Fidelity: one stop shop

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Fidelity: one stop shop contains a summary of Bogleheads forum topic "Fidelity as a one stop shop",[1] which provides details about using Fidelity for all banking and investment needs. This is not an endorsement of any product or provider. Fidelity Investments is the marketing name for FMR LLC, a giant Boston-based investment management company and financial supermarket.[note 1]

Cash Management Account

The Fidelity Cash Management Account (CMA)[2] is a brokerage account with check writing, ATM card and default sweep to FDIC insured money market fund. It has several features:

  • ATM fee reimbursement;
  • Check writing;
  • Bill pay;
  • Check deposit using mobile app.
  • Auto-roll service for Treasury securities and CDs

Different ways to setup your accounts

These are the different ways to set up accounts. [3]

Brokerage account only

  • ATM card but no free ATM fees. Exception: Private Client Group gets 0 fees;
  • Sweep options: Fidelity Government Money Market Fund (SPAXX) or Fidelity Treasury Money Market Fund (FZFXX);
  • Bill pay, check writing, ACH, deposits available;
  • Deposit/withdrawal from sweep fund;
  • If sweep hits 0; withdrawal from other money market (MM) but no sale of other stock / Exchange-Traded Fund (ETF) / mutual fund (MF);
  • Overdraft available via margin;
  • Can buy any stock, ETF, MFs;
  • All brokerage features.

CMA account only

  • Can get ATM card with no worldwide fees;
  • Sweep option: FDIC with 1.25m coverage;
  • Bill pay, check writing, ACH, deposits available;
  • Deposit/withdrawal from sweep FDIC;
  • Can buy MM funds, ETF, MFs;
  • If FDIC cash hits 0; withdrawal from MM but no sale of other stock/ETF/MF;
  • If both FDIC cash and MM hit zero; fails withdrawal;
  • All cash management features.

CMA and brokerage

  • CMA used for ATM with FDIC sweep; no ATM fees;
  • CMA overdraft protection with connection to brokerage;
  • CMA balance is kept low or zero;
  • Brokerage sweep as SPAXX or FZFXX;
  • ATM withdrawal first from CMA;
  • If CMA hits zero withdrawal from brokerage sweep/MM;
  • If CMA hits zero and brokerage sweep/MM hits 0; withdrawal fails if no margin;
  • Another level of overdraft protection available in brokerage via margin;
  • No automatic sell of stocks/MF from brokerage other than sweep or MM.

Issues/concerns

Security concerns involve unauthorized access to the ATM or CMA account, and the risk that the CMA and linked investment account can be drained of funds. A common suggestion is to have a separate, unlinked investment account to hold the investment portfolio, with no mingling of investment capital and the money used for expenses/banking.

Fidelity tips, links, and general orientation

The default account at Fidelity is a full-featured brokerage account. You can buy mutual funds (Fidelity and non-Fidelity funds), ETFs, individual stocks, bonds, brokered CDs, along with options and precious metals, all within the same Fidelity account. As of April 2015:

Competing products

Cash management programs are also available from Schwab and Merrill:

Notes

  1. Vanguard discontinued its VanguardAdvantage® cash management account on July 31, 2019. See this Bogleheads® forum post: Re: Discontinuing VanguardAdvantage Accounts, bhwabeck3533. Feb 28, 2019 and How to transition from the VanguardAdvantage account, from Vanguard.

References

  1. Bogleheads® forum topic: Fidelity as a one stop shop, BogleMelon. December 15, 2018
  2. Fidelity CMA
  3. Bogleheads® forum post: Fidelity a one stop shop, yogesh. March 17, 2019