Cashiering and Money Movement Basics for Advisory Clients

By October 16, 2015Financial Planning, Security

As you invest and save more, the movement of money between accounts becomes a larger part of your financial life. Here is some good information on the process, safety protocols, and different options available for moving money between accounts:

—‡

—

  1. Raising Cash: To support any cash needs, your adviser must “raise cash” meaning, she will sell some of your investment positions. Once trades are executed in your account, it takes between one and three days for the funds to be available, depending on what securities were sold. It’s important that you take into account this period of time when requesting funds on short notice.
  2. Safety Protocols: Most Advisers will not send out money based solely upon a single communication from their client. We always call a client to verify a transfer before initiating. I have personally received a bogus request via email for a third party wire and it was VERY well done and would have fooled just about anybody. If we are not able to talk to our client personally on the phone via a phone number we know to be accurate, no money leaves their account: plain and simple. If your timeframe for receiving funds is short, make sure you are available via your phone to confirm your identity.
  3. Delivery of Funds: You can receive money from your investment accounts by check, ACH, or fed funds wire.
      1. Check: Checks are usually initiated by the adviser team but sent from the clearing firm. In our case, checks are cut and mailed out from TD Ameritrade via overnight mail once trades have cleared and settled. Generally, the overnight mailing cost is paid by the client. The biggest drawback to checks: it is not uncommon for your bank to put a hold on the check for several days until it clears.
      2. ACH: This has become our favorite cashiering tool. With ACH, we first set up an authorized link between your investment account and bank account. Once the link is setup, we can move money to and from your bank account per your requests very easily with no fees or additional costs. ACH is not as fast as a wire, but generally usually completes within a single day.
      3. Wire: The Federal Reserve system has been facilitating the transfer of money between banks and companies since 1915. A wire is the fastest, most reliable means of moving money. If you are closing a real estate deal or other large transaction, you will generally use a wire. There is currently no cost on our side to initiate or receive wires, but most banks charge a fee on their end.

I hope this helps you better understand how money transfers between investment accounts and bank accounts. Through ACH, we can automate and simplify many of your cash needs. If you are interested in exploring easier ways to manage cash needs, please contact us http://schulzwealth.com/contact-us here so we can discuss.
RS