Save’s Market Savings available to 16,000 Schwab RIAs

More than 16,000 registered investment advisers that custody assets with Charles Schwab can now offer Save’s Market Savings through Schwab Marketplace. The product moves uninvested client cash into a network of banks, where it earns interest that Save invests in vehicles linked to exchange-traded funds while preserving principal and liquidity.

Market Savings requires a $100,000 minimum investment. Save reports the product has averaged a 7.5% annual return over the past three years. The firm says interest is reinvested monthly into the principal to compound returns.

Save says it can distribute deposits across banks to provide FDIC coverage for balances up to about $50 million. Participating advisers will share part of the fees they receive from Market Savings with Schwab.

Save positions Market Savings as an option for long-term or “permanent” cash that clients hold in reserve rather than for transactional balances used for trading or bill payments. Sean O’Hara, a director at Pacer Financial and president of PacerETFs Distributors, called it “sort of halfway between short-term cash and what you might make in the equity markets.” He added that advisors often manage client cash without receiving direct compensation: “Normally the way it works is they’ve got to take care of cash, but they don’t have any way to sort of get paid on that.”

Broker-dealers earn significant interest revenue from cash sweep programs that place client cash at banks or other vehicles and retain a portion of the returns. Schwab reported nearly $3.4 billion in net interest revenue in its most recent quarter, with about $485.7 billion held in sweep accounts. Industry observers have raised concerns that advanced AI tools could eventually identify and shift consumers’ cash into higher-yield options, a change that could reduce broker-dealer margins.

Tim Welsh, founder of consulting firm Nexus Strategies, called Market Savings “a sophisticated, complex and niche product” and said he does not expect it to materially affect Schwab’s net interest income, in part because the offering targets wealthier clients and large balances.

Save plans to seek distribution through other custodians and adviser networks beyond Schwab. The firm targets high-net-worth households, family offices and corporations that keep large cash reserves and want higher returns without taking on direct market risk. O’Hara noted that cash often sits idle in accounts for years.

Save’s executives describe Market Savings as complementary to Schwab’s existing options such as money market funds, bonds and bank products like certificates of deposit, which offer different trade-offs between yield and liquidity. Schwab did not respond to requests for comment.

Market Savings is one of several products from fintech firms and asset managers that aim to offer higher yields on long-term cash holdings while limiting downside risk.