at Fidelity - CMA or Brokerage?

[peterwantstosave]

Is one or the other better to hold cash? Don't plan to touch it much. I'm especially interested in knowing positives/negatives of the CMA versus the Fidelity (Brokerage) account.

Thank you, Peter

[JMACatfish]

About a year ago I transitioned to using Fidelity as a one stop shop.

My takeaway at that time was that the brokerage and CMA are identical except that the CMA allows cash management features, ATM reimbursement, and maybe some other similar and minor perks. Its sweep account was FDIC insured with something like a ~2.3% SEC yield.

The brokerage account meanwhile let you change the sweep account to money market funds like SPRXX or FDLXX for ~5% SEC yield.

They recently have allowed you to change the CMA's sweep account to the same options that a normal brokerage has, so I don't think there's really any reason to opt for the brokerage over the CMA, especially if you plan to hold cash in it. As a matter of fact, I'm in the process of moving my cash over to the CMA and using the brokerage solely as an account for equity ETFs right now.

[deltaneutral83]

About a year ago I transitioned to using Fidelity as a one stop shop.

My takeaway at that time was that the brokerage and CMA are identical except that the CMA allows cash management features, ATM reimbursement, and maybe some other similar and minor perks. Its sweep account was FDIC insured with something like a ~2.3% SEC yield.

The brokerage account meanwhile let you change the sweep account to money market funds like SPRXX or FDLXX for ~5% SEC yield.

They recently have allowed you to change the CMA's sweep account to the same options that a normal brokerage has, so I don't think there's really any reason to opt for the brokerage over the CMA, especially if you plan to hold cash in it. As a matter of fact, I'm in the process of moving my cash over to the CMA and using the brokerage solely as an account for equity ETFs right now.

I think margin is about it for things the brokerage could do that CMA can't

[peterwantstosave]

So, for cash, they're effectively the same

[f8andbethere]

So, for cash, they're effectively the same

Essentially, yes.

I'll note that my CMA only has SPAXX or bank sweep options for the core position. You can buy into others, which will auto-liquidate to cover transactions once your core balance is zero.

[well9boy9]

I use CMA for direct deposit, bill-pay, check writing, ATM, etc. It has limited amount for safety concern.

I use brokerage to trade MF and ETF. It has more amount.

[peterwantstosave]

thank you all, this is helpful

[aristotelian]

They are both good options. This reddit thread has Fidelity's official take on the differences. Basically, the CMA is "intended" to offer banking services, whereas the brokerage account can offer them, but you may end up with ATM fees or other inconvenience.

CMA does not allow margin but has most other brokerage services, along with banking services including ATM fee reimbursement. It also comes with a Cash Manager app that you use in combination with the brokerage account. CMA now gives you the option of an FDIC insured sweep account or a money market fund.

The brokerage account has checking and ATM withdrawals, but ATM fees are reimbursed only for certain account threshold. No FDIC sweep fund.

Basically, margin vs ATM fee reimbursement regardless of level, FDIC, and Cash Manager.

https://www.reddit.com/r/fidelityinvest ... brokerage/

[feh]

I use CMA for direct deposit, bill-pay, check writing, ATM, etc. It has limited amount for safety concern.

I use brokerage to trade MF and ETF. It has more amount.

+1

[aristotelian]

I use CMA for direct deposit, bill-pay, check writing, ATM, etc. It has limited amount for safety concern.

I use brokerage to trade MF and ETF. It has more amount.

What is the benefit to separate accounts? If you had to pick one which would you choose?

[SmileyFace]

I use CMA for direct deposit, bill-pay, check writing, ATM, etc. It has limited amount for safety concern.

I use brokerage to trade MF and ETF. It has more amount.

What is the benefit to separate accounts? If you had to pick one which would you choose?

If you don't need the ATM card nor banking features just use the brokerage.

[MrJedi]

I still use both. CMA for ATMs and normal brokerage for margin. I don't use margin for leverage but it makes transactions easier as I can place orders without cash in the account and then settle it up afterward with the exact amount needed.

