Start Your Engines: Ultra-Fast Account Opening and Linking with Max

Account opening and linking is racecar-fast.

Get your stopwatch: the race to intelligent cash management just accelerated.

Max and UFB Direct, an online-banking brand of BofI Federal Bank, have just launched the industry’s fastest account-opening and linking process. It now takes just minutes to open a new Max-linked UFB Direct online savings account.

How is this possible? In partnership with BofI, Max developed new technology that allows the process to go much faster than the usual procedures for opening an account at an online bank.

What this means for Max members: it’s now possible to visit the Max website, apply for a new UFB Direct account, link it to Max, and start optimizing your cash all within minutes.

Financial advisors who use Max can also help their clients open UFB Direct accounts right on the Max site. The new, streamlined linking process means it’s faster than ever to start earning more on cash, FDIC-insured.

We’ve heard from financial advisors that they would like to add clients to the Max platform as quickly and with as little friction as possible. That’s why we made it possible to pre-onboard clients with one click from advisors’ CRM systems. Now, with rapid account opening and linking, clients can get a savings account set up quickly and can start their first optimization right away.

Why does speed matter? Because every moment counts — not just because time is valuable, but also because the power of cash optimization can start working sooner.

Learn more about Max’s intelligent cash management services for individuals, financial advisors, and businesses, nonprofits, and institutions, or contact us with questions: member.services@maxmyinterest.com.

 

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Cash = Happiness, Science Finds

This may be the insight that explains everything: people are happier the larger their bank balance grows.

Everyone knows that money can’t buy you love. But cash can buy you happiness, apparently — as long as you don’t spend it. That’s the conclusion of a recent academic paper, “How your bank balance buys happiness: The importance of ‘cash on hand’ to life satisfaction,” by researchers Peter M. Ruberton, Joe Gladstone, and Sonja Lyubomirsky.

Accumulating assets has long been a bulwark against unhappiness. But this study, which looked at UK bank customers, reveals that your ATM receipt can be a better predictor of satisfaction than an overall portfolio statement or your total net worth.

“We find a very interesting effect: that the amount of money you have in your bank account right now is a better predictor of happiness than your aggregate wealth,” Mr. Gladstone told The Wall Street Journal.

The study doesn’t determine why exactly cash makes us happy. But liquidity can confer many advantages: peace of mind, insurance against emergencies, or an ability to pounce on opportunities when they become available.

At Max, our members tell us that they hold onto cash for a myriad of reasons: for dry powder, to snap up assets when their prices drop; for specific future purchases; or for capital calls.

Because Max automatically optimizes members’ cash, keeping it under the FDIC limits and making sure it’s earning the highest possible yield, our members don’t have to worry about whether their cash is safe. They can rest easy knowing that their cash is earning among the highest yields possible, while focusing on the happiness they feel when they look at their Max statement.

To learn more about Max and how it helps optimize yield and FDIC insurance for cash, visit maxmyinterest.com for individuals or maxforadvisors.com for financial advisors.

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What’s Better for Clients Than Money Markets? Max.

This week, Max is at the T3 conference in Orange County, Ca., which is spurring us to think about financial advisors and how we can help them best serve their clients.

As financial advisors think about where to put their clients’ cash, many head automatically toward money market funds. But in today’s regulatory environment, where money market funds pay ultra-low rates and can force investors to pay redemption penalties in times of market turmoil, they may no longer be the best choice.

There is a better solution for cash held in brokerage or bank accounts. It’s called Max.  

Some statistics about cash: high-net-worth households in the U.S. are currently holding 23.7% of their assets in cash. That works out to a staggering $3.5 trillion, just among the top 4% of the U.S. population.

Most of this cash is being kept in the wrong place. In money market funds, it is under-earning its potential and it’s not insured.

Clients hold cash for a host of reasons, including as a reserve for a future real estate purchase, private equity capital call, or other asset buy. A recent U.S. Trust survey showed that a majority of clients were holding cash on the sidelines to serve as “dry powder” to capitalize on market opportunities. That’s the same reason why Warren Buffett has said he likes cash so much.

Most financial advisors think that clients aren’t holding much cash because what they see is the cash allocation within the client’s investment portfolio. The reality is that there’s a lot more cash sitting on the sidelines, out of view of the advisor. Most high net worth investors maintain multiple advisory relationships at several institutions. Advisors’ wallet share is only what clients choose to bring to them.

