Fidelity: one stop shop
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][note 2]
Offerings
Fidelity has a page showing their different account options and features.
529 account
- Fidelity manages 529 plans for several states and offers a national one called The UNIQUE College Investing Plan which achieved a 2021 Morningstar Bronze 529 Rating.[4]
Brokerage
- The Fidelity Account®
- The Fidelity Account® for Businesses - which is available for non-profits such as 501(c)(3) or 501(c)(6). This allows an organization to simplify their finances into a combined checking/savings account.
- Fidelity Youth Account
Cash Management Account
The Fidelity Cash Management Account (CMA) is an alternative to a traditional checking account allowing you to separate your spending and investing. It has several features:
- ATM card with ATM fees reimbursed worldwide.[5]
- No foreign transaction fee for debit card purchases in non-US dollar transactions (as of 8/19/2024[6]).[5]
- Check writing;
- Bill pay;
- Check deposit using mobile app.
- Sweep options - SPAXX (as of 6/18/24) or FDIC Deposit Sweep Program with up to $5 million in FDIC coverage[7] and Money Market Mutual Fund Overflow.
- If your cash balances are above the maximum deposit limit, any excess will be placed in Class S of the Fidelity Government Money Market Fund. This will be debited first.
- Note, please review the Program Bank List used for your Fidelity CMA. If you already have deposits at any of those banks, it will affect your total FDIC eligibility.
Credit card
- Fidelity offers The Fidelity® Rewards Visa Signature® Card which gives 2% cashback on all purchases and has no foreign transaction fee as of 8/21/23.[8] While it is administered by Elan Financial, a subsidiary of US Bank,[9][10] you can access the credit card through the Fidelity website.
Donor Advised Fund
- Fidelity Giving Account which has a tiered fee schedule of 0.6% or $100 for the first $500k.[11]
Health Savings Account
- Fidelity began offering Health Savings Accounts in 2018. It has no annual fees, offers bill pay, a debit card, and the ability to invest.
- As of 2021, some[12] consider it one of the top HSAs available on the market.
UGMA/UTMA
- Fidelity offers a UGMA/UTMA custodial account. Notably, any assets in a UGMA/UTMA will factor into financial aid eligibility.
Suggested account usages
Harry Sit (The Finance Buff) has outlined his method to use Fidelity as your primary checking account in his article: 2 Ways to Use Fidelity as a Checking or Savings Account
Forum member Yogesh has provided several ways to setup your Fidelity One Stop Shop accounts.[13]
Brokerage account only
- ATM card but no free ATM fees. Exception: Private Client Group gets 0 fees
- Sweep options: SPAXX or FZFXX
- Bill Pay, Check writing, ACH, Deposits available
- Deposit/withdrawal from sweep fund
- If sweep hits 0; withdrawal from other MM but no sale of other Stock/ETF/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 5m coverage or SPAXX
- Bill Pay, Check writing, ACH, Deposits available
- Can buy MM (money market) funds, ETF, MFs
- If sweep hits 0; withdrawal from MM but no sale of other Stock/ETF/MF
- If both FDIC cash and MM hits 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
Disadvantages, issues, and concerns
- Cashier's checks are not supported as of 2021[14]
- Zelle is not supported though some may consider this an advantage as Zelle fraud is not necessarily covered under Electronic Funds Transfer Act (Reg E) protections because a consumer has "agreed" to have Zelle debit their account.[15][16][17]
- You cannot deposit cash or money orders, use Plaid for instant verification, and there can be a hold on ACH pulls and check deposits for up to four business days.[18]
- Theoretical security concerns involve unauthorized access to the CMA account by debit card or checks/ACH, and the risk that the CMA and a 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.
- For those who manually purchase money market funds, it is difficult to get a clean view of deposits and withdrawals like a 'normal' banking account. Even using filters, it will include the MMF purchases. The workaround is to use the monthly PDF statements.[19]
- Privacy concerns as Fidelity reports all ACH transactions to Early Warning Services (EWS)[20]
- Opening a revocable trust CMA account may require a paper application.[21] Linking any existing bank accounts to a trust account also requires mailing in paper forms.[22]
- The Fidelity Account® for Businesses does not support Bill Pay.
- Businesses cannot open a Fidelity CMA account. However, the Fidelity account for business can use FZFXX as its core position. This comprises treasury bills and repurchases, and can also be considered a safe, conservative position.
- Fidelity's debit card is unavailable during certain hours of the night.[23][24]
- Fidelity only allows downloading transactions via CSV. OFX/QFX is no longer available.
- Fidelity no longer can connect with YNAB. They expect all 3rd parties to use Fidelity Access
Advantages, 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, and fractional shares along with options and precious metals, all within the same Fidelity account.
- Automatic Withdrawals - If inclined, you are able set your dividends to pay out to an external bank account or one at Fidelity.
- Money Transfer Lockdown is available to block outbound money transfers and transferring assets to other institutions
- Auto-roll service for Treasury securities and CDs[25]
- If moving from Vanguard, some of their mutual funds can be converted tax free to the equivalent ETFs which give better portability and allows you to continue to trade at Fidelity without fees. See: List of eligible mutual funds, from Vanguard.