[feh]

I use CMA for direct deposit, bill-pay, check writing, ATM, etc. It has limited amount for safety concern.

I use brokerage to trade MF and ETF. It has more amount.

What is the benefit to separate accounts? If you had to pick one which would you choose?

viewtopic.php?t=266538&start=6450

That might not be the exact page you'll want to start with, but it's close.

[muffins14]

Is one or the other better to hold cash? Don't plan to touch it much. I'm especially interested in knowing positives/negatives of the CMA versus the Fidelity (Brokerage) account.

Thank you, Peter

Brokerage:
Free ATM rebates if you have like 250k across all account types
Margin options

CMA:
Free ATM rebates
No margin

I use my brokerage account to hold my “cash” and transfer or withdraw it, or deposit into it

[aristotelian]

I use CMA for direct deposit, bill-pay, check writing, ATM, etc. It has limited amount for safety concern.

I use brokerage to trade MF and ETF. It has more amount.

What is the benefit to separate accounts? If you had to pick one which would you choose?

If you don't need the ATM card nor banking features just use the brokerage.

Why is that? I would say if you don't need margin then go for CMA.

[muffins14]

I use CMA for direct deposit, bill-pay, check writing, ATM, etc. It has limited amount for safety concern.

I use brokerage to trade MF and ETF. It has more amount.

What is the benefit to separate accounts? If you had to pick one which would you choose?

If you don't need the ATM card nor banking features just use the brokerage.

Why is that? I would say if you don't need margin then go for CMA.

It’s starting to seem silly that they even offer these as two different products now. Why don’t they just combine the offerings?

[well9boy9]

I still use both. CMA for ATMs and normal brokerage for margin. I don't use margin for leverage but it makes transactions easier as I can place orders without cash in the account and then settle it up afterward with the exact amount needed.

what is their margin interest rate? I assume you had to pay daily interest.

[muffins14]

I still use both. CMA for ATMs and normal brokerage for margin. I don't use margin for leverage but it makes transactions easier as I can place orders without cash in the account and then settle it up afterward with the exact amount needed.

what is their margin interest rate? I assume you had to pay daily interest.

It’s a personal rate that you can negotiate. Mine is the Federal Reserve prime loan rate minus 1.8%. So today it is 6.7%. Yes it accrues daily if you have a negative balance after settlements.

[well9boy9]

I still use both. CMA for ATMs and normal brokerage for margin. I don't use margin for leverage but it makes transactions easier as I can place orders without cash in the account and then settle it up afterward with the exact amount needed.

what is their margin interest rate? I assume you had to pay daily interest.

It’s a personal rate that you can negotiate. Mine is the Federal Reserve prime loan rate minus 1.8%. So today it is 6.7%. Yes it accrues daily if you have a negative balance after settlements.

Thanks for the rate info. How does it work?

If I buy an ETF today with margin, that settles the next business day (T +1 ). If I pay the margin back the next business day, I don't have to pay any interest?

[Northern Flicker]

About a year ago I transitioned to using Fidelity as a one stop shop.

My takeaway at that time was that the brokerage and CMA are identical except that the CMA allows cash management features, ATM reimbursement, and maybe some other similar and minor perks. Its sweep account was FDIC insured with something like a ~2.3% SEC yield.

The brokerage account meanwhile let you change the sweep account to money market funds like SPRXX or FDLXX for ~5% SEC yield.

They recently have allowed you to change the CMA's sweep account to the same options that a normal brokerage has, so I don't think there's really any reason to opt for the brokerage over the CMA, especially if you plan to hold cash in it. As a matter of fact, I'm in the process of moving my cash over to the CMA and using the brokerage solely as an account for equity ETFs right now.

