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Investors Can Allocate Their Brokerage Account Cash Across a Network of Banks;
Commonwealth Financial Network to Offer Bank Deposit Sweep Program
BOSTON, October 13, 2009 -- National Financial®announced today a new program that enables retail broker/dealers to deposit or "sweep" cash in their customers' eligible brokerage accounts into multiple interest-bearing bank accounts that offer FDIC (Federal Deposit Insurance Corporation) insurance coverage1.
The National Financial Bank Deposit Sweep Program®offers broker/dealers the ability to allocate their customers' brokerage cash across as many as eight program banks. Within the new offering, principal and accrued interest will be eligible for FDIC insurance up to the current $250,000 per bank, or combined coverage of up to nearly $2 million2 when deposits are spread across multiple banks in the network.
For example, an investor deposits $600,000 into his or her brokerage account and then selects three program banks within the "sweep" program. The following business day, $246,500 3 is deposited in the first program bank, $246,500 is deposited in a second program bank, and the remaining $107,000 is deposited into a third program bank, providing the customer FDIC coverage for the entire $600,0004.
"Given the volatility of the markets over the past year, investors have historically high levels of cash and may be looking to protect their principal as they evaluate long-term investment opportunities," said Bob Leonhardt, senior vice president, National Financial. "Our new program can help firms meet their customers' funding and liquidity needs by providing them with an FDIC-insured option within their brokerage account that offers coverage of up to nearly $2 million."
The new program complements National Financial's existing single bank sweep program. Launched in 2005, this offering allows broker/dealers with affiliated banks to deposit their customers' brokerage cash into an FDIC-insured account at their own banking institution.
In addition to FDIC coverage, the new National Financial Bank Deposit Sweep Program offers individuals a variety of other features and benefits, including:
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Tiered interest rates5 -- Broker/dealers will be able to offer their customers six different interest rates based on their brokerage sweep account balances. This offers investors an opportunity to earn higher rates as their balances grow.
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Consolidated statements -- With the sweep program integrated into the brokerage account, customers will receive consolidated statements and tax reporting, allowing them to view their balances and account activity in one place.
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Easy account access -- Cash held in the bank sweep program is available to cover securities purchases, as well as check and debit card transactions in brokerage accounts.
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National Financial also announced that Commonwealth Financial Network, the second-largest, privately held independent broker/dealer in the U.S., has made the company's Bank Deposit Sweep Program available to its individual investor clients.
"Right now, preserving capital while minimizing market risk is important to many investors," said Wayne Bloom, CEO, Commonwealth Financial Network. "Through National Financial's new program, we are able to offer a short-term investment solution that carries the safety of FDIC insurance as well as liquidity for our financial advisors' clients."
"With the addition of the new Bank Deposit Sweep Program, our broker/dealer clients now have several brokerage sweep account options to offer their customers," said Leonhardt. "The new program also can help broker/dealers more effectively compete for new customers and high-producing brokers who may be looking to switch firms."
About National Financial
National Financial, a Fidelity Investments company, offers Integrated Brokerage Solutions to over 310 clients ranging from retail broker/dealers to institutional investment firms. As of June 30, 2009, National Financial custodied over $520 billion in assets, representing 5.4 million accounts. Integrated Brokerage Solutions incorporates innovative technology, products and programs, supported by dedicated client service professionals and trusted industry alliances. This holistic, solutions-oriented approach is designed to help client firms attain competitive advantage by driving growth, creating efficiency and managing risk. For more information about National Financial and Integrated Brokerage Solutions, please visit www.nationalfinancial.com
About Fidelity Investments
Fidelity Investments is one of the world's largest providers of financial services, with assets under administration of $3.0 trillion, including managed assets of more than $1.4 trillion as of August 31, 2009. Fidelity offers investment management, retirement planning, brokerage, and human resources and benefits outsourcing services to over 20 million individuals and institutions as well as through 5,000 financial intermediary firms. The firm is the largest mutual fund company in the United States, the No. 1 provider of workplace retirement savings plans, the largest mutual fund supermarket and a leading online brokerage firm. For more information about Fidelity Investments, visit Fidelity.com.
About Commonwealth Financial Network
Founded in 1979, Commonwealth Financial Network, member FINRA/SIPC, and a registered investment adviser, is celebrating its 30th anniversary as a leading, privately owned independent broker/dealer, with offices in Waltham, Massachusetts, and San Diego, California. The firm supports more than 1,200 independent registered representatives nationwide and makes available a comprehensive array of financial products and services.
1National Financial Services LLC (NFS) does not guarantee in any way the financial condition of the Banks participating in the Bank Deposit Sweep Program or the accuracy of any publicly available financial information concerning such Banks.
2Actual total insured amount is $1,972,000.
3Allowing for interest accrual.
4Assets deposited with each Program Bank are lower than the maximum FDIC insurance limits so that interest which is accrued is also eligible for insurance. Factors such as investor opt-outs, amount invested, and bank deposit capacity will affect bank sequence, FDIC insurance eligibility, and deposit allocation
5Balances will earn the same rate of interest regardless of the Program Bank with which funds are deposited. Interest rate is based upon each account's Program Deposits in accordance with the Interest Rate Tiers described in the BDSP Disclosure Document. The rate of interest paid is currently evaluated on a daily basis. Interest rates/APY will be determined based on prevailing economic and business conditions. Interest accrues daily and is paid monthly. Amounts reflecting interest paid will be presented on brokerage account statements. Interest rates are subject to change at any time.
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Commonwealth Financial Network is an independent company and is not affiliated with Fidelity Investments.
$100,000 to $250,000. These temporary increases will remain in effect until December 31, 2013. Additional information can be found on the FDIC website.
National Financial Services LLC, Member NYSE, SIPC
200 Seaport Boulevard, Boston, MA 02110
Fidelity Investments Institutional Services Company, Inc.,
82 Devonshire Street, Boston, MA 02109
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