- Automated recurring ETF purchases[26]
Automating conversion to a non-core money market fund
This is possible by scheduling purchases for greater than the amount held in your core position. For example, if you prefer holding FDLXX rather than SPAXX, you can set a monthly purchase of FDLXX greater than what you expect will be in your core position. Your prior holdings of FDLXX will be auto-liquidated to cover the difference between what is in your core holding and the overage.[27]
From Fidelity:[28]
To begin, if you wish to automatically invest in Fidelity Money Market Fund (SPRXX) in your Cash Management Account (CMA), you can set up Automatic Investments from your core position into SPRXX. Please note that at this time, Automatic Investments can only be set up monthly or quarterly; however, you can set up more than one if you are looking to replicate a weekly frequency.
If you choose to set up Automatic Investments tools, log in to Fidelity.com and do the following:
- Click "Accounts & Trade," then "Account Features"
- Select "Payments & Transfers," followed by "Automatic Transfers and Investments"
- Choose the appropriate action and follow the steps
Now let's move to auto-liquidation and how it works with Automatic Investments. In the scenario that you presented, the core position needs to have the necessary funds to cover the Automatic Investment process. It would only attempt another one in the next month.
The purpose of auto-liquidation is to cover certain debit balances. It is best practice to sell non-core money markets before expected purchases. However, it is generally possible to utilize a secondary money market mutual fund to cover distributions in addition to your core position. Fidelity will attempt to cover debit balances created through trades, direct debits, checkwriting, etc., by first using funds in your core balance. If the core balance is depleted, the system will turn to any eligible secondary money market fund to cover the transaction. In these cases, the money market fund will automatically be liquidated.
Order of auto-liquidation in CMA and brokerage accounts
Fidelity will attempt to cover debit balances created, whether through trades, direct debits, check writing, etc., by first using funds in your core balance. If the core balance is depleted, the system will turn to any eligible secondary money market fund to cover the transaction. In these cases, the money market fund will automatically be liquidated.[29]
From Fidelity:[30]
There is an order in which money markets will liquidate. When purchases or debits are made, the debit will be drawn first from the core, then followed by any additional money markets. If the core has insufficient funds alongside additional money market mutual funds in the account, we would draw from the taxable money markets first, then the tax-free money markets. Within each category, we draw from the fund with the highest balance first.
Although checks contain the statement:[31]
Please note that all checks written from this book are drawn from your Fidelity core account. Other holdings in your Fidelity Account will not be automatically redeemed to cover checks that you write. To avoid bouncing your checks, please make sure you have available funds in your core account.
the amount the account shows as "Available to Withdraw", and not the amount in the core holding determines how much a check can be written for.[32]
Non-core money market funds that auto-liquidate
While there is not a published list of money market funds that are eligible for auto-liquidation, you can determine whether a money market will auto liquidate using the requirements below.[33]
Auto-liquidate non-core money market requirements:
- Fidelity Investments Money Market (FIMM), non-FIMM government, retail prime, and retail municipal funds
- Maintains a stable net asset value
- A liquidity fee has not been imposed
SPRXX, SPAXX, FDRXX, FZFXX, FDLXX, FMSXX,[34] FISXX, FSIXX,[35] FTEXX,[36] and FZDXX[37] have been confirmed to auto-liquidate.
Multifactor authentication options
- You can use the Fidelity app with push notifications or an authenticator app of your choice with TOTP support[38] such as Ente Auth
Competing products
Cash management programs are also available from Schwab and Merrill:
- Schwab Cash Solutions which includes Schwab Bank Investor Checking that is a full bank with no foreign transaction fees on its debit card. Forum topics regarding Schwab as a one stop shop as well as a comparison to Fidelity are available.
- Merrill Cash Management Account, including Merrill Edge
Notes
- ↑ 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.
- ↑ In late 2022, Vanguard relaunched its cash management program as a pilot called the Vanguard Cash Plus Account.[2] Funds stored in the account are swept to a FDIC insured bank.[3]
References
- ↑ Bogleheads forum topic: "Fidelity as a one stop shop", BogleMelon. December 15, 2018
- ↑ "Vanguard Cash Plus Account". Vanguard. Retrieved 2023-03-11.
- ↑ "Bank Sweep Program Bank List" (PDF). Retrieved 2023-03-11.
- ↑ "Morningstar 529 Ratings: The Top Plans and What They Offer". 2022-11-02. Retrieved 2023-04-25.
- ↑ 5.0 5.1 "FAQs - ATM Debit Card - Fidelity Cash Management". Fidelity. Retrieved April 24, 2024.
- ↑ "Fidelity's new debit card is coming". Reddit. 2024-08-19. Retrieved 2025-01-03.
{{cite web}}
: CS1 maint: url-status (link) - ↑ "Safeguarding Your Accounts". Fidelity. Retrieved 2023-03-23.
- ↑ Bogleheads forum post: "Fidelity as a one stop shop", cspitzer. 8/23/2023
- ↑ Bogleheads forum post: "Fidelity as a one stop shop", jbranx. 16 December 2018
- ↑ "U.S. Bancorp". Retrieved 2023-03-17.
- ↑ "Fidelity Giving Account tiered fee schedule". Retrieved 2023-03-26.
- ↑ "Which Is the Best HSA? Lively vs. Fidelity Review". The White Coat Investor. 2021-07-14. Retrieved 2023-03-17.
- ↑ Bogleheads forum post: "Fidelity a one stop shop", yogesh. March 17, 2019
- ↑ "How do I get a certified check?". Reddit. Retrieved March 9, 2023.
- ↑ Bogleheads forum post: "Fidelity as a one stop shop", JoMoney. June 12, 2022
- ↑ "Why some users are complaining about Zelle, the popular money app". Clark Howard. Retrieved March 9, 2023.
- ↑ "New warning: How scammers are robbing people through the Zelle app". Boston 25 News