On this week's episode of the Financial Planning Podcast, Frank Bonanno says that even though cash rules everything around us, nobody wants to talk about it.
Bonanno, managing director and head of marketing at
Over the years, Bonanno spent time at Reich & Tang Deposit Networks, Double Rock Corporation, The Dreyfus Corporation and Lexington Management Corporation. But the early days of his career were spent as a financial consultant at Merrill Lynch.
Bonanno says that while he loved being in financial services, he quickly learned that sales weren't his strong suit. So he moved to marketing and was immediately captivated by cash. It stood out to him as the asset most widely held, but the least talked about.
So he dedicated his career to helping advisors tap into the true potential of dollars and cents, particularly the large stacks of cash held away from the advisor-client relationship.
During his conversation with FP Podcast host and lead editorial producer Justin L. Mack, Bonanno discusses what advisors still don't understand about cash management; how the ongoing banking crisis is changing the conversation; and why his favorite part of the job actually ties to empowering local communities.
Listen to the new episode — as well as to all future and past episodes — by subscribing to the FP Podcast on
Justin L. Mack (00:02):
Good morning, good afternoon and good evening. Welcome to the Financial Planning Podcast. I'm your host Justin L. Mack, wealthtech editor with Financial Planning. And it is my pleasure to introduce this week's guest, Frank Bonanno, managing director and head of marketing at StoneCastle Cash Management. Frank, thank you so much for joining us this week on a special edition of the Financial Planning Podcast.
Frank Bonanno (00:23):
I appreciate it, Justin. Happy to be here.
Justin L. Mack (00:25):
Absolutely. And this is a special edition indeed. Consider it a complimentary piece to the reporting of Financial Planning Chief Correspondent Tobias Salinger whose most recent deep dive cover story is all about cash sweeps, referring to advisors cash assets moving back and forth from a brokerage to one or more bank accounts that never individually go above the federal deposit insurance corporation limits and remain immediately available to financial advisors and clients. The money comes from small leftover sums in trades in an account or liquid holdings in a client portfolio. Some say that sweeps help pay for commission free trades, boost access to capital and expand FDIC coverage of cash deposits. Others question whether advisors and their clients know that there's an estimated $1 trillion in brokerage cash sweeps that they could move into money markets, certificates of deposit and other higher yielding accounts to tap into those climbing interest rates themselves.
(01:14)
So to help advisors better understand an asset class of growing importance, FP has put together an advisors guide to cash sweeps, how they work, why they exist and the alternatives. And if you know Toby's reporting, he comes at it from every angle. So be sure to check that out both in the real and virtual pages of financial planning over at
Frank, who oversees StoneCastle Cash management's marketing strategy and all the firm's client-centric outreach programs, has more than 20 years of experience creating relationship marketing initiatives with banks and helping them best meet their funding and liquidity goals. He also says right now, as banking institutions collapse all around us, is the perfect time for advisors to properly crack that cash conversation with their clients. So Frank, what better place to start than at the beginning? Before we get into that cash convo, tell me a little bit about how you got into the world of financial services and what about cash management specifically attracted you so much?
Frank Bonanno (02:25):
Oh, absolutely. And I appreciate the opportunity to share that. I come from a background like many other people. I started in the industry 25 years ago … building portfolios for clients and taking them through the different types of markets and what have you. And it turned out I wasn't the greatest salesman in the world. I was passionate about the process, so how do I stay close to the financial services process but not be on the sales end of it? So I turned into marketing and it became one of these phenomenal opportunities where you're seeing all different market cycles and different asset classes and how they behave and interrelate. And then there was one that really is the most widely held, but the least talked about, and it became cash. And then I started getting involved in it saying, you know what? There are so many practical applications and uses and things that people aren't really even talking about with cash and it gets overlooked a lot. So for the last 20 years I've been trumpeting out to as many advisors that would listen to us the importance of it and how it interact and interrelates with banking, the banking system, particularly community banks across the country. So I've found a nice home where I can marry all of that together and really get into the nitty gritty with advisors now.
