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Carson to Roll Out Banking Option for Clients

May 16, 2019

Carson Group is in beta testing mode for a new white-labeled cash solution for its clients that could give it a leg up competing with larger wealth management firms, according to news reports.

In partnership with Galileo Processing, Carson began offering the bank account-like service last week following nine months of discussions between the two firms, WealthManagement.com writes. And Carson expects to roll it out to all its investors in the third quarter, according to the web publication.

Carson is the first client of Galileo Money+, which offers two demand deposit accounts whose interest rates are pegged to the Federal Reserve fund rate, earning 1.24% annual percentage yield and 2.20% APY, WealthManagement.com writes. The accounts are FDIC-insured up to $2.5 million per Social Security number and are custodied by Bancorp Bank, according to the web publication.

The accounts’ fee is 20 basis points, which Galileo splits with the bank — but they’re structured to allow Carson advisors to tack on up to 1% in fees on them, WealthManagement.com writes. Carson hasn’t yet decided how much, if at all, it will let advisors earn from the accounts, Andrew Rogers, advisor solutions manager at the firm, tells the web publication. Regardless, however, it’s a chance for independent advisors to compete with the big banks, Aaron Dillon, managing director of Money+, tells WealthManagement.com.

“All of the major banks now have both wealth management and financial advisors in the bank branch. Financial advisors are working with the bankers at those institutions to try to bring in wealth management business to the bank,” he tells the publication. “Here’s an opportunity for that story to flip — where the independent advisor can now go after the banking client.”

Carson isn’t alone among the smaller wealth management operations to offer its clients deposit accounts, WealthManagement.com writes. Robo-pioneers Wealthfront and Betterment both offer cash management services, according to the web publication. And some offerings come more competitive rates and fees. MaxMyInterest, which is used by several firms, including Dynasty Partners, charges only two basis points per quarter and offers 2.71% APY max yield on cash and an average of 2.46% APY yield, WealthManagement.com writes.

But Teri Shepherd, Carson’s chief operating officer, tells the web publication that the firm did its due diligence and that Money+ was the right choice. Money+ offers firm-branded debit cards, according to Dillon, as well as a network of no-fee ATMs and an app that brands the experience for each wealth management outfit using it, and its call center staff can pinpoint the client’s wealth management firm, WealthManagement.com writes. But Money+ doesn’t give clients access to physical bank branches, according to the web publication.

By Alex Padalka
  • To read the Wealth Management article cited in this story, click here.