Over the past week I have heard from employees of brokerages and money market funds annoyed at me because I suggested their clients fully understand what they are invested in. The complainers actually told me “We had to spend so much time on the phone with our clients because you scared them."

After my appearance on the Sept. 23 Oprah Winfrey show it seems that a lot of people followed my advice to make sure their savings are safe. On that show, (and in this scoop) I explained the difference between money market deposit accounts (MMDAs) at banks and money market mutual funds (MMMFs) offered by brokerages and mutual fund companies. I explained that though MMMFs have a long history of being very safe they do not have the same insurance protection as FDIC-insured bank MMDAs).

And plenty of people followed my advice and checked in with their brokerages and fund companies. Much to their advisors’ annoyance. Give me a break. Isn’t it the advisor’s job to be available to work with their clients? Isn’t that what you are paid to do? And my goodness, if now isn’t a good time to be scared and want to be extra careful with your money I don’t when is. I am thrilled to hear that so many people were taking control of their destiny by double checking the safety of what they own.

I realize a lot of advisors are annoyed because I told people to check that their money is either in an insured bank or credit union account (for info on Credit Union insurance, read this scoop) or move it into a MMMF that invests solely in Treasury securities. The advisors say that isn’t necessary since the government announced 10 days ago that it is creating a special guaranty insurance fund for regular MMMFs. The advisors insist therefore that no one has to worry about a thing because the Treasury is going to make sure that MMMFs are just as safe as MMDAs held at FDIC-insured banks and federally insured Credit Unions.

Not so fast. It is still my opinion that if you have a MMMF you should make sure it is invested in Treasury Money Markets. Because I am here to tell you what your advisors may not be telling you: the “guaranty” of MMMFs is not a done deal, and nor is it a blanket protection.

Here is the exact information the Treasury Dept. has released about its guaranty plan:

Washington – The U.S. Treasury Department is continuing to develop the specific details surrounding the temporary guaranty program for money market funds that was announced on September 19, 2008.

While these details are being finalized, Treasury is making the following clarifications:

1. All money market mutual funds that are regulated under Rule 2a-7 of the Investment Company Act of 1940 and are publicly offered and registered with the Securities and Exchange Commission will be eligible to participate in the program.
   
2. Eligible funds include both taxable and tax-exempt money market funds. The Treasury and the IRS intend to issue guidance that will confirm that participation in the temporary guaranty program will not be treated as a federal guaranty that jeopardizes the tax-exempt treatment of payments by tax-exempt money market funds.
   
3. The temporary guaranty program will be designed to provide coverage to shareholders for amounts held by them in such funds as of the close of business on September 19, 2008.
   
4. Further details on other aspects of the temporary guaranty program and the required documentation for funds to participate will be provided in the coming days.
   

That’s a lot of stipulations if you ask me. First, we don’t know what the final plan will look like. Second, only money invested as of Sept. 19th will be covered. Third, the company that runs your MMMF has to agree to participate (pay a fee) before any of its MMMF shareholders receive a penny of protection.

So if you have your money in a MMMF you bet I STILL think it’s smart to move the money into a MMMF that specifically invests in Treasury securities. That way you don’t need to worry about this guaranty fund program. You have the ultimate “insurance” built into a Treasury MMMMF because the securities it owns are backed “by the full faith and credit” of the U.S. government. That’s why I moved my personal MMMF accounts into Treasury-specific MMMFs. I don’t have to worry about when and how the proposed Guaranty Program for regular MMMFs is put into action. I know I am 100% safe right now. If safety is what you’re after these days, that’s the best move you can make. Period.

Suze