What should Broker Pete do if his trust account has more money than is insured by the FDIC?

Broker Pete should establish a sweep account if his trust account has more money than is insured by the FDIC. A sweep account is designed to automatically transfer excess funds from one account to another, typically into a higher interest-bearing account, or to various other investment vehicles, where the funds can be managed to ensure they remain accessible while also potentially earning a better return.

This option provides a balance between security and potential growth, as it allows Broker Pete to safeguard funds beyond the insured limit while simultaneously optimizing returns on those funds. This is particularly important when dealing with client money, as Brokers must ensure their clients’ assets are managed responsibly and securely while adhering to regulatory standards.

Establishing a sweep account can help mitigate the risks associated with exceeding the FDIC insurance limits, ensuring that the trust account remains compliant while maximizing the earning potential of the available funds.