I think margin is about it for things the brokerage could do that CMA can't

It also does not appear that the CMA account can set FZFXX, the treasury MMF, as its core position.

https://www.fidelity.com/spend-save/fid ... t/overview

The brokerage account now can do many (but not all) of the CMA banking features, including bill-pay, paper checks, or ATM, and directly from FZFXX (or other core position choices). There may not be ATM fee reimbursement depending on account balance. (I don't want an ATM card connected to a brokerage account anyway).

If you pick wrong, it is not a taxable event to switch.

[SmileyFace]

I use CMA for direct deposit, bill-pay, check writing, ATM, etc. It has limited amount for safety concern.

I use brokerage to trade MF and ETF. It has more amount.

What is the benefit to separate accounts? If you had to pick one which would you choose?

If you don't need the ATM card nor banking features just use the brokerage.

Why is that? I would say if you don't need margin then go for CMA.

If your only holding is a MM it doesn't matter which you chose BUT if you also hold ETFs or other things keeping your MM as a settlement fund in the brokerage avoids having to do a transfer everytime you want to buy or eveytime you have distributions. If you have other holdings you will end up with both. Why have both If you don't want the banking features of a CMA?
I have both - but I wanted the ATM card. (I didn't realize they added an ATM card option to brokerage).

I believe many folks end up with both for mental accounting purposes - 2 different buckets.

[feh]

Why is that? I would say if you don't need margin then go for CMA.

If your only holding is a MM it doesn't matter which you chose BUT if you also hold ETFs or other things keeping your MM as a settlement fund in the brokerage avoids having to do a transfer everytime you want to buy or eveytime you have distributions. If you have other holdings you will end up with both. Why have both If you don't want the banking features of a CMA?
I have both - but I wanted the ATM card. (I didn't realize they added an ATM card option to brokerage).

I believe many folks end up with both for mental accounting purposes - 2 different buckets.

There are other reasons, but I'm not going to mention them here. There are over 7000 responses in the "Fidelity as a one stop shop" thread.

[Lastrun]

Why is that? I would say if you don't need margin then go for CMA.

If your only holding is a MM it doesn't matter which you chose BUT if you also hold ETFs or other things keeping your MM as a settlement fund in the brokerage avoids having to do a transfer everytime you want to buy or eveytime you have distributions. If you have other holdings you will end up with both. Why have both If you don't want the banking features of a CMA?
I have both - but I wanted the ATM card. (I didn't realize they added an ATM card option to brokerage).

I believe many folks end up with both for mental accounting purposes - 2 different buckets.

There are other reasons, but I'm not going to mention them here. There are over 7000 responses in the "Fidelity as a one stop shop" thread.

Yes, yes, and many of them either irrelevant or incorrect with the recent CMA changes.

[SmileyFace]

Why is that? I would say if you don't need margin then go for CMA.

If your only holding is a MM it doesn't matter which you chose BUT if you also hold ETFs or other things keeping your MM as a settlement fund in the brokerage avoids having to do a transfer everytime you want to buy or eveytime you have distributions. If you have other holdings you will end up with both. Why have both If you don't want the banking features of a CMA?
I have both - but I wanted the ATM card. (I didn't realize they added an ATM card option to brokerage).

I believe many folks end up with both for mental accounting purposes - 2 different buckets.

There are other reasons, but I'm not going to mention them here. There are over 7000 responses in the "Fidelity as a one stop shop" thread.

Okay - thanks for the help - I suppose the OP can go read through those thousands of posts to see if he/she can find the answer.
Personally- I felt it better to try to answer here than say "go read 7000 messages and see if you can decipher from there".

[feh]

There are other reasons, but I'm not going to mention them here. There are over 7000 responses in the "Fidelity as a one stop shop" thread.

Yes, yes, and many of them either irrelevant or incorrect with the recent CMA changes.

Everything since May (or whenever Fido made the CMA cash position change) are fine.

[Lastrun]

There are other reasons, but I'm not going to mention them here. There are over 7000 responses in the "Fidelity as a one stop shop" thread.

Yes, yes, and many of them either irrelevant or incorrect with the recent CMA changes.

