Many advisors don’t discuss cash often enough with their clients and they may be leaving money on the table as a result, according to Gary Zimmerman, CEO and founder of the cash management platform MaxMyInterest.
That may be the case especially during these days of great volatility, when some investors may want to have quick access to cash.
There is a “big opportunity” for advisors to “include cash as part of their discussion when they meet with clients,” he told ThinkAdvisor in a phone interview.
“So often an advisor will talk about equities or they’ll talk about fixed income or they’ll talk about alternative investments — and those are all very important,” he said. “But cash is important too and most advisors don’t have visibility over their clients’ cash because they never thought to talk about it,” he noted.
For instance, a client might have $200,000 of cash in his or her portfolio with an advisor, but that client might actually have $800,000 in cash at another bank that the advisor might not be aware of, he pointed out.
“The very existence of that cash cushion may enable the advisor to have the client take more risk in their core portfolio and thus earn higher returns over time,” he said.
Eyeing More Banks
MaxMyInterest currently supports seven of the leading Federal Deposit Insurance Corp.-insured online banks and Zimmerman expects that number will soon be growing, he said.
More banks “will be announced in the next few months,” according to MaxMyInterest, which is operated by Six Trees Capital, a fintech firm that Zimmerman serves as managing partner of.
As of now, online banks supporting MaxMyInterest are Ally Bank, American Express, Barclays, Marcus by Goldman Sachs, Radius Bank, Sterling National Bank and UFB Direct, according to MaxMyInterest.
Orion Integration Update
As part of a recent integration with Orion Advisor Tech, the MaxMyInterest platform can also be used by advisors using Orion’s service to get preferential rates of up to 1.92% annual percentage yield on same-day liquid, Federal Deposit Insurance Corp.-insured bank deposits, the companies said in February.
“Integrations with platforms like Orion have been really important to us because it helps advisors integrate Max into their broader processes,” Zimmerman told ThinkAdvisor.
He explained: “That’s particularly important because, historically, advisors tend to choose Max just for held-away cash. But now we’re starting to see them use Max for portfolio cash as well because it delivers yield that is just so much higher than what’s available from money market funds or others sorts of cash equivalents.”
MaxMyInterest has “seen dramatic growth in interest from financial advisors, in part because of the Orion integration, which is now fully live, so every firm can use it,” he added.
The Orion integration followed MaxMyInterest launching its own integrated central hub account in the fall that he said “enables people to allocate a specific amount of cash to Max, and that’s been a big improvement as well,” enabling the platform to “integrate a lot better with a lot of wealth management firms.”
As of June 23, MaxMyInterest was delivering the highest yield on cash in the U.S., at 1.36%, Zimmerman said, citing data from Treasury.gov and data from companies including Vanguard.
— Check out How Cash Makes Clients Happy on ThinkAdvisor.