What is Advantage Sweep?

Advantage Sweep is a liquid, FDIC-insured alternative to money market mutual funds. It enables clients to obtain millions of dollars of FDIC insurance with daily liquidity and potentially higher returns.

How does Advantage Sweep work?

Customer deposits are sent daily to/from their DDA account into the Advantage Sweep program. Deposits that exceed the target balance are then allocated to FDIC-insured accounts held at other well-capitalized banks that participate in the program. Deposits are allocated to as many banks as necessary, up to the program maximum, to fully insure your funds. Clients have full access to their cash on a daily basis.

What is the FDIC insurance limit in the account?

Joint accounts receive up to $100.2 million in FDIC, and all other account types receive up to $50.1 million per TIN. However, individuals in different account types may receive higher amounts. For example, if Jane Doe has an individual account, a joint account with her husband, and an IRA account, all with deposits in DDM, she has the potential coverage of up to $75 million on her deposits.

How are high levels of FDIC insurance achieved?

Balances are sent daily into the Advantage Sweep program. These deposits are allocated in increments of no more than $250,000 to multiple well-capitalized FDIC institutions within the program, which abides by the FDIC pass-through insurance provisions established by the FDIC. By allocating deposits to multiple banks, clients receive high levels of FDIC insurance while maintaining daily liquidity and the convenience of maintaining one bank relationship.

Is Advantage Sweep a money market mutual fund?

No. Your funds within the program are invested in deposit accounts held at FDIC member banks. Each account is insured up to $250,000 for each category of legal ownership. Money market mutual funds are not FDIC-insured.

Are FDIC-insured programs less risky than money market mutual funds?

Yes. FDIC programs eliminate the risks associated with money market mutual funds. Clients’ balances, up to the program maximum, are fully FDIC insured. Although the possibility exists for a program bank to fail, deposits are insured. No customer has ever lost money through an FDIC-insured account.

What are the advantages of an FDIC-insured account versus a money market mutual fund?

  • Provide the safety and explicit guarantee of FDIC insurance that money funds do not offer

  • Eliminate market risks associated with money fund investing

  • Are outside the scope of the SEC’s money fund reforms

  • Currently offers a highly competitive yield

  • It is an allowable cash investment vehicle for HUD investors

What does the FDIC insure?

  • Traditional deposit accounts, such as Checking and Savings Accounts

  • Money Market Deposit Accounts − Certificates of Deposit − Individual Retirement Accounts, to the extent of the cash therein

Can investing in Advantage Sweep decrease my overall portfolio risk?

Yes. FDIC-insured investments eliminate the market risks associated with money market mutual fund investing or some other direct cash instruments.

How does interest accrue, and when is interest paid?

Interest accrues daily throughout each month with the accrual period beginning on the first calendar day of the month and posting at the close of business on the last business day of the month, which includes interest for non-business days through calendar month-end.

Does the program provide daily liquidity?

Yes. While deposits may be allocated to deposit accounts held at several program banks, your cash is accessible on a daily basis.

If I have existing deposit accounts held by the same bank, are they fully insured?

Deposits in the program are insured by the FDIC up to $250,000 per bank for each category of legal ownership, including any other balances you may hold directly or through other intermediaries. Any funds that a client holds at a bank outside of the program may impact the insurance coverage available. It is your responsibility to monitor the banks that hold the deposits. A full list of all participating banks is made available to you when your account is opened and can typically be obtained online. You will also receive the list of banks and amounts of deposits held at each bank, included with your monthly statement. You are encouraged to periodically review the list of banks for potential insurance limit exposures.

What if I do not want my money deposited in a particular bank or banks?

You have the option to exclude any program bank you choose. However, by opting out of one or more banks, it may affect the maximum amount of FDIC insurance you may receive.

Do you have more questions?

Funds participating in the Advantage Sweep program are deposited into deposit accounts at participating banks, which are insured by the Federal Deposit Insurance Corporation (FDIC) for up to $250,000 for each category of legal ownership, including any other balances a bank customer may hold directly or through other intermediaries, including broker-dealers. The total amount of FDIC insurance in an account depends on the number of banks in the program. If the balance in the account is greater than the FDIC insurance coverage in the program, any excess funds will not be insured. Customers should read the Program Terms and Conditions carefully before depositing money into the program and for other important customer disclosures and information. To assure their FDIC coverage, customers should regularly review banks in which their funds have been deposited and notify the sending bank immediately if the customer does not want to allocate funds to a particular bank or banks. The Advantage Sweep program is administered by Reich & Tang Deposit Solutions, LLC.