Janney FDIC Insured Sweep puts your cash to work at a competitive market interest rate at one or more participating banks, and provides Federal Deposit Insurance Corporation (FDIC) protection.
How Janney FDIC Insured Sweep Works
In Janney FDIC Insured Sweep, cash in your Janney account is “swept” into an FDIC insurance interest-bearing account at one or more participating banks (each a “Program Bank”).
FDIC insurance covers both the principal and accrued interest in a bank account, up to $250,000 per depositor, for each ownership category in any Program Bank (FDIC-insured depository institutions participating in Janney’s FDIC-Insured Sweep) where money is deposited in the event that the bank fails.
If a single bank is used to deposit your cash balances, you are limited to that one bank’s FDIC insurance coverage only. If your cash balances exceed that amount, funds deposited into a number of different banks, allowing for insurance coverage of up to $2,500,000 for an individual account; $5,000,000 for joint accounts; and $2,500,000 for retirement and corporate accounts. Your deposited cash balances will be allocated nightly to one or more banks. The number of banks to which balances are allocated will be determined by your total balances and Program Bank capacity. For a detailed description of the coverage and limitations of FDIC insurance visit fdic.gov.
Other Cash Sweep Options
As a Janney client, your eligible accounts are automatically enrolled in Janney FDIC Insured Sweep upon account opening, unless you instruct us otherwise. You may direct your Financial Advisor to deposit your cash in other eligible sweep options, which
may include money market funds. Please note: money market funds are securities and, therefore, not eligible for FDIC insurance.
Your Janney monthly client account statement will list the banks your cash balances were allocated to during the previous month. The list of Program Banks will differ based on account type. A complete list of the banks utilized in Janney FDIC Insured
Sweep is located on our website at Janney.com/cash.
Janney will deposit available cash balances from your account(s) into each of the Program Banks, beginning with an allocation of up to $246,500 (or up to $493,000 for joint accounts) to the first bank and then to additional banks, as warranted, based on the value of the account. (See the multi-bank sweep example.)
It is possible to exceed the FDIC insurance limits at a specific bank if you also hold deposits directly with the same bank or with another brokerage firm outside of Janney FDIC Insured Sweep. You can avoid this by periodically reviewing Janney’s list of Program Banks. You may opt out of a Program Bank at any time by contacting your Financial Advisor.
Janney FDIC Insured Sweep Example
In this example, Janney’s client, an individual, has $650,000 of FDIC-insured balances in three separate banks.
The interest payable under Janney FDIC Insured Sweep takes into consideration total assets held at Janney, not just your cash balances allocated. We consider all client account balances within a “household” (same mailing address and/or Tax ID Number), to determine your total household account balance with Janney.
Your total household account balance is then used to determine your qualifying interest rate tier and the interest rate applied to cash balances. Interest rates for Janney FDIC Insured Sweep may change as frequently as daily and without prior notice.
Compensation to Janney
Each Program Bank pays interest based on a percentage rate of the daily deposit balances for eligible accounts at that bank to Janney. This rate may differ between Program Banks and it is generally based on either the Federal Funds effective rate or the London Interbank Offer Rate (LIBOR), plus a “spread”. Rates and overall balances can change daily. Janney retains the monies remaining after interest is paid to clients with eligible accounts in FDIC Insured Sweep and fees paid to the Administrator.
Interest Calculation For Discretionary Advisory IRA Accounts 1
The interest rate calculated on cash balances in the Janney FDIC Insured Sweep will differ for discretionary advisory IRA accounts. The interest rate on these accounts is determined by the amount the Program Banks are willing to pay minus the fees paid
to Janney and other parties. This differs from other account types in the FDIC Insured Sweep, where Janney determines the interest rate based on household size and other factors, as detailed above. Janney reserves the right to withdraw the monthly
account fee, or a portion thereof, in the event or to the extent that the amount received from the program banks and paid to Janney by the third-party administrator for the month is less than Janney’s fee for the same period.
You can view current rates at any time on Janney’s website at Janney.com/cash, or you can request a copy of the current rates from your Financial Advisor.
Compensation to Janney From Discretionary Advisory IRA Accounts1
For Discretionary Advisory IRA accounts, Janney receives a level monthly fee for each account. This amount is determined based upon a fee schedule indexed to the Federal Funds Target (FFT) Rate. Janney’s per account monthly fee is administratively managed to be no less than $0.50 and no more than $12.00. It is generally anticipated that Janney’s fees will be offset by the total amounts paid by the Program Banks. If Janney does not receive sufficient payments each month from the Banks, we reserve the right to debit the account for the amount of any shortfall.
Working with Janney
Depending on your financial needs and personal preferences, you may opt to engage in a brokerage relationship, an advisory relationship or a combination of both. Each time you open an account, we will make recommendations on which type of relationship
is in your best interest based on the information you provide when you complete or update your client profile. When you engage in an advisory relationship, you will pay an asset-based fee which encompasses, among other things, a defined investment
strategy, ongoing monitoring, and performance reporting. Your Financial Advisor will serve in a fiduciary capacity for your advisory accounts. For more information about Janney, please see Janney’s Relationship Summary (Form CRS) on www.janney.com/crs which details all material facts about the scope and terms of our relationship with you and any potential conflicts of interest.
By establishing a relationship with us, we can build a tailored financial plan and make recommendations about solutions that are aligned with your best interest and unique needs, goals, and preferences. Contact us today to discuss how we can put a plan in place designed to help you reach your financial goals.
1 Discretionary Advisory programs at Janney currently includes: Compass, Pioneer, Investor Select, Keystone, ETF Advantage, Russell, Goals-Based Portfolio Solutions, Advisers, Advisers MSP, Classic and Janney Capital Management Direct.
Monies deposited in Janney FDIC Insured Sweep accounts at Program Banks are not subject to market risk and value loss but are subject to the risk of a bank’s failure. In the unlikely event a bank fails, deposits at each bank are eligible for FDIC insurance protection up to a limit of $250,000 (including principal and interest) per depositor in each insurable capacity (e.g., individual or joint). This limit includes any other deposits you may have at each bank outside of this program. You are responsible for monitoring your bank balances within Janney FDIC Insured Sweep, and the balances in any of your other bank accounts at the same bank, to determine if these, in total, exceed FDIC insurance limits. Monies held in accounts with Program Banks are not covered by the Securities Investor Protection Corporation (SIPC) insurance; however, securities held in Janney brokerage accounts are covered by SIPC insurance. For more information regarding FDIC insurance, please consult fdic.gov. For more information regarding SIPC coverage, please consult sipc.org. These Deposit Accounts are direct obligations of the Program Banks and not of Janney.
Janney Montgomery Scott LLC, its affiliates, and its employees are not in the business of providing tax, regulatory, accounting, or legal advice. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any taxpayer for the purpose of avoiding tax penalties. Any such taxpayer should seek advice based on the taxpayer’s particular circumstances from an independent tax advisor.