Everything since May (or whenever Fido made the CMA cash position change) are fine.

Then why mention 7000 posts? I say this because I have read the entire thread and it is a mess, so I think it is a disservice to send someone there, IMHO, and I say this in the spirit of trying to help a poster who really can’t understand whether they should have a CMA, brokerage or both. Perhaps a separate subsection of the Wiki may be helpful here as this is a constant question on this forum and on the Reddit forum.

[MrJedi]

I still use both. CMA for ATMs and normal brokerage for margin. I don't use margin for leverage but it makes transactions easier as I can place orders without cash in the account and then settle it up afterward with the exact amount needed.

what is their margin interest rate? I assume you had to pay daily interest.

I honestly don't know because I don't ever have a balance by the end of the day. I place my buy orders and then initiate a transfer or sell other shares to cover the balance before the end of the day. By the time everything settles there is no margin balance to pay interest on.

[aristotelian]

It’s starting to seem silly that they even offer these as two different products now. Why don’t they just combine the offerings?

It's almost like they enjoy seeing investors on the internet spend 7000 posts arguing which one is better.

[TomatoTomahto]

This might be user error, but I find that using Quicken with the CMA leads to 2 different Quicken accounts and the brokerage leads to a sane and normal Quicken experience.

I am too lazy to figure it out, so I’m just going to close the CMA account. I don’t use margin.

[aristotelian]

There are other reasons, but I'm not going to mention them here. There are over 7000 responses in the "Fidelity as a one stop shop" thread.

Yes, yes, and many of them either irrelevant or incorrect with the recent CMA changes.

Everything since May (or whenever Fido made the CMA cash position change) are fine.

Then why mention 7000 posts? I say this because I have read the entire thread and it is a mess, so I think it is a disservice to send someone there, IMHO, and I say this in the spirit of trying to help a poster who really can’t understand whether they should have a CMA, brokerage or both. Perhaps a separate subsection of the Wiki may be helpful here as this is a constant question on this forum and on the Reddit forum.

Not only that, they are issuing new debit cards for everyone that now makes the foreign transaction fee debate obsolete. It would be a nice service to the OP and the internet to have an updated thread with a simple decision tree.

IMHO it's something like this:

Do you use margin? If yes, get the brokerage account.

Do you want to (1) use banking without premium status or (2) prefer FDIC insurance for uninvested cash? If yes, get CMA.



If no to all of the above, it does not matter, get either one.

But maybe I am missing something.

[hiddenpower]

I use CMA for direct deposit, bill-pay, check writing, ATM, etc. It has limited amount for safety concern.

I use brokerage to trade MF and ETF. It has more amount.

Re: safety concerns. Does that mean you turn off overdraft from the CMA to the brokerage?

I've been putting all cash into the brokerage, keeping the CMA at $0 and having it overdraft into the brokerage, but I do think it would be way nicer to just move everything over to the CMA now that it supports SPAXX. Also the CMA is free wires I believe.

[muffins14]

I still use both. CMA for ATMs and normal brokerage for margin. I don't use margin for leverage but it makes transactions easier as I can place orders without cash in the account and then settle it up afterward with the exact amount needed.

what is their margin interest rate? I assume you had to pay daily interest.

It’s a personal rate that you can negotiate. Mine is the Federal Reserve prime loan rate minus 1.8%. So today it is 6.7%. Yes it accrues daily if you have a negative balance after settlements.

Thanks for the rate info. How does it work?

If I buy an ETF today with margin, that settles the next business day (T +1 ). If I pay the margin back the next business day, I don't have to pay any interest?

If you have cash in the account on settlement day you shouldn’t have to pay margin interest because you had the cash available

[muffins14]

I use CMA for direct deposit, bill-pay, check writing, ATM, etc. It has limited amount for safety concern.

I use brokerage to trade MF and ETF. It has more amount.

Re: safety concerns. Does that mean you turn off overdraft from the CMA to the brokerage?

