New Rules for Money Market Funds – Are You Prepared?

moneyOctober 14, 2016 is an important date for anyone who currently holds a Money Market Account.  On this date, a couple very important regulations will go into effect surrounding how Money Market Accounts are handled.

Back in 2014, the US Securities and Exchange Commission (SEC) adopted new money market fund rules. The rules were designed to reduce the risk of investor runs on money market funds should another financial crisis occur the likes of 9/11. The new rules require institutional money market funds to float the net asset value (NAV) (share price) in such a manner that it reflects the fair value of the investments the fund holds.  This creates the possibility that an investor could lose money on this type of fund.

The newly adopted rules also permit a board of directors of a fund to impose liquidity fees and so-called “gates on redemptions.” The fees and gates do not apply to government money market funds, although governing boards of those funds may impose them if they feel it is in the best interest of the funds. The SEC rules also require increased transparency. Daily and weekly liquid asset values and market-based NAVs will be required.

So what does this mean to you?  Quite frankly, now is the time to review your plan’s current money market fund holdings and make decisions on what to do going forward. If you haven’t already made plans to do so, sit down with a trusted adviser (we recommend fee-only, like the team here at Financial Fiduciaries) so they can explain the rules and show you if and how they will affect your retirement plans.

About Objectively Speaking

Tom Batterman, founder of Vigil Trust & Financial Advocacy and Financial Fiduciaries, LLC is in the business of representing the best financial interests of his clients. Having provided objective, fee-only financial management services for over two decades, he specializes in managing the investment and related financial affairs of individuals and mutual insurance companies who do not have the time, interest or expertise to manage such matters on their own. As an objective, unbiased professional who takes on a fiduciary responsibility to his clients, he guides clients to the financial decisions they would make themselves if they had years of training and experience and the time and expertise to fully research and understand all of their options. Founded in 2010 as an outgrowth of Vigil Trust & Financial Advocacy, Financial Fiduciaries, LLC is a financial management solution for individuals and mutual insurance companies who recognize they do not have the time, interest or expertise to properly attend to their financial matters on their own. While there are many financial “advisors”, most of them have investment products to sell and the “advice” they provide is geared toward getting their clients to engage in a purchase. As one of the rare subset of advisors known as “fiduciary advisors”, Financial Fiduciaries does not sell any investment product so its guidance is not compromised by conflicts of interest which plague ordinary advisors. Prior to his employment in the financial industry in financial advocacy and trust positions, he worked at a private law practice in the Wausau area in the areas of estate planning, tax, retirement planning, corporate organizations and real estate. He is a graduate of the University of Wisconsin-Madison and the UW-Madison Law School and has during his career held Series 7, 24 and 65 securities licenses. A longtime resident of the Wausau, Wisconsin Area, Tom is active in the community. He enjoys golf, curling, skiing, fishing, traveling and spending time with his family.
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