where they make substantially more in the relationship with you), are you giving your clients access to the whole of the market as a proper fiduciary advisor?

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"Sweep accounts do require precisely a dollar in and a dollar out," he said.

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Together with a team of skilled experts, he or she can offer solutions like sweep accounts to leverage cash flow, equipment purchase lines that convert to term loans and even interest rate swaps, which help mitigate interest rate risk on long-term loans.

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"It's not as simple as running sweep accounts across a few saving accounts and rolling it up at the end of the night," he said.

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Sweep accounts that automatically transfer net balances at day's end--netting debits and credits on aggregate across all of the accounts as opposed to doing so on an individual account basis--allow for full segregation of the accounts.

The art of balancing cash flow and electronic payments

The key objection centered on the potential curtailing of useful market-making activities such as commercial and municipal debt underwriting, holding inventory in order to make secondary markets, sweep accounts, commercial paper issuance, and foreign exchange services.

Bernanke says Volcker Rule will be delayed

For the most part, banks were still offering business interest checking accounts to larger businesses through sweep accounts, which use money market accounts for deposits each night and are then moved back the following business day.