I've been putting all cash into the brokerage, keeping the CMA at $0 and having it overdraft into the brokerage, but I do think it would be way nicer to just move everything over to the CMA now that it supports SPAXX. Also the CMA is free wires I believe.

The brokerage is also free wires

[xb7]

I just have a brokerage account. I moved to Fidelity earlier this year and read up and thought about this. In my case, I use an external online bank as I feel more comfortable having automated payments and ATM usage going out of somewhere other than where most of my money is --- that level of indirection is a little bit of hassle but on balance I prefer it. And if I were ever even temporarily locked out of my Fidelity account I would have some decent working cash at my online bank that way.

So no CMA for me, keeps it simple. No ATM card from Fidelity. And I don't have their app on my phone or any mobile device, I only log in via a computer at home, using their Symantec VIP as my 2FA. Keep all accounts locked for money transfer. Automatically ACH a fixed amount every month to my online bank. Occasionally shift cash at Fidelity into a slightly higher yielding MM fund.

I don't present the above as somehow universally ideal, but it feels like the best balance of security and convenience for me.

[aristotelian]

I use CMA for direct deposit, bill-pay, check writing, ATM, etc. It has limited amount for safety concern.

I use brokerage to trade MF and ETF. It has more amount.

Re: safety concerns. Does that mean you turn off overdraft from the CMA to the brokerage?

I've been putting all cash into the brokerage, keeping the CMA at $0 and having it overdraft into the brokerage, but I do think it would be way nicer to just move everything over to the CMA now that it supports SPAXX. Also the CMA is free wires I believe.

The brokerage is also free wires

I don't see anything on the website saying they charge wire fees for CMA either.

Fees
Fidelity doesn’t charge a fee for sending or receiving EFTs, but the receiving bank may charge a fee. Fidelity also doesn’t charge fees to process wire transfers to a bank or other recipient. If you’re transferring money to an account at another bank, however, the receiving bank may charge an incoming wire transfer fee.

[hiddenpower]

I just have a brokerage account. I moved to Fidelity earlier this year and read up and thought about this. In my case, I use an external online bank as I feel more comfortable having automated payments and ATM usage going out of somewhere other than where most of my money is --- that level of indirection is a little bit of hassle but on balance I prefer it. And if I were ever even temporarily locked out of my Fidelity account I would have some decent working cash at my online bank that way.

So no CMA for me, keeps it simple. No ATM card from Fidelity. And I don't have their app on my phone or any mobile device, I only log in via a computer at home, using their Symantec VIP as my 2FA. Keep all accounts locked for money transfer. Automatically ACH a fixed amount every month to my online bank. Occasionally shift cash at Fidelity into a slightly higher yielding MM fund.

I don't present the above as somehow universally ideal, but it feels like the best balance of security and convenience for me.

I feel the same about separation.

Currently I’ve used fidelity as the bank, and Etrade as the brokerage

[f8andbethere]

I just have a brokerage account. I moved to Fidelity earlier this year and read up and thought about this. In my case, I use an external online bank as I feel more comfortable having automated payments and ATM usage going out of somewhere other than where most of my money is --- that level of indirection is a little bit of hassle but on balance I prefer it. And if I were ever even temporarily locked out of my Fidelity account I would have some decent working cash at my online bank that way.

So no CMA for me, keeps it simple. No ATM card from Fidelity. And I don't have their app on my phone or any mobile device, I only log in via a computer at home, using their Symantec VIP as my 2FA. Keep all accounts locked for money transfer. Automatically ACH a fixed amount every month to my online bank. Occasionally shift cash at Fidelity into a slightly higher yielding MM fund.

I don't present the above as somehow universally ideal, but it feels like the best balance of security and convenience for me.

Devil's advocate: If not consolidating cash at Fidelity for ease of access/checking features, wouldn't a Vanguard account with significantly higher yield money market fund (VMFXX) be a better pick?