Where is this cash being held? Up until this point, the default for many financial advisors was to keep client cash in a money market fund. This is no longer best practice, especially in a fiduciary environment. It’s difficult to justify offering your clients less of a yield on uninsured cash when there’s a solution that allows them to earn more and stay FDIC-insured.

After the 2008 financial crisis, the SEC imposed new rules on money market funds, rendering them no longer a true cash equivalent. Under the new regulations, retail-held prime funds are subject to redemption gates of up to 10 days and redemption penalties of 1-2% in periods of financial stress. This means that your clients may not be able to access their funds when they need them most. At the same time, yields on money markets are still relatively low, and these funds are not insured.

How can Max solve these problems? Max offers a tool that lets advisors bring more cash into view, help clients earn more on that cash, and help ensure that cash is fully insured. We’ve created a better solution for cash, offering liquidity, higher yield, and greater FDIC insurance. Max doesn’t take custody of clients’ funds. Their cash stays in the client’s own name, while our software acts as a sort of air traffic control system, telling the banks to move funds among the client’s own accounts whenever it’s advantageous to do so to get better rates. In this manner, clients continuously earn the highest yield possible within the FDIC limits. That means Max members can keep up to $5 million per couple insured, and we have a partner solution that can deliver up to $50 million of FDIC coverage per tax ID for business accounts or complex trusts.

Now that money markets are considerably less attractive, isn’t it time to find a better way to manage cash? Learn more about Max at MaxForAdvisors.com.

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3 Ways to Maximize Your Company’s Cash

Cash should be working its hardest for you. That’s especially important for corporate, foundation, and nonprofit cash. This money has to be kept safe — it’s needed for payroll, ongoing expenses, or acquisitions — so it can’t be invested in risky securities. In today’s low-rate environment, it can be tough to find a safe place to keep cash that allows it to earn interest.

Here are three ways treasurers can maximize both safety and yield.

  • Online savings accounts

Some online banks offer commercial accounts that yield more than what your brick-and-mortar bank pays. Be aware of FDIC insurance; choose a bank that is part of this government guarantee program, and make sure to keep your company’s account below the $250,000 limit.

While you won’t have a branch, online savings accounts make it simple to move money to and from your company’s regular checking account using ACH (likely the same way your company handles direct deposit for payroll). You can also arrange wire transfers if you need the money to move the same day.

  • CDs

A certificate of deposit, which pays a fixed return that’s usually higher the longer the term of the CD, is a safe place to keep your corporate cash — as long as it’s FDIC-insured. The drawback of a CD is that your money is typically locked up until the end of the term, and you may have to pay a fee to retrieve it early. This makes CD a less attractive option for businesses that need access to their cash.

  • Max for Business

We think companies should be able to earn a higher yield on their cash, FDIC-insured, just as individuals can by using Max. That’s why we’ve partnered with the American Deposit Management Co. to offer high-yield, FDIC-insured accounts to commercial, institutional, nonprofit, and trust customers. Through Max, ADM offers a preferred yield of 0.75% on balances up to $5 million, and a competitive yield on balances up to $50 million, all FDIC-insured. ADM clients include top U.S. corporations, municipalities, universities, public funds, non-profits and trusts.

Learn more about Max for Business or contact member.services@maxmyinterest.com.

 

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Rates Rise; Max Members Cheer

Fed Chairwoman Janet Yellen speaks at a press conference to announce the central bank's rate increase on December 14, 2016. Photo credit: Federal Reserve via Flickr.

Fed Chairwoman Janet Yellen speaks at a press conference to announce the central bank’s rate increase on December 14, 2016. Photo credit: Federal Reserve via Flickr.

Since the Federal Reserve last raised interest rates in December 2015, investors have been waiting for the central bank’s next move. Now Chairwoman Janet Yellen and her board have done what the market expected and raised rates by 25 basis points (0.25%).

Analysts expect that this will be the start of a period of increased rate volatility. In 2017, the market anticipates three to four more rate hikes, as the Fed climbs out of the near-zero rate trough that accompanied years of quantitative-easing after the 2008 global financial crisis.

Rising rates are a conundrum for investors. They bring the promise of more interest earned on new or floating-rate debt, but they also mean that investors now have to make sure their investments are earning the best rates.

Bank deposits will likely move higher now that the Fed’s rates are increasing. Investors who keep cash in the bank or in brokerage accounts should monitor their financial institutions’ rate moves to be certain their money is earning the most advantageous rate.

