LPL's Multi-Bank Cash Sweep Program Can Offer Increased FDIC Insurance Limits

Last Edited by: LPL Financial

Last Updated: March 27, 2023

LPL's Multi-Bank Cash Sweep Program Can Offer Increased FDIC Insurance Limits

As the events of last week's bank failures played out in the headlines, advisors stepped up to reassure their clients amid market volatility and concerns about the safety of the American banking system.

"If I were in an advisor's shoes, I'd make sure my clients understood FDIC insurance limits. People haven't had to think about it for a decade," said Matt Enyedi, managing director, Client Success LPL Financial. "We've been working with advisors over the past week to address concerns about cash deposits and help them communicate the benefits of LPL's multi-bank cash-sweep programs, including expanded FDIC insurance protections and our ongoing risk management."

While LPL is not a bank, the company does utilize cash sweep programs that deposit customers’ uninvested cash in banks that offer FDIC insurance. [1]LPL offers two bank deposit sweep programs, the LPL Insured Cash Account (ICA) and LPL Deposit Cash Account (DCA), which are available to different types of client accounts. Cash balances in the ICA and DCA are eligible for FDIC insurance up to $250,000 for individuals and $500,000 for joint accounts per bank. For additional protection, LPL's multi-bank cash sweep programs are designed to reduce risk to investor cash by depositing that cash in multiple banks. This approach provides up to ten times the FDIC insurance coverage on cash in the ICA and DCA, making individual account holders eligible for up to $2.5M or, in the case of joint accounts holders, $5M, in FDIC insurance.

LPL Financial utilizes an enterprise risk management framework to examine the health of business partners with which the company has relationships in order to assess risk to both LPL and its clients. This process includes research, financial analysis, and forward-looking measures of financial strength and sustainability. When necessary, business partners have been removed from LPL’s “approved” list until such time as they can effectively demonstrate a return to good standing.

"While we are believers in taking the long-term view, we recognize that there are moments in time where the short-term matters most, and we've got to solve for both to help advisors navigate the uncertainty so they can take care of their clients," said Enyedi. "Our clients tell us what their investors need. And right now, their investors need safety and security. We have an elegant solution with our multi-bank cash sweep approach and can provide ten times the peace of mind any single bank can provide."

Last week, regulators stepped in to backstop bank cash deposits to prevent contagion from spreading beyond the handful of impacted banks. Speaking at the American Bankers Association on Tuesday, Treasury Secretary Janet Yellen said that the federal government could intervene to protect depositors at small banks if the fallout from Silicon Valley Bank's collapse keeps growing. However, Yellen stressed that the banking system is "sound" and that recent bank failures are "very different" from the economic crisis of 2008.

"The backstops steps by regulators have calmed the situation," said Marc Zabicki, Chief Investment Officer, LPL Financial. "Distress levels are elevated, but things have remained relatively calm compared to a 2007-2008 scenario. We believe the Fed must be careful with messaging here to not inject any more worry into the market than we have already experienced."


Zabicki and the LPL Research team make sense of the financial landscape and provide objective investment research and commentary across multiple channels. Visit  and follow LPL Research on Twitter, LinkedIn and YouTube for the team’s latest insights on macro and market news.

Lists that identify all the insured banks in the ICA and DCA programs appear at Investors are entitled to exclude institutions on the bank lists from eligibility to receive their deposits.

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