Justin L. Mack (03:40):
Absolutely. And tell me about that nitty gritty. How is StoneCastle serving advisors? What kind of services do you provide in relation to having that cash conversation be something that comes up more commonly? Because like you mentioned, and is also pointed out in Tobias's reporting in the cover story, it's overlooked. It's not talked about as much as so many other things. So how does Stone Castle help and why do you think folks aren't talking about cash more?
Frank Bonanno (04:06):
Sure. So I'll start with the StoneCastle aspect of it. StoneCastle Cash Management, plain and simple, for advisors we provide a high yield, high level of FDIC insured savings accounts essentially. So we're trying to help advisors to add value to their business by being able to attract held away cash that may be uninsured, maybe earning little interest and what have you, and build that into the cash conversation. It becomes very important. That's what we do and that's how we're helping advisors. The cash conversation. I'm so glad you started this whole conversation talking about it as the cash conversation because two years ago during the pandemic, nobody was talking. No advisors were talking about cash simply because no matter where you look, rates were sub 10 basis points at banks and brokerages. So advisors weren't incentivized to talk about it other than getting higher levels of FDIC insurance. Now you look at the Fed tightening as they have done over the past year, and all of a sudden cash has come back with a vengeance. And the story is if you're not talking to your clients about cash somebody else is. And there's a huge opportunity that you're going to miss.
Justin L. Mack (05:18):
Absolutely. And what kind of demand in the market are you seeing right now from RIAs and how does it compare to previous years? And to give folks the context, we are sitting here firmly in spring 2023, April 2023. Had a heck of a first quarter to kick off this year as far as the markets and financial institutions. So a lot to keep in mind. But what kind of response are you seeing, and I guess your contemporaries are likely seeing, as far as alternatives to manage cash in maybe a different way away that advisors hadn't been considering before? Is business up right now?
Frank Bonanno (05:50):
Yeah, business has been, it's been crazy for the last couple of months certainly. And you know, go back just a full year just when the Fed started tightening, we started coming back out of the pandemic and all of a sudden cash is becoming a little bit more interesting because you see the rate that's happening. Fast forward to how quickly the Fed had historically raised rates to combat 40 year highs in inflation. So all of a sudden it becomes very, very meaningful. This money that's been sitting there that did nothing for a couple of years is all of a sudden coming into play and cash as an asset class came back. Then you dump on top of that Silicon Valley Bank, Signature Bank, what has happened over the last month, month and a half … and all of a sudden it's this massive spotlight that is being put on cash. Should I be concerned about uninsured deposits at my bank? Should I be concerned about not getting enough rate in certain places? What a perfect storm of events, sadly. I hate to say that. I don't like to capitalize on bad events that are happening. But talk about an incentive to talk about cash, there's no better time to be talking about it from a safety and a rate perspective. You combine those two and it becomes a very powerful conversation.
Justin L. Mack (07:01):
And as far as that conversation around the current circumstances, again, and we're still very much in the wake of SVB and what's happening, there are folks who are saying, hey, it's almost over, don't worry about it. And plenty of folks who say that the impact is still yet to be seen. So I'll leave that for them to figure out because I sure as heck don't know. <laughs> I'll be honest with you. It's a very unpredictable situation to try and look at and predict where we might be and what we might be talking about six months from now in relation to the impact it had. So I won't put you on the spot and ask you to predict or say "hey Frank, when do you think everything's going to be fine?" I won't do that to you. But just your thoughts as far as the impact it's already had as far as what advisors need to know in relation to how they're approaching cash, how they're approaching that conversation with their clients, how they're trying to actually maybe get more insight into the assets. Those held assets that they don't know about.
(07:53)
Considering that we know that among the general public, concern is up. Fear is up. We know that to be true. So knowing you have maybe a client base that's a little bit more skittish or a little bit more concerned about their cash, and an advisory market that maybe hasn't talked about it a lot in the past, what are your thoughts on where we need to go over the next few months as the rest of these year plays out?
