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Schwab SWVXX Problem

bethwr

I saw the announcement that this will show up as cash in Quicken, but this is a terrible change! It is not immediately liquid, and must be sold in order to be used. This change has caused two recent problems for me:

1. Timing was close on a large payment and deposit in my Schwab checking account, but Quicken showed I had plenty of cash in my brokerage account. If the checking is overdrawn, Schwab pulls from cash from the brokerage account. As it turns out, I didn't have any liquid cash in the brokerage, it was nearly all in SWVXX, but I found out after the fact!

2. I manage my grandmother's RMDs, and according to Quicken, she had plenty of cash to move from IRA to brokerage; however, I received a notice from Schwab that they were unable to process the RMD because there was no cash - it was all in SWVXX.

I've been a Quicken user since 1994, and I mostly rely on it to manage exactly these situations. Can anything be done to change this back??

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Comments

jacobs

No one here can answer whether this will ever be changed back. I'd note that this change to treating the Schwab money market accounts as cash in Quicken was made a year ago.

We don't know if this change was initiated by Quicken or Schwab, but it seems likely Schwab decided they wanted to do it this way at the time they changed their connectivity system with Quicken. So you might want to pursue that question/lobby for a change with Schwab. You might also want to inquire if Schwab has a way to set the accounts up to automatically sell shares from SWVXX when cash is needed.

bethwr

I appreciate your response. I didn't make the mandatory Schwab connection change until a few months ago, so I didn't know it had been like this for a year. Beyond that, I never managed cash vs. money market funds so closely in the past because there wasn't much of a delta in the rates. Today, the "sweep" rates pay 0.48%, and SWVXX pays 4.48%.

I will definitely inquire with Schwab.

thebenskys

I have the same problem and will complain to Schwab. Meanwhile, anyone have any suggestions for similar funds at Schwab that won't cause this problem?

GermanBlueRam

My real complaint on all this is with Schwab, more than Quicken. I have brokerage accounts with Schwab, Fidelity, and Wells Fargo Advisors, and only Schwab makes me manually purchase money market funds to obtain a market rate of interest. Fidelity, for example, lets me switch my “core position” (Fido's term for default cash sweep) to a higher-yield (4%+ as I write this) money market fund like the Fidelity Government Money Market Fund (SPAXX). This month I had a big "cash" balance in Schwab for the first time and I really noticed the difference with Fidelity and Wells Fargo. Schwab is behaving like the big commercial banks (Chase, etc.) that count on many customers staying in place with near-zero interest rates rather than going to online savings accounts. This just might be the trigger for me to consolidate my Schwab assets with Fidelity or Wells Fargo.

Anyway, end of rant (mostly). Having finally noticed this difference in interest last week, I "invested" idle Schwab cash into a money market fund by buying SWVXX on Friday. From a Quicken perspective, I'm actually OK wth tracking this balance as "cash," because for me that is what it is. I do understand the downside (i.e., I actually have to sell the money market fund to get cash, etc.). Again, I much prefer what Fidelity does with the core account - SPAXX is completely liquid and I don't have to deal with money market transactions and movements in and out. In other words, with Fidelity SPAXX really is cash, for my purposes. We'll see how this goes, after making this choice, which I was faced with on Saturday for the first time. 😉

thebenskys

I asked our Schwab Financial Consultant about this problem. Here's the response:

"I spoke with our tax team. They have not heard of an issue within Quicken and confirmed that Schwab does not consider SWVXX to be a cash account. It is an investment that you must purchase and sell, checks cannot be written out of it, and it is not FDIC insured. The tax team suggested reaching back out to Quicken because we did not claim SWVXX as a cash account last year or any year."

In other words, Schwab says it's Quicken's problem, and has been from the start. How do I get asked the "Cash Representation" question I see others have been asked? Meanwhile, our Schwab cash is now in very short-term CD's.

GermanBlueRam

It still isn't quite clear to me what Quicken is doing here, after having selected the first option shown above. The investment in SWVXX still did not show up as "available cash" in Quicken's Online Center, but rather as a security.

I had to restore my backup for another reason and so was faced with the same option as shown above. This time, I clicked on the second button, and the result seems to be the same?

tim.rohrer1

I am absolutely UNCONVINCED this is a Schwab issue; I am experiencing two different problems.

I have two IRA accounts that include SWVXX. Neither of them is downloading monthly div transactions correctly. They both receive them as Dividend Income vice Reinvest Dividend Income. However, the statements on Schwab's website show them clearly as reinvested and the balances match. However, Quicken is receiving the income as type Dividend Income, so each transaction has to be manually changed.

And the second problem is the issue of cash vs security in the Online Cash balance reported by Quicken. The Schwab rep confirmed that SWVXX is _not cash_, and is most definitely a security. He did call it a "cash equivalent" (in quotes of course) but I must still sell it in order to use those funds to purchase another security. There is no sweep.