[hiddenpower]

I just have a brokerage account. I moved to Fidelity earlier this year and read up and thought about this. In my case, I use an external online bank as I feel more comfortable having automated payments and ATM usage going out of somewhere other than where most of my money is --- that level of indirection is a little bit of hassle but on balance I prefer it. And if I were ever even temporarily locked out of my Fidelity account I would have some decent working cash at my online bank that way.

So no CMA for me, keeps it simple. No ATM card from Fidelity. And I don't have their app on my phone or any mobile device, I only log in via a computer at home, using their Symantec VIP as my 2FA. Keep all accounts locked for money transfer. Automatically ACH a fixed amount every month to my online bank. Occasionally shift cash at Fidelity into a slightly higher yielding MM fund.

I don't present the above as somehow universally ideal, but it feels like the best balance of security and convenience for me.

Devil's advocate: If not consolidating cash at Fidelity for ease of access/checking features, wouldn't a Vanguard account with significantly higher yield money market fund (VMFXX) be a better pick?

Angels advocate: I wouldn’t wish vanguard’s (or ibkr’s) UI on my worst enemy

[Chv396]

Essentially the same. We use our taxable brokerage account for some cash, tax efficient index ETF’s. Our CMA for bill pay functions.

[xb7]

I just have a brokerage account. I moved to Fidelity earlier this year and read up and thought about this. In my case, I use an external online bank as I feel more comfortable having automated payments and ATM usage going out of somewhere other than where most of my money is --- that level of indirection is a little bit of hassle but on balance I prefer it. And if I were ever even temporarily locked out of my Fidelity account I would have some decent working cash at my online bank that way.

So no CMA for me, keeps it simple. No ATM card from Fidelity. And I don't have their app on my phone or any mobile device, I only log in via a computer at home, using their Symantec VIP as my 2FA. Keep all accounts locked for money transfer. Automatically ACH a fixed amount every month to my online bank. Occasionally shift cash at Fidelity into a slightly higher yielding MM fund.

I don't present the above as somehow universally ideal, but it feels like the best balance of security and convenience for me.

Devil's advocate: If not consolidating cash at Fidelity for ease of access/checking features, wouldn't a Vanguard account with significantly higher yield money market fund (VMFXX) be a better pick?

Angels advocate: I wouldn’t wish vanguard’s (or ibkr’s) UI on my worst enemy

I moved to Fidelity from Vanguard. I don't feel quite as unhappy with Vanguard as the above but I want my external bank to be an actual bank. I guess Vanguard went back to allowing check writing in limited form (?), but we pay all of our bills automatically via our online bank, and use the ATM (debit) card from it occasionally. And find it easy to deposit checks there via the phone app.

It's true that I've given up a little yield relative to VMFXX. I mitigate that to a degree by shifting cash from SPAXX to FZDXX when any signifcant amount builds up in the SPAXX sweep fund. And by not keeping too much at my online bank beyond what I need for paying monthly bills credit card expenses. I pay the bulk of those out of savings at my bank, not checking, so I get okay interest there too (not as good as FZDXX of course, but much much better than any local branch bank offers).

[Northern Flicker]

I just have a brokerage account. I moved to Fidelity earlier this year and read up and thought about this. In my case, I use an external online bank as I feel more comfortable having automated payments and ATM usage going out of somewhere other than where most of my money is --- that level of indirection is a little bit of hassle but on balance I prefer it. And if I were ever even temporarily locked out of my Fidelity account I would have some decent working cash at my online bank that way.

So no CMA for me, keeps it simple. No ATM card from Fidelity. And I don't have their app on my phone or any mobile device, I only log in via a computer at home, using their Symantec VIP as my 2FA. Keep all accounts locked for money transfer. Automatically ACH a fixed amount every month to my online bank. Occasionally shift cash at Fidelity into a slightly higher yielding MM fund.

I don't present the above as somehow universally ideal, but it feels like the best balance of security and convenience for me.

Devil's advocate: If not consolidating cash at Fidelity for ease of access/checking features, wouldn't a Vanguard account with significantly higher yield money market fund (VMFXX) be a better pick?