Frank Bonanno (08:16):
Yeah, sure, it's a great setup. We're not in the business of predicting anything. Like you said, you wouldn't put me on the spot for it. But there is one thing that we kind of did predict, and it's the two motivators of anybody with their cash or with their money and it's fear and greed. So what happened over the past month, month and a half was the fear factor, right? SVB put a spotlight on, oh my goodness, there's uninsured deposits. So we had a clamoring of business people trying to get to us to say, how do I ensure more of my cash? Which we can certainly help them by getting them up to $25 million of FDIC insurance on each account. So it becomes this big fear thing and we're still going through it. Certainly not as much as we did last month, but we're still going through the fear aspect of that.
(09:00)
But now all of a sudden that fear is, OK, I got my money insured, but when I was going back to my bank or other financial institution where I kept my cash, I'm noticing now … I'm speaking from the depositor point of view … they're noticing that their rates were, they're mostly terrible at most money centers, large banks, what have you. So the greed factor comes in. Wow, now that I've got my money insured, these rates are very, very low. How do I get more on my cash? That's where they can turn to their advisor. The advisors are in a very unique position right now to not only give them very high levels of insurance, but also give them a very, very competitive rate. So while the market has short memories, events like this do remind us that there's an importance to watching where you put your cash and how you manage your cash. And importantly enough, don't miss out on the opportunity cost of having it sit there, earning nothing when it could be earning something and be protected at the same time.
Justin L. Mack (10:04):
Absolutely. And with that, we're actually going to take a quick break and enjoy a word from our sponsors, but when we return, we'll have more with Frank Bonanno, managing director and head of marketing at StoneCastle Cash Management. Stay locked. We'll be right back after this break.
And welcome back to the Financial Planning Podcast. I am your host Justin Mack, and we're jumping right back into our conversation this week with Frank Bonanno, managing director and head of marketing at StoneCastle Cash Management. Now, Frank, we talked a lot in the first half of the show about how StoneCastle helps with that cash conversation, why it's so crucial right now as we're dealing with crisis and collapse and whatever will happen next. As we know, it's very unpredictable. So talk to me a little bit about how advisors can use understanding cash. How we can approach it better, what we need to be doing and how that might be an opportunity to grow.
(10:56)
Because I think there might not always be that correlation. It might just be another service we can provide to clients considering that as we know, the cash takes up such a small percentage of the overall portfolio. If you're stepping back and looking at a pie chart, you're like, this is the space it occupies, but the importance I think far exceeds whatever that percentage might be in that pie chart of the portfolio. So how can advisors say, Hey, cash is an opportunity for me to grow my business to stand out. How is that something that they can go from point A to point B on if they haven't had that conversation yet?
Frank Bonanno (11:30):
Yep, now that's a great question. When clients speak to their advisors about their managed portfolio, there typically is a very small portion allotted to cash. Whether they put it in T-Bills or CDs or something readily available. What we're trying to educate advisors on is like, yes, fine, keep doing your treasury bills, keep doing whatever you need to do in your managed portfolio. What we're really trying to get them focused on is the held away cash. That's money that's held away from the relationship. High net worth individuals typically keep 20% of their household assets outside of the advisory relationship in cash. That could be in banks, that could be in other areas. This is not my statistics, this is
(12:17)
So we're encouraging them to have the conversation about this held away cash. And when you look at, even on the FDIC website, you look at what bank balance sheets look like right now. North of $17 trillion sitting in deposits at the bank, of which about $7 trillion is uninsured deposits and about a little less than $5 trillion right now is earning zero. So talk about a low hanging fruit of opportunity to speak with their clients. And it's as simple as these two questions. Do you have uninsured balances sitting at the bank and what rate you're getting on at the bank? And it becomes this simple, almost a very bland conversation starter, but then all of a sudden you realize that there's a huge amount of assets that are held away cash that's held away, and the advisor can tap into that very easily by having a solution in place for their customers. So just by virtue of those facts that are put out by the FDIC, there is a tremendous amount of opportunity to do more with client cash and in many cases increasing the rate that they're earning while decreasing their overall risk. I mean, what financial advisor, what RIA out there doesn't want to go to their client with an opportunity to increase rate while lowering risk? It's a perfect setup.
