Fidelity to Shift Independent Advisor Cash to Lower-Yielding FCash Amount in 2025

Posted on January 24th, 2025 at 2:00 PM
Fidelity to Shift Independent Advisor Cash to Lower-Yielding FCash Amount in 2025

From the desk of Jim Eccleston at Eccleston Law

Fidelity Investments plans to redirect cash balances in non-retirement brokerage accounts managed by independent financial advisors to its in-house sweep account, FCash, starting in 2025. Barron's reports that the change affects cash held in existing accounts, which previously was exempt from similar changes announced last year. FCash currently offers a 2.32 percent interest rate—less than half the yield of many money-market funds, a popular settlement option among advisors.

Fidelity confirmed the move to Barron’s, citing a goal of providing consistency to customers. The firm emphasized that FCash is intended for holding uninvested client balances awaiting reinvestment. Advisors still can manage client funds actively by selecting other investment options, such as money-market funds, to align with long-term financial goals. Fidelity also provides features like automatic fund transfers from money-market accounts to meet trade settlement obligations when FCash balances fall short.

The changes apply only to non-retirement accounts managed by independent advisors, leaving retirement accounts and retail investors unaffected. Nonetheless, the decision carries significant weight as Fidelity is one of the largest custodians of registered investment advisor (RIA) assets, second only to Charles Schwab.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

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