SIPC Insurance and cash investment at Merrill Edge

[earthshine]

I am getting moving some funds around, and considering how much to place where based on FDIC / SIPC coverage.

Is the concern noted in this article regarding SIPC insurance coverage still an issue?

https://www.huffingtonpost.com/laurence-j-kotlikoff/why-no-one-should-use-bro_b_5508633.html

Also, any input on these two options through Merrill Edge?

Preferred deposit: 1.56% interest, Cash deposit – FDIC insured (250K – separate for each account), money fund – initial buy in is 100K – does not need to be maintained

BlackRock Liquidity – 1.88% interest, Floating net asset value, PMCXX, Camp Cash fund – not FDIC Insured- brokerage product, initial buy in is 100K – does not need to be maintained, has SIPC insurance
(The advisor indicated the floating net asset value influence over past three years has been quite small)

Thanks for any input.

[protostache]

Bank accounts have insurance because they are in the business of turning your risk less deposits into risky loans and capturing the interest rate spread. A brokerage is legally barred from doing that in a non-margin account. Brokers hold your assets. If you have cash in a brokerage it is sitting in an account at the broker’s custody firm. It’s not being loaned out.