Justin L. Mack (13:37):
Yeah, absolutely. And earlier, like I said, I wouldn't put you on the hot seat to predict and tell us exactly where the rates were going to go earlier in the year, but I will put you on the hot seat a bit to get into some of that marketing expertise that you have. The years and years of experience. Because I think about, OK, once advisors understand that this is the approach we're going to take this year considering the conditions, where we are and what we're looking at in April, 2023. There is also another gap that needs to be cleared, which is how we develop this approach. How do I then turn that into something that can be pitched to a client, either current or perspective, as a value proposition add? How can I make it clear that this is something that is going to make our relationship as client and advisor more advantageous for you, and allow something for us to maybe get a little bit closer.
(14:24)
Because when you learn more about those held away assets, you in turn learn more about the person that you're serving as an advisor. There's no way that when you learn more about a person's money or where it might be that you don't also learn something more about them on maybe a more personal level. So it's not as easy if you don't know how to do that and say this is something that you can benefit from, client X. Any advice on how advisors can make that jump and pitch cash management as a value prop?
Frank Bonanno (14:51):
Oh, absolutely. And again, it turns back to you, the timing is perfect right now because you can't look in the news today anywhere in April of 2023 without seeing something going on with bank headlines or interest rates or what have you. So it becomes one of those, you know, you have to make mention of it to your client because we have a saying in our business. We always talk about whoever controls the cash controls the relationship, which to us means cash at the bank, particularly at the bank. It's very personal to depositors. It's their cash flow. It's the lifeblood of their expenses and what have you. And they want to make sure that it's safe. Never be in a position where you have to defend your cash cash selection. So we always tell advisors, make sure that number one, it's all FDIC insured and we don't talked about it much here, but the ability to get $25 million FDIC insurance and through one account is extraordinarily appealing to a lot of high net worth individuals out there who have been managing 5, 6, 7, 8, 10 bank relationships just to try to get high levels of FDIC insurance.
(16:00)
So right off the bat, there's not one RIA that I've ever spoken to that hasn't had a client who maintains more than one bank account. So it becomes, you have this start of the conversation, it's no risk, there's no principle risk, there's no credit risk in the conversations to have with FDIC insured cash management. But you're right, you learn a lot about the individuals. You learn that they sit on nonprofit boards they have on their corporations, or they sit on a homeowner's association where there's a terrific need for insured cash. So all of a sudden you start developing deeper relationships with your clients. They're like, oh yeah, we can provide cash solutions for your nonprofit, for your business, or for your, like I said, whatever associations or foundations that they might sit on. And high net worth individuals like to talk to other high net worth individuals, the referrals become rampant. And it's not something that you can get retail. This is an opportunity for the advisor to showcase the value that they offer that depositors simply can't get anywhere else. So if you make that a part of your business, it stays a part of your business going forward for a long, long time.
Justin L. Mack (17:17):
Fantastic. And then something else I wanted to talk to you a little bit about is just the market for cash management advisor option and choice right now. Something that stood out and in the story that Tobias Salinger did on cash sweeps, which again is available now over at
(18:05)
My thought is just with all of these options that now exist, because all of these options didn't always exist. Twenty years of experience that you have in this industry and knowing what is available to advisors, to clients. Now, personally, I'm always excited because greater choice drives greater innovation and it eventually will get to a place where we have better services all around. It's rising tides. We know how it works. So your thoughts as someone who's working in this field, you've got your competitions, you've got your contemporaries, you've got the market as it was before you guys started doing what you were doing at StoneCastle. What are your thoughts on just the options that are available? Is it encouraging for you? What's the competition? How does it feel to be working in this kind of environment?
Frank Bonanno (18:47):
Yeah, it's something that we love to be part of the competitive set. There's always a different reason for your product versus somebody else's type of thing. So we always say we're not the solution, we're a solution. You could read any article recently, tons of money is going into money market mutual funds, typically government funds. So the rate is good there, it's an investment. It's not FDIC insured, but it's relatively safe. There's CDs, there's treasuries, there's ladder treasuries, all advisors have all of these options at their disposal. And we think it's great. As long as the education is around having the cash conversation, we think it's fantastic. Being unique in the space, like you mentioned, there's lazy cash out there. I think that goes to the greed story that I started mentioning before the fear shifted over to greed, and there is a ton of lazy cash sitting there, not earning anything that could be earning more.
