Save Advisors, a Houston-based subsidiary of markets-based savings firm Save, has introduced an FDIC-backed savings option that registered investment advisors can offer clients interested in drawing yields from the markets instead of interest rates on held-away cash.
The program is being run in partnership with Customers Bank, which provides the deposit accounts for a market-based yield strategy managed by Save and held at custodian BNY Pershing. The minimum deposit amount for the firm’s Market Savings Sub-Advisory Program is $10,000 for a one-year term. Save charges a 0.35% annual management fee for use, and clients can face trading costs if they withdraw funds early.
Save founder Michael Nelskyla said the program can give advisors a unique option to offer clients looking for a safe-haven for cash that can potentially draw better returns than traditional options such as a money market fund or CD.
“No. 1 is that an advisor can give the client potential for higher yield to beat inflation,” he said. “No. 2, the advisor can treat the cash similarly to their normal investment program.”
Save was founded in 2018 by Michael Nelskyla, a former managing director at UBS, Goldman Sachs, and RBS, along with other financial industry veterans, as a way to offer a savings program based on market returns. The firm offers consumers savings accounts that combine FDIC-insured bank deposits with market investments managed by Save for fees that range from about 0.79% per year.
There has been interest in helping advisors manage client cash for years. MaxMyInterest, which launched over a decade ago, is one well-known provider that works with more than 3,000 wealth management firms and integrates with many third-party technology platforms.
MassMutual-owned Flourish has also been targeting advisors to get them to pay attention to held-away client cash (along with debt tracking, loans and annuities). Its Flourish Cash offers a 4% annual percentage yield through an account that will tie to an advisor’s wealth stack. In a study of its own customer base, Flourish found that clients with net worths of $1 million to $2 million hold an average of $183,672 in cash. And custodian Altruist launched its own cash management platform, built internally from scratch, last year.
Nelskyla said Save’s program is unique because it acts like an investment that protects from downside risk.
“If you’re the advisor then our proposition to you is a sub-advisory program which you can use to enhance the yield on your client’s cash,” he said. “Your selection or our recommendation will generate you yields that are coming from the S&P, NASDAQ or multi-asset portfolio … that return in general should be higher than an equivalent money market or savings products.”
Adam Watts, Save’s president and chief operating officer, pointed to the negative returns in the bond market in 2022.
“Most portfolio models are related to bonds being at a lower risk than equities,” he said. “Now, cash has become a more important part of a portfolio and you need tools to have cash managed more efficiently and have it be a more equal partner in the allocation process.”
Nelskyla said Save is targeting smaller, independent advisors who likely have fewer options for managing client cash.
Jake Danielski, managing director and head of the financial institutions group at New York-based Customers Bank, said the bank has been developing products for the RIA sector for the last two years, including those independent RIAs that may be working with regional, non-specialized firms.
Danielski said through the Save program, the bank can offer advisors a new way to capture clients’ held-away assets that they might otherwise lose.
“Customer cash is moving very fast,” he said. “We see it as a valuable proposition for RIAs to provide clients with FDIC insurance in a bank account and the potential for market upside … this is another tool for advisors to capture held away cash but under the advisory framework.”
Danielski also said that, unlike some banks, Customers does not have a wealth advisory division and so will not compete to advise on assets.
“We provide the services without the advisor having to worry that this is a ripe area for the bank client,” he said.