What’s a “sweep” account?
Your investments pay you periodic interest, dividends and capital gains. These payments, if not automatically reinvested in more shares, are deposited to your account and then “swept” to a cash or money market fund so you can continuously receive interest on any uninvested cash balances. This allows you to earn income ’round-the-clock while your cash remains available.
Why the change?
For certain accounts, Schwab is changing the assigned “sweep” feature to Schwab Bank sweep, which is an FDIC-insured cash deposit feature. The Schwab Bank sweep feature automatically makes deposits to and withdrawals from deposit accounts at Charles Schwab Bank, an FDIC-insured depository institution affiliated with Schwab, so your cash holdings are eligible to benefit from FDIC protection. The mailing you’ve received is for regulatory purposes and confirms that this change is taking place. No action is required on your part.
As always, clients are invited to call our offices with any questions regarding their accounts, investments or account features.