(19:49)
There's plenty of cash vehicles outside of just traditional bank savings accounts that offer higher rates. And in the RIA space, you hear a term more and more these days that is trending called cash sorting, which is there's some lower interest type products out there, but there's always alternatives to compliment that. You know, you mentioned a couple of times that the piece that Toby is working on sweeps. The product for StoneCastle, we are not a sweep program. We're a nice compliment to a sweep where it is a higher yielding savings account that may be a compliment. Sweeps are really important in that they're made for two things. Transaction convenience and liquidity rate is a secondary item for sweeps. So we like being in the bucket outside of that. If you're looking for something that may be a little bit longer term that has a higher interest rate with also the added protection of FDIC insurance, I think it's really important. So the competitive set is right in the cash space, as long as advisors are having that conversation, that's good. Do what's best for your client. But if you're looking to get it FDIC insured like we do at StoneCastle with significant high levels up to $25 million, I think that's an important discussion to have with high net worth and customers and businesses.
Justin L. Mack (21:06):
Absolutely. And now as we wrap up and come to the closing moments here on the podcast, we're going to transition to something that's become customary here on the Financial Planning Podcast, which is ending with some good vibes. And Frank, we talked a lot about the cash conversation right now, how you got into this aspect of financial services, what we're seeing in the wake of the banking collapse. It's a lot to keep in mind. We can already tell from your experience and what you do every day that it's something you're very interested in advisors doing, which is approaching this no matter what option you turn to. Have the conversation. And right now it's extremely crucial that you do. So looking at that, your experience, all we've talked about today, if you had to stop and think about it, what do you love most about your job and what you do? What's your favorite part of helping advisors in this way and helping them approach cash in this way? What keeps you coming back?
Frank Bonanno (21:55):
Yeah, that's an awesome question and I speak with a lot of people and nobody asks that question, so I appreciate you doing that. The neatest thing about this is, one, the value that we're able to bring to advisors is very unique just by nature of what we do. I won't get into a whole product sale about it. But what's really cool, it makes the advisors happy because they're creating some additional value that their clients can't get elsewhere. Their clients get additional value by making sure that their cash is, number one, safe. But also number two, earning a really competitive rate. But I think what keeps me coming back, here's the coolest piece of it that nobody writes about, which is really interesting that we can talk about it. The reason why we're able to offer such high levels of FDIC insurance is because we have 900 banks in our network.
(22:46)
These 900 banks are mostly community banks through all 50 states, many of which are in underserved communities across the country. The money that comes in from these depositors gets spread out amongst all of these banks or a good portion of these banks, of these 900 banks across the country. But when you talk about all this money going into money funds … money funds are great, don't get me wrong. I love money funds. But that money that goes into money funds, it's not getting into local communities that help small banks lend and help to grow and do positive things in local communities. The deposits that we take in from our RIA clients and even institutions and corporations, all that money gets spread out amongst these, a lot of community banks across the country, which keeps communities thriving and we're able to get those banks deposits that otherwise they wouldn't be able to source on their own. It's such a cool aspect of what we do and the differences that we make in local communities as a result of getting deposits there is just, it's really neat and it's something that I think more folks in your business should talk about because it's cool.
Justin L. Mack (23:57):
Well I can't think of better good vibes to end on than those. Giving back and, like you said, contributing to those local communities. So I want to thank you for sharing that passion with us here this week on the Financial Planning Podcast. And thank you again for joining us this week on this special edition as we add a compliment to the new cover story on cash sweeps. Thank you, Frank, for joining us this week.
Frank Bonanno (24:17):
Thanks Justin. I appreciate you, it was awesome.
Justin L. Mack (24:20):
And I want to thank everyone for listening to this week's edition of the Financial Planning Podcast. This episode was produced by Arizent with audio production by Kevin Parise. Special thanks again to our guest, Frank Bonanno, managing director and head of marketing at StoneCastle Cash Management. Rate us. Review us and subscribe to all of our content at