That’s not a problem for Max members. Max automatically reallocates cash to a member’s highest-yielding online savings accounts. Members don’t have to think about which of their banks is paying more in interest, or about whether they’ve exceeded the FDIC deposit-insurance limit on their bank deposits.

As the Fed continues to raise rates, it’s likely that the spread between the interest rates paid by brick-and-mortar banks — practically zero — and online banks will widen. Online banks, which have a lower cost structure because they don’t have branches, are likely raise their rates on savings accounts more rapidly. This also means that Max members will benefit, since Max works by optimizing members’ cash balances across online savings accounts.

In a rising interest rate environment, Max can help investors to stay current with the highest rates they can earn on their cash. Currently, Max members are earning .70% to .90% more than the national average.

We also work with financial advisors to help their clients earn more on cash in bank or brokerage accounts.

To learn more about how Max can help you, visit MaxMyInterest or MaxForAdvisors.com.

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Questions Clients Ask Advisors About Max

High net worth households currently have 23.7% of their holdings in cash.

High net worth households currently have 23.7% of their holdings in cash.

When clients hear that they could earn more on their cash without sacrificing liquidity or giving up FDIC insurance, they are often surprised. Aren’t banks paying almost 0% in interest now?

It’s a conversation we hear frequently at Max, where we are working to help financial advisors and their clients maximize the interest they earn on cash in the bank.

Max is an intelligent cash management service that automatically allocates clients’ cash between their existing checking or brokerage account and a portfolio of higher-yielding FDIC-insured savings accounts at the nation’s leading online banks. Most Max clients are earning more than 1.00%.

Clients, and advisors, frequently have questions about how Max can accomplish this goal. Here are some real-life comments they’ve made:

 

“Please look into this opportunity to earn more interest on cash.”

“[Your financial-advisory firm] is behind the times. You guys need to establish a relationship with Max so I can earn better interest on cash.”

“Have you heard anything about this outfit? I read about them in The Economist. They claim to move funds between bank accounts to optimize interest rates. The advertising implies that they can get around 1% versus whatever bank you have is paying.”

“Any chance [your financial-advisory firm] would offer this?”

“I saw a reference to this website in the WSJ and found it to be pretty interesting. Please take a look and we can discuss when you come to Boca.”

 

The reason clients are curious about Max is that the average savings account in the U.S. pays 0.11%, with many bank or brokerage accounts paying only 0.01% or 0.02%. That means Max members are earning about 10 times as much on cash as the average, and considerably more that they earn in a brokerage account.

How does Max help clients earn more on cash? Online banks are more efficient than brick-and-mortar banks. Without retail branches, their lower cost structure allows them to pass along more yield to clients who deposit cash with them. And by optimizing clients’ cash across several online banks, Max helps keep cash within the FDIC deposit-guarantee limits.

For financial advisors, offering Max to clients has the effect of bringing held-away cash into view. Over time, clients migrate cash towards Max, where they can grant their financial advisor read-only access to their balances through the Max Advisor Dashboard (a free service for financial advisors.) With the ability to see the cash that clients are holding, advisors can spark a new conversation about portfolio allocation, and often nudge some of this cash into higher-beta asset classes.

Max is not a bank, nor does it provide financial advice.  Max is a technology-driven tool that automatically optimizes a client’s cash balances among accounts at online banks held in the client’s own name. Clients retain direct access to their funds, maintain their relationship with their primary checking-account bank (or custodial account at Fidelity or Schwab), and can continue to use all bank services like notaries and tellers.

Learn more about the Max Advisor Dashboard and how to invite clients to Max by visiting MaxForAdvisors.com. Or contact advisors@maxmyinterest.com with questions.

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For Advisors, New Technology Brings More Cash Into View

Max brings more cash into view.

Max brings more cash into view.

After eight years of near-zero yields, clients are eager to earn higher returns. Financial advisors want to deliver greater returns without taking on more risk. Advisors are using a novel technology, called Max, to achieve both of these goals, helping clients earn more while growing assets under management.

Which asset class can generate an incremental 0.90% of return, without taking on risk or sacrificing liquidity? The answer lies in a forgotten corner of client portfolios: cash. Most investors are earning little to no interest on their cash held in their bank or brokerage accounts. Since yields have been so low for so long, most financial advisors don’t spend much time thinking about cash.  Instead they focus on higher-return asset classes like stocks, fixed income, or alternative investments.