Angels advocate: I wouldn’t wish vanguard’s (or ibkr’s) UI on my worst enemy

Maybe your worst enemy would focus on just getting done what they need to get done, and in the process would discover that they spend about the same amount of time with either system doing a particular task.

There are various things I prefer about Fidelity and various things I prefer about Vanguard. None of them have anything to do with their UIs, and I certainly would not pay .42%/year instead of .09%/year to hold a treasury MMF at Fidelity instead of Vanguard just to have the Fidelity UI.

[chaser]

I just have a brokerage account. I moved to Fidelity earlier this year and read up and thought about this. In my case, I use an external online bank as I feel more comfortable having automated payments and ATM usage going out of somewhere other than where most of my money is --- that level of indirection is a little bit of hassle but on balance I prefer it. And if I were ever even temporarily locked out of my Fidelity account I would have some decent working cash at my online bank that way.

So no CMA for me, keeps it simple. No ATM card from Fidelity. And I don't have their app on my phone or any mobile device, I only log in via a computer at home, using their Symantec VIP as my 2FA. Keep all accounts locked for money transfer. Automatically ACH a fixed amount every month to my online bank. Occasionally shift cash at Fidelity into a slightly higher yielding MM fund.

I don't present the above as somehow universally ideal, but it feels like the best balance of security and convenience for me.

Devil's advocate: If not consolidating cash at Fidelity for ease of access/checking features, wouldn't a Vanguard account with significantly higher yield money market fund (VMFXX) be a better pick?

Angels advocate: I wouldn’t wish vanguard’s (or ibkr’s) UI on my worst enemy

Maybe your worst enemy would focus on just getting done what they need to get done, and in the process would discover that they spend about the same amount of time with either system doing a particular task.

There are various things I prefer about Fidelity and various things I prefer about Vanguard. None of them have anything to do with their UIs, and I certainly would not pay .42%/year instead of .09%/year to hold a treasury MMF at Fidelity instead of Vanguard just to have the Fidelity UI.

To push back on the UI thing, UI isn't just cosmetic. Bad UI can lead people to make mistakes or avoid doing things that would be beneficial to them. At Vanguard, off the top of my head I can think of a few things that costed me money because of their bad UI: managing options spreads and lack of auto-roll for T-bills. Vanguard's UI makes it impossible to roll an option or do spreads. You must manage each as a completely separate transaction. This is problematic for multiple reasons. First, if you don't have the highest level of options trading allowing for naked exposure (which I think Vanguard also doesn't grant), then you must construct and execute the trades in a certain order, otherwise the system will reject it. Second, Vanguard's UI is really slow and clunky for this and prices can move quickly In volatile markets, so as you are trying to manually manage the legs, it is possible that one leg gets executed, but the price runs away before you have a chance to get the other leg in place. This UI failure can cost more than a few whole percentage points.

I've found Fidelity's autoroll feature to do the right thing. I never have to worry about forgetting to manually roll (or being unable to log in to Vanguard on the day I need to). And with manual rolling of treasuries, you have to place an order a week before the current T-Bill matures in order to not be out of the market for a full week due to how auction settlement times work. With Vanguard's interface/system, this automatically is interpreted as a marginable transaction. So now I have to be very careful about making sure I have all the funds at settlement time. While I have never made this mistake, I did come close to messing this up once because I had a large number of other transactions in flight which obfuscated how munch funds I would actually have ready on that settlement date. A better UI/system would have prevented me from making this kind of mistake because the rolling T-bill money could be automatically earmarked for the roll and be an entirely cash transaction and not need to bring in margin considerations. Fidelity actually has the ability to do this, which prevents this kind of mistake. And because of having such a good auto-roll implementation, I started questioning why I need to play games (and expenses) to treasury money market funds. You can buy T-bills directly for free and keep all the yield for yourself. The autoroll feature lets me create something very close to my own treasury money market for free with no expenses. I have built my own T-bill ladder where a portion matures every week.

