Frequently Asked Questions
- What is BDSP and how does it work?
- The Bank Deposit Sweep Program (“BDSP” or the “Program”) is the core account sweep option for eligible accounts. This means that any cash balances awaiting reinvestment in or through your brokerage or advisory account(s) will be automatically deposited or “swept” into interest-bearing deposit accounts at one or more FDIC-insured financial institutions (“Deposit Accounts”). Any credits to your account(s), including those arising from deposits into your account(s), sales of securities, interest and dividends, will be swept to the Deposit Accounts. Any debits to your account(s), including those arising from securities purchases and other charges, will be satisfied by withdrawing from the Deposit Accounts and sweeping cash back to your account(s).
- Which accounts are eligible for BDSP?
- Currently, almost all account types are eligible for BDSP, except for Keogh accounts, non-US accounts, and advisory retirement accounts that are governed by the Employee Retirement Income Security Act of 1974 (“ERISA”). These ineligible accounts will continue to sweep into money market mutual funds pending further notice.
- What if I do not want to sweep to BDSP?
- If you choose not to participate in the Program, you should discuss with your Wealth Advisor how to redeploy the proceeds of your existing money market mutual fund. Non-retirement accounts that choose not to participate in the Program have the option of sweeping their free credit balances into FCASH (See “What is FCASH” below) (note that retirement accounts may currently select only BDSP as their sweep).
- What is FCASH?
- FCASH, offered by Fidelity, is a means for holding cash balances. FCASH is not a bank deposit or a money market mutual fund. Fidelity may, but is not required to, pay interest on the balances held in FCASH. Your Wealth Advisor can provide you with current interest rates on FCASH. Note that like any cash held in or through a securities account, FCASH is protected by the Securities Investor Protection Corporation (“SIPC”), up to applicable limits (See below – “What are the differences between FDIC and SIPC?”). FCASH is not eligible for insurance by the Federal Deposit Insurance Corporation (“FDIC”).
- What interest will I earn on my Deposit Accounts?
- For all eligible account types (other than advisory individual retirement accounts): the interest you earn depends on the interest rate tier. See specific information regarding interest rates and interest rate tiers. The Deposit Accounts earn the same rate of interest regardless of the bank at which your funds are deposited. The amount of interest you receive will be lower than the amounts paid by the participating banks due to fees received by William Blair and others, as more fully described in the Bank Deposit Sweep Program Disclosure Document. For eligible advisory individual retirement accounts: The interest you earn is determined by the amount of interest the participating banks are willing to pay on the aggregate advisory individual retirement account balances of the deposits minus the (i) account-level fee paid to William Blair based on a fee schedule (indexed to the Federal Funds Target Rate), as further described in the Bank Deposit Sweep Program Disclosure Document, (ii) the fees paid to National Financial Services LLC (“NFS”) for its services, and (iii) the fees paid to IntraFi Network LLC, as administrator.
- Does the Program benefit William Blair?
- Yes. For eligible accounts other than Advisory IRA Accounts, the combined total fees that we and others (including our clearing broker, NFS) may earn will be a maximum of the Federal Funds Target Rate, plus 0.25% as determined by the total deposit balances at all of the participating banks over a 12-month rolling period. We anticipate that we will retain approximately 55% of the Federal Funds Target Rate, subject to change. The more client deposits held in the Program and the longer such deposits are held, the more William Blair will receive. For Advisory IRA Accounts, we charge a fixed monthly fee indexed to the Federal Funds Target Rate (which is offset by the amounts received from the participating banks, to the extent available); NFS and IntraFi also receive a fee as further described in the Bank Deposit Sweep Program Disclosure Document.
In addition, William Blair will receive benefits in connection with the participating banks with whom William Blair has existing or future relationships by seeking to obtain certain services or rates from such banks relating to other lines of business or other transactions. Given the conflicts discussed above, you should consider the importance of the Program to us when evaluating our total fees and compensation and deciding whether to enroll in the Program. - If I have an advisory account, will the advisory fee be charged on deposits held through BDSP?
- Yes. Similar to money market mutual funds, deposits held through BDSP will be subject to an advisory fee if held through an advisory account. You and your Wealth Advisor should consider the percentage of your overall portfolio in a cash sweep option to ensure that your Account is appropriately balanced, taking into consideration investment objectives, liquidity needs, and other important factors.
- What are the differences between FDIC and SIPC?
- FDIC insurance covers bank deposits, up to applicable limits. SIPC protection covers securities and cash held through a securities account, up to applicable limits.
