Bogleheads

[DaveTH]

Wells Fargo seems to have a real problem with paying decent returns on idle cash. Last July they switched from good money market cash sweep accounts to a pathetic replacement that pays next to nothing.

Many people dealt with the change by manually buying shares of 3rd-party money market funds such as the Vanguard Prime MM and the Russell Institutional MM.

Until Jan 31st that strategy worked fine because it did not eat up a free trade. Well as of Jan 31 most purchases of 3rd-party MM funds will cost you a free trade. Even worse, they retroactively went back and decremented my remaining free trades for MM trades I made in 2007!

I still have plenty of free trades available until the next reset in May, but I am getting a little annoyed that they are making it so difficult to get a good return on idle cash and they keep changing the policy on cash sweeps with little or no notice. Just something to be aware of.

[pointyhairedboss]

Thanks for the heads up.

The removal of Russell Institutional MM as a ntf fund may be at Russell's end. Russell probably never anticipated the popularity of the fund. How would they even think about changes in a broker's idol cash policy. Russell was probably paying more in ntf shelf fees to Wells Fargo than they were collecting from the expense ratio.

The real evil here is the retroactively removing your free trades. This is total bs. I think with enough complaining - and if necessary, attitude - you can get this fixed.

Do you know when this policy went into effect? I made a purchase into Russell MM a week ago. I just noticed that I have been docked a free trade. I don't if they did this retroactively or not. They don't really don't tell you whether you are eating a free trade. They simply tell you your commission is $0.

You can always invest in a Wells Fargo money market fund. I believe the main one is WMMXX. The yield is 1% less.

Also, Russell MM's expense ratio is .15%, this includes a .15% waiver that expire at the end of the month. I don't know if Russell will extend this waiver.

[pointyhairedboss]

One positive thing I recently realized is that free trades are per account, and not per customer. So if you have taxable, roth ira, and trad ira accounts, you have 300 free trades - 100 free trades per account - rather than 100 free trades total. 100 trades is a lot of trading if you are a mutual fund investor.

[pointyhairedboss]

Just thought of another option, which I was alerted to by another wells trade user on a prior thread.

You can fill out an "Electronic Funds Transfer Authorization" form. (While logged in, goto brokerage tab, brokerage services sub tab, forms sub sub tab). This form is used to link outside accounts to your taxable brokerage account. Check out section 4 of the form:
The Settlement Account is used to automatically pay for purchases as well as to be used to deposit
proceeds from any sales related to your brokerage account. Use this section to change your account
settlement options established when you first opened your brokerage account. NOTE: The change will
replace the money market fund, if applicable, selected at account opening.

You could open a money market account at the firm of you choice, say Vanguard, and then link that account to Wells Trade. I'm guessing it will only work for taxable accounts.

[indexfundfan]

[DaveTH]