I have recently created a small CMA account to pay all my bills out of. I like having a little firewall between my bill paying and my main account (where the majority of my assets are). I do not use Cash Management to auto-liquidate from my brokerage to handle overdrafts. I also have past bad experiences (at Vanguard) being unable to link ACH transfers because the other side doesn't approve of the routing & account numbers. Fidelity CMA uses UMB Bank as their front-facing routing/account numbers, so these seem to be accepted by everybody.

I have also tied the Fidelity Visa credit card to redeem in the CMA. I love the idea of getting 2% cash back on all my purchases, plus earning Treasury interest (~5%) on the cash sitting in my CMA until it is time to pay the credit card bill. I also had a Wells Trade account from years ago, so I was able to do the FRSXX ACAT transfer trick into Fidelity. The basis point spread between FRSXX and VUSXX is pretty small where I don't care that much. If I did care, I would forgo both of them apply the weekly T-bill auto-roll technique I described above directly in my CMA. This would particularly work great if you had enough incoming cash and interest payments to cover your bills where you never need to draw down on the T-bill principle.

[Northern Flicker]

Those are not UI limitations. You are describing additional functionality you would like implemented. A UI is the collection of facilities used to access functionality, not the functionality itself.

I doubt Vanguard sees options trading as a core brokerage activity they need to support well given their typical customer. I certainly would not want them prioritizing that over many other things they could implement, like yubikey support for their phone app.

An auto-rolling ladder is a nice feature to have. I don't know what percentage of brokers who have it, but Fidelity is the only one I know of (which doesn't mean much). I think it is a nice feature for managing say t-bills. For longer term ladders, auto-rolling is a double-edged sword in that it can auto roll into less attractive rates when an alternative may be preferred. For instance, one might compare a treasury rate with a brokered CD rate when deciding which to purchase.

[chaser]

Those are not UI limitations. You are describing additional functionality you would like implemented. A UI is the collection of facilities used to access functionality, not the functionality itself.

I doubt Vanguard sees options trading as a core brokerage activity they need to support well given their typical customer. I certainly would not want them prioritizing that over many other things they could implement, like yubikey support for their phone app.

An auto-rolling ladder is a nice feature to have. I don't know what percentage of brokers who have it, but Fidelity is the only one I know of (which doesn't mean much). I think it is a nice feature for managing say t-bills. For longer term ladders, auto-rolling is a double-edged sword in that it can auto roll into less attractive rates when an alternative may be preferred. For instance, one might compare a treasury rate with a brokered CD rate when deciding which to purchase.

No, these are UI limitations because this functionality exists on their backend system. You used to be able to call into the options trading desk and do these things (admitting full well their web UI was crap), but then they closed the phone desk last year.

[Northern Flicker]

Maybe the options trading desk staff just were facile at constructing and executing the trades in the required order. Either way, it still is functionality not implemented in the web app as opposed to a clumsy process for using the functionality.

I'm not sure why you would want to trade options with a broker that shut down their options trading desk. It clearly is not business Vanguard is trying to pursue.

[chaser]

No, these features exist in the system. I spoke to them in detail about it. And these demonstrably can't be done manually because they are contingent (limit) orders where all legs must satisfy before triggering. These can sit in the system until they fill or expire. And tellingly about the (bad) web UI, the website actually can display these contingent orders so you can see them in your account once the desk creates them. But the web UI (limitations) doesn't allow you to modify the orders.

I've been at Vanguard for decades. They only shutdown their phone desk last year in July.

[Northern Flicker]

No, these features exist in the system. I spoke to them in detail about it.

That still does not make it a UI issue for a web app that has not implemented the functionality. A feature not implemented cannot have a bad UI.

[hiddenpower]

No, these features exist in the system. I spoke to them in detail about it.

That still does not make it a UI issue for a web app that has not implemented the functionality. A feature not implemented cannot have a bad UI.

Now we're talking about bad UX. Vanguard and IBKR win at that too.