Advisers walk fine line when managing client cash
Staying ahead of inflation in a low-yield environment can mean taking on more risk with emergency cash positions. The shortest-term certificates of deposit are yielding less than 65 basis points.
May 17, 2021 2 MINS
While most financial advisers continue to recommend their clients hold enough cash or liquid cash equivalent to cover between three- and six-months’ worth of living expenses in case of an emergency, the crushing reality of historic-low yields is leading to some shifting priorities when balancing safety and yield.
“I get the question about earning yield on cash at least once a week from clients,” said Paul Schatz, president of Heritage Capital. “There are plenty of solutions, but solutions don’t come with the same low level of risk as bank savings accounts.”