But how much clients earn on cash can make a significant difference to the overall performance of their portfolios. Here’s the math: the average high-net-worth investor holds 23.7% of his or her net worth in cash, according to the 2015 CapGemini/RBC Wealth Report. Earning an extra 0.90% on that cash means the portfolio as a whole will earn 0.21% more. Because it’s cash in the bank — FDIC-insured — this incremental return is risk-free.

Max is an intelligent cash management service that automatically allocates clients’ cash between their existing checking or brokerage account and a portfolio of higher-yielding FDIC-insured savings accounts at the nation’s leading online banks. Most Max clients are earning more than 1.00%. By contrast, many bank or brokerage accounts pay only 0.01% or 0.02%.

How does Max help clients earn more on cash? By capitalizing on the efficiency of online banks. These institutions don’t have branches, and their lower cost structure allows them to pass along more yield to clients who deposit cash with them.

For financial advisors, offering Max to clients has the effect of bringing held-away cash into view. Over time, clients migrate cash towards Max, where they can grant their financial advisor read-only access to their balances through the Max Advisor Dashboard (a free service for financial advisors.) With the ability to see the cash that clients are holding, advisors can spark a new conversation about portfolio allocation, and often nudge some of this cash into higher-beta asset classes.

Max is not a bank, nor does it provide financial advice.  Max is a technology-driven tool that automatically optimizes a client’s cash balances among accounts at online banks held in the client’s own name. Clients retain direct access to their funds, maintain their relationship with their primary checking-account bank, and can continue to use all bank services like notaries and tellers.

Learn more about the Max Advisor Dashboard and how to invite clients to Max by visiting MaxForAdvisors.com. Or contact advisors@maxmyinterest.com with questions.

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The Best Deal in Fixed Income: Online Savings Accounts

Max members are earning approximately nine times as much on cash as the national average.

Max members are earning approximately nine times as much on cash as the national average.

We all know that interest rates have remained low for the last eight years, a deliberate policy on the part of the Fed to keep the cost of funding low to help spur the economy.  This has made it easier for people to borrow money to buy homes, propping up the housing market. It has been good for the stock markets, helping companies refinance high-cost debt and fund share repurchases.  And it’s been favorable to hedge funds as well, reducing the cost of leverage used to boost returns.

Where low rates have had a negative effect is on investors’ cash in the bank, which yields barely anything.

There’s something odd at play this time around, though.  Historically, money market funds yielded more than bank savings accounts.  No longer.  Most money market funds yield a small fraction of what is currently being earned by Max members.

Even more surprising, though, is the fact that term deposits and longer-term bonds are yielding far less than online banks these days.  The yield on the 2-Year Treasury stands at 0.84%, and 5 Year CDs at most brick-and-mortar banks hover around 0.60%. At Chase Bank, a 10-year CD pays 1.05% — and that’s only if you keep $100,000 or more in the CD, and lock up your money for 10 years.

We at Max are puzzled as to why investors would buy 2 Year Treasurys or lock their funds up in bank CDs when it’s possible to stay liquid and earn up to 1.05% on FDIC-insured bank deposits, with no minimum deposit level.

With rates expected to rise, online banks seem like the most logical place to keep cash. As interest rates go up, cash held in these accounts can be expected to follow the upward movement in rates. With Max, cash automatically flows to the banks with the best rates, even as these banks vie to offer the highest yield on savings. This happens while keeping cash safely below the FDIC insurance limits at each bank.

While hedge funds can’t take advantage of the higher yields available through online banks, individual investors can earn significantly more by keeping cash in these online accounts. Learn how MaxMyInterest.com can help with a fully-automated solution that makes it easy to open and manage online bank accounts, all without changing how you interact with your existing checking account.

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Keep Your Bank, Max Your Cash

With Max, earn more on your cash while keeping your existing checking account, or using a brokerage account.

You’d like your cash to earn more — but you don’t want to switch banks.

Enter Max, an intelligent cash management service for intelligent investors. It offers a way to see all your cash at once, while earning you higher yield and obtaining broader FDIC insurance coverage. Max even simplifies tax season, delivering all 1099-INT statements by email in a single password-protected PDF.