But what is interesting, is that I have a joint brokerage account that uses SWTXX. I asked the Schwab rep if there was any difference between that and SWVXX. He replied that they were fundamentally the same. However, my Quicken downloads the Reinvested Dividend Income transactions for SWTXX correctly, and the online cash balance does not include the SWTXX balance.

The primary difference in these cases is that the IRA accounts are not treating the download of SWxXX correctly whereas the joint brokerage account is treating the download of the SWxXX security correctly.

While the issue *could* be with Schwab's API, Quicken has not provided sufficient evidence to support their claim. To do this, they would need to show us a representative API response from Schwab showing the SWVXX balance lumped into reported cash and transaction types of DIVINC vice REINVDIVINC for the monthly dividends. And someone there would need to explain the difference between SWVXX and SWTXX as they relate to these issues.

And even if the error does lie with Schwab, Quicken could make the adjustment using their service to subtract the SWVXX balance from the reported cash and fix.

jacobs

@tim.rohrer1 You can call it an error or bug if you wish, but Quicken is operating the way it does intentionally. I don't know why this decision was made more than a year ago, but if you read Quicken's announcement about the change in February 2022, they made clear this is "by design". Whose design? We don't know. But since Quicken hasn't forced this money market change on users of other brokerages, and since the change was made at the time Schwab forced Quicken to change its connectivity platform, it certainly appears it was a change driven by Schwab.

https://community.quicken.com/discussion/7907735/swvxx-value-advantage-money-market-fund-and-swgxx-schwab-government-money-fund

tim.rohrer1

@jacobs, yes I read that announcement. Design? Or excuse?

As I mentioned, the problem could be related to Schwab but that doesn't excuse Quicken (who is taking my money) from not working harder to solve the issue. Schwab has told several customer (based on the various threads in this forum) that these are not cash, but rather securities that are "cash equivalents". If this was really the desired design, then *all* money market funds would be handled this way. And we know they are not.

Sure, the left hand of Schwab may not be talking to the right hand, but at the end of the day, Quicken Mac is personal finance/accounting software and the ability to reconcile accounts and trust automatic downloads is crucial. The announcement you linked says to me that Quicken rolled over because they didn't want to take the time and effort to fix the issue.

Schwab's website clearly shows trades of SWVXX as buys and sells of a security that pays dividends. The second bullet in the announcement states "[t]hese funds will **show** as dividends and not buys and sells as they did in the past." (** emphasis added) This reads as a Quicken decision, and the comment from the Schwab rep I chatted with last night seems to confirm this (at least from his read/perspective of the announcement). He seemed to specifically focus in on the word "design" and "show", but asked me to contact Schwab's tech support team next week. I'll ask them to show me a representative response from their API, and will continue to drive the question about why all SWxXX funds are not being treated the same. And when you have two fundamentally equal categories of data being treated differently based on account type, API endpoint, or some other factor, without a sold explanation, it screams of being a bug.

jacobs

I'm only saying it's not a bug because it is working as designed, which Quicken has confirmed. "As designed" doesn't mean the design works best, or well, or the way some/many/most users might prefer.

tim.rohrer1

Design? Or, Excuse? Given that multiple fundamentally identical funds are being treated differently does not support the notion of "as designed".

jacobs

@tim.rohrer1 I think you're looking for answers or affirmations here that I — that no one — can provide. This change took place about 14 months ago, and Quicken affirmed that it is operating as designed. There are a number of things which point to this being a decision made by Schwab, including the fact that Quicken hasn't forced a similar change for any other brokerages. Quicken never said so publicly that I'm aware of; they have to walk a careful line of not throwing Schwab under the bus, or Schwab could choose to simply cut them off. The transition in connectivity last year was bumpy, but I believe Schwab dictate to Quickne that they had to make the change by a deadline they set, even though the bugs hadn't been worked out.

I don't have accounts with Schwab, but I wouldn't want to track my cash & money market funds this way, so I'm not disagreeing with you about what's desirable. I'm only saying that for reasons we can guess at but probably never know, this is how it works, and it's intentional.

There's an alternative, of course: you could disconnect your Schwab account from downloading, and enter transactions manually. Whether that's practical for you depends on how many transactions you have per month. I have money market funds in several Vanguard accounts, and I choose to enter them manually because it's not a heavy lift: each month there's one interest dividend transaction, and usually no more than one or two money in/out transactions. I'm not saying this approach is right for you or everyone; I'm just sharing that it's an alternative when Quicken presents connectivity issues.

thebenskys

Our Schwab financial advisor just asked us what Quicken has done about this issue - clearly Quicken has done nothing and, apparently, plans to do nothing. We give up, we're no longer in SWVXX. Lots of Quicken downloading problems - the latest is JPMorgan Chase. I've been using Quicken for more than 20 years, so I'm stuck, but not so sure I'd recommend it to new users....