For BDSP, the Deposit Accounts are eligible for FDIC insurance up to a maximum amount of $250,000 (including principal and accrued interest) when aggregated with all other deposits, including other bank accounts, certificates of deposit and deposits held through us or other brokers, that are held by you in the same insurable capacity at any particular bank. For example, if you hold $100,000 in BDSP at Bank X, and you also hold $150,000 at Bank X separate from the Program, those amounts are aggregated for insurance purposes; in this example, you would have reached the maximum insured amount at Bank X. (See below – “How does BDSP seek to maximize FDIC coverage?”) More information regarding FDIC insurance can be found in the Bank Deposit Sweep Program Disclosure Document. You may also obtain information by contacting the FDIC, Deposit Insurance Outreach, Division of Supervision and Consumer Affairs, by letter (550 17th Street, N.W., Washington, D.C. 20429), by phone (877-275-3342 or 800-925-4618 (TDD)), by visiting the FDIC website, or by e-mail using the FDIC’s On-line Customer Assistance Form available on its website.
SIPC protects against the loss of customer securities and cash up to a total of $500,000 (of which up to $250,000 may be cash) per customer in each separate capacity under SIPC rules held in or through a securities account. Money market mutual fund shares are considered to be securities for purposes of SIPC coverage. Deposit Accounts are not eligible for SIPC coverage. You may also obtain information about SIPC coverage, including a brochure that describes SIPC and SIPC insurance, by accessing the SIPC website. In addition to SIPC protection, NFS provides additional “excess of SIPC” coverage. The excess of SIPC coverage will be used only when SIPC coverage is exhausted. Like SIPC protection, excess of SIPC protection does not cover investment losses in customer accounts due to market fluctuation. It also does not cover other claims for losses incurred while broker dealers remain in business. Total aggregate excess of SIPC coverage available through NFS’s excess of SIPC policy is $1 billion. Within NFS’s excess of SIPC coverage, there is no per-customer dollar limit on coverage of securities, but there is a per-customer limit of $1.9 million on coverage of cash awaiting investment, subject to the $1 billion cap across all accounts. See more information about NFS’s excess of SIPC coverage. You may also obtain information about SIPC coverage, including a brochure that describes SIPC and SIPC insurance, by accessing the SIPC website. - How does BDSP seek to maximize FDIC coverage?
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Cash balances will be deposited in a cascading sequence into various banks as set forth in the Program Bank List. Once your Deposit Account at the first bank reaches the maximum deposit amount (currently $246,500 for individual, corporate and retirement accounts, and $493,000 for joint accounts), subsequent deposits will then be made at the next bank on the Program Bank List, up to the same maximum deposit amount, and so on. Please note, however, that notwithstanding the number of participating banks, Program limitations require that eligibility for FDIC insurance be limited up to $2.5 million per depositor, for each account ownership category, or up to $5 million at any given time (for joint accounts), subject to certain factors, including capacity constraints, other deposits you hold at the same bank separate from the Program, and applicable FDIC rules. Once all of the banks in the Program have been utilized or when you’ve reached the maximum coverage amount, any subsequent deposits will be made into excess deposit banks, as designated on the Program Bank List. Cash balances deposited with excess deposit banks are likely not eligible for FDIC insurance. See our sample scenario.
Cash balances that cannot be placed at a participating bank, including excess deposit banks, due to capacity limits or in NFS’ sole discretion, shall be swept to a Money Market Mutual Fund Overflow Fund as described in the Bank Deposit Sweep Program Disclosure Document. In the event that you have funds swept to a Money Market Mutual Fund Overflow Fund, it will have a material impact on your insurance coverage, how interest is calculated and how funds are placed and withdrawn. - How many banks participate in the Program?
- There are multiple banks in the Program selected by our clearing broker, NFS. The banks are listed on the Program Bank List.
- Can I remove one or more banks from the Program?
- Yes. You can remove as many banks from the Program as you desire, as long as you maintain one participating bank and one excess deposit bank. The removal of a bank might be helpful if, for example, you hold deposits at that bank separate from the Program, as those deposits would be counted together with deposits held at the same bank through the Program for purposes of FDIC insurance.
- Will BDSP be reflected on my account statements?
- Yes. Your account statement will show the total amount held in Deposit Accounts and will also show each of the applicable banks and the specific amount held by each bank.
- How can I elect to enroll in BDSP?
- If opening a new account, you will designate BDSP as your core sweep option on the account application. If you currently sweep to FCASH, but want to elect BDSP instead, you must direct your Wealth Advisor in writing to transfer the assets into the Program. If you opted out of the BDSP previously, you must direct your Wealth Advisor in writing to transfer the assets into the Program.