Max works with your existing checking account — unless you’d rather open a new checking account or use your brokerage account. Here’s how:

 

Transactional Checking Account

Most investors have a checking account at a bank that they use to pay bills, accept direct deposit of their paychecks or partnership distributions, and manage their household finances. Many Max members link this checking account to Max, because they value Max’s automated optimization that restores their checking account to their pre-set target balance each month..  For example, if you tell Max that you wish to keep $30,000 in checking, but Max finds only $22,000 at the time of your monthly optimization, it will pull $8,000 from savings to bring you back to your target balance of $30,000.  Similarly, if Max finds excess cash sitting in your checking account, it will automatically be swept to your online savings accounts, where it can earn more. We typically advise that clients set their target checking account balance to be slightly higher than their monthly working capital needs, to ensure an ample cash cushion.

 

Separate Checking Account

Some Max members elect to open a new checking account reserved specifically for Max. They move into this account any funds they wish to optimize, link their online savings accounts, and start optimizing. Often they set a low target balance on this checking account, since they don’t plan to use it for any purpose aside from Max.

This setup functions much like a separately managed account, allowing members to cordon off a specific amount of cash to be optimized, separate from the other cash in their portfolios, and not impacted by their daily transactional activity. They can view and manage this cash from the Max dashboard, and when they need to access this cash, they can move it back to the checking account using Max’s Intelligent Funds TransferSM feature, or wire it elsewhere directly from their online bank accounts. It’s easy to open a new checking account online, without visiting a bank branch.

 

Brokerage Account

Many people keep a significant portion of their cash in their brokerage account. Max supports bank and cash management accounts at brokerage houses including Charles Schwab Bank and Fidelity. This strategy takes full advantage of Max to garner additional FDIC coverage and higher interest rates on the cash that’s not currently invested. Most brokerage accounts pay less than 0.1% on your deposits, while the Max average is 1.00%. Historically, investors who chose to maintain cash as dry powder, on hand to deploy when market opportunities presented themselves, typically lost out on the ability to earn interest on these funds. With Max, that’s no longer a problem. You can earn dramatically more while keeping your cash liquid and easily accessible, within reach when it’s time to trade.  Since the average HNW investor is holding 23.7% of his or her portfolio in cash, picking up an extra 0.90% of interest income on cash is equivalent to earning an extra 0.21% across your entire portfolio.

Learn more about setting up your Max account or read our one-page setup guide. Have questions? Ask Max Member Services at member.services@maxmyinterest.com.

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Fiduciary Solutions for Financial Advisors: How to Think About Clients’ Cash

Max members are earning about 10 times more on their cash than the national average.

Max members are earning about 10 times more on their cash than the national average.

With the move towards the fiduciary standard across the investment-management landscape, financial advisors increasingly are looking at how they can make sure their clients are getting this standard of advice for the cash portion of their portfolios as well as for their securities. That’s where Max comes in. 

Cash is the one asset class that’s present in every portfolio. But a near-zero-interest-rate environment over the last few years has meant that investors overwhelmingly are earning almost nothing on cash. The national average on savings accounts is 11 basis points — 0.11%. As a fiduciary, an advisor is bound to give advice that’s in a client’s best interest financially. For cash, this means advisors have to seek out ways that clients can earn more interest while remaining insured under the FDIC deposit guarantees.

– Think carefully before using money market funds

Money market funds are a traditional substitute for cash, because they’re designed always to trade at a stable $1 per share. But with new regulations, these funds may now be able to hold onto investors’ money if markets are in turmoil. That means that clients may not be able to get their money out of a money market fund when they need it most. With this lower level of safety, and essentially no yield, money market funds may not be up to the fiduciary standard as a cash equivalent.  

– Use online banks

Online banks don’t have branches, so their cost structure is considerably less than their brick-and-mortar competitors. This imbalance allows them to offer higher interest rates to depositors — above 1%, in some cases, making online banks the highest-yielding places to park cash that clients wish to keep fully liquid. FDIC-insured online banks have the same federal deposit guarantee as any other U.S. bank protected under the program.

– Seek more FDIC coverage

Many investors don’t realize that exceeding the FDIC limits in their accounts means that excess money may not be safe if something happens to the bank. If your clients hold more cash than the FDIC limit — $250,000 per depositor, per account type, per institution — you should consider helping them open accounts at additional banks to gain FDIC coverage for as much of their cash as possible. Keeping cash safe is a prerequisite for fiduciaries.

– How Max can help

It’s possible to get both higher interest on cash and greater FDIC coverage. That’s what Max provides for advisors and their clients through the Max Advisor Dashboard. The average Max client is currently earning more than 1.00% on cash and enjoying FDIC coverage across several institutions. Learn more about how you and your clients can benefit at MaxForAdvisors.com.

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