Sales & Marketing | 08.12.26

Wealth Management Has a $3 Trillion Problem: Investors Are Keeping Too Much Cash

by: Miriam Gottfried

Investors are holding more than $3 trillion in retail money-market funds (MMFs), creating a challenge for wealth managers trying to persuade clients to move cash into longer-term investments. Cash became especially attractive after interest rates surged in 2022, and MMFs still offer average yields near 3.5% despite subsequent rate cuts. Advisors warn that cash yields could decline further and may fail to outpace inflation, recommending alternatives such as investment-grade corporate bonds, municipal bonds, ultrashort bond funds and buffer exchange-traded funds. Some investors, however, remain skeptical of bonds and complex products, particularly given past market losses and concerns about fees. The debate highlights a broader challenge for wealth managers: convincing cautious investors to accept additional risk in pursuit of potentially higher returns while respecting their need for liquidity and financial security.

Read the full article on Wall Street Journal