Sweep Account

[HappyEarlyRetirementForum]

Can anyone explain how the Sweep account Works?

Just read the wells trade contract that there is a 0.30% fee on the funds held in the sweep account?

 

[Rambler]

I have a sweep account at schwab...no fees. They sweep all the cash in my brokerage acct into that account nightly so that it is always working (even if at low rates) for me.

R

 

[HappyEarlyRetirementForum]

Is my understanding correct:

The sweep account is the money market account that holds the funds
for the brokerage account? and from those funds I pay for my orders?

Also, when I sell a stock the funds from the sale are placed into the sweep until the transaction clears?

And, the dividend payments from investments are sent to the sweep?

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So the goal is:

to only move funds to the sweep when I want to place an order?

And move the funds out of the sweep as fast as possible into my PMA account?

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[brewer12345]

Cannot speak to your specific account as i use schwab, bit most sweep accounts pay interest rather than charging fees. A sweep is just a holding pen for money in between trades. Mine is actually an FDIC insured savings account rather than a money market.

 

[FIRE'd@51]

Also, when I sell a stock the funds from the sale are placed into the sweep until the transaction clears?

No funds are transferred to the sweep account until the transaction settlement date (3 business days after the trade date for stocks).

 

[meierlde]

I believe that is the management fee for the money market fund you are parking your money in. By doing this the account is effectively a zero interest account. Note you can get an FDIC insured account thru Wells Fargo Advisors it pays a whopping .05% pa. It can be used as a sweep account also.

 

[LOL!]

WF does not charge 0.3% for the sweep account unless you pick a special sweep account. It's in the fine print. If you pick the default or the default tax-exempt sweep account, there is no extra 0.3% fee.

Furthermore, no matter which broker you use, if you use a money market fund or money market account for the sweep account, then that fund has an expense ratio that gets paid.

Your sweep account is your PMA account (but not necessarily your PMA checking account which is something different). WF will move the funds automatically for you so you do not have to think about it.

Of course, the sweep account is paying such a paltry interest rate that you will probably not want to keep much money there. For example, I use VCSH for any and all the fixed income in my brokerage account.

 

[HappyEarlyRetirementForum]

WF does not charge 0.3% for the sweep account unless you pick a special sweep account. It's in the fine print. If you pick the default or the default tax-exempt sweep account, there is no extra 0.3% fee.

Yes, in the contract it can be found that the PMA becomes the sweep account when linked.

But I look through my papers and browse online and I don't see anything about the type of sweep account I have. All I find is bank sweep account.

The sweep is my brokerage account?

Right now my account is $0.00 so to buy funds I load the sweep?

Do I need to keep the sweep funded? The wells trade account requriemnts is the account needs $1,000.00.

Is that $1,000.00 requirment in cash held in the brokerage account? or does that include stock/fund holdings?

I'd like to hold a zero balance in the sweep and load it when I want to buy. Does this make sense?

 

[LOL!]

Yes, in the contract it can be found that the PMA becomes the sweep account when linked.

But I look through my papers and browse online and I don't see anything about the type of sweep account I have. All I find is bank sweep account.

The sweep is my brokerage account?

Generally, yes.

Right now my account is $0.00 so to buy funds I load the sweep?

Yes.

Do I need to keep the sweep funded? The wells trade account requriemnts is the account needs $1,000.00.

No, you do not need to keep the sweep funded. It can have $0.00 in it as mine does right now.

Is that $1,000.00 requirment in cash held in the brokerage account? or does that include stock/fund holdings?

I never saw that, but I have more than $1,000 in ETFs in the account anyways.

I'd like to hold a zero balance in the sweep and load it when I want to buy. Does this make sense?

Sort of. You can have zero balance and load it, but to load it will take some amount of time. To load from your WF PMA checking account will take about an hour which is the only way I have done it.

 

[ER Fireball]

We are in the process of moving all of our accounts away from Wells Fargo. DW just recieved a statement showing that they have released the funds from an old IRA that she had someplace where she worked. $25 charge to close the account.

When we closed a trust account where the person had passed away, they deducted ALL of the interest that had been earned on a number of CDs, because 'the trust didn't die and the CDs were cashed in before maturity date'.

Same person had some money from a different IRA. Guess what the WF advisor recommended? Of course, an annuity! When I looked it up, it was on of the highest commissioned annuities in the market.

They were the most difficult of all of the financial institutes and brokerage houses to deal with. I am in the process of moving everything out of WF. Another person who helped on the trust is doing likewise.

 

[LOL!]

Note that a WF account that uses an advisor is completely separate and different from the do-it-yourself PMA relationship where you are on your own.

I'd ditch any accounts where an advisor is/was involved pronto-quicko.

Lots of places have account closure fees. I think the WF brokerage account closure fee might be around $90.

 

[FreeAtLast]

Banks in Florida have just started being converted to WF from Wachovia. I just read an article today that when you use automatic bill paying WF is now deducting funds from your account 2-5 days prior to the payment date. Wachovia never did that so people are upset.