Schwab is supplanting its various money market funds that pay about 3.8% as its default vehicle for sweep balances with a bank checking account that pays 2.2% interest. A primary option is the Schwab Money Market Fund with $42.3 billion in assets.The bottom line here is that Schwab and TD Ameritrade have begun to charge clients out the wazoo for money market sweep accounts.
TD AMERITRADE jacked up its management fees on its default money market funds as of Feb. 24. The Omaha, Neb.-based company allows investors to choose a default option.
TD Ameritrade charges a management fee of .91% on its Money Market Portfolio--are you kidding, an expense ratio of nearly a point for a money market fund? And Schwab, offering 1.6 points lower yield for a bank sweep account vs. money market? Will clients really put up with this? They will if they are not aware.