Dear Client,
Recently AssetMark sent a letter to all those who are using AssetMark products or services. You may have received this letter if we have hired through AssetMark an institutional portfolio manager (e.g. City National Rochdale, William Blair, AssetMark's Market Blend, New Frontier, etc.) to manage some of your wealth. The letter addresses an SEC Order against AssetMark and its affiliate AssetMark Trust (AMT) for failure to provide adequate disclosures associated with their FDIC-Insured Cash Deposit Program (IDC Program) during the period September 2016 to January 2021.
You, NOR ANY other Brophy Wealth Management, LLC (BWM) client, used the IDC Program that the SEC found wanting for disclosures.
The IDC Program was a cash management product that sought to pay higher interest rates to depositors than standard money markets by bundling term CDs issued by several FDIC-insured banks. This approach of using multiple banks maximized FDIC insurance coverage beyond the standard $250,000 limit. Once interest rates from the banks were negotiated, AssetMark and AMT together set the amount of the interest paid that would be retained as compensation and the amount to be paid to depositors. The SEC found disclosures did not fully disclose the associated conflicts of interest related to their role in negotiating between themselves the amount of interest received from the banks that would be retained and the amount that would be paid out to customers.
If you have any questions or concerns please reach out to us.
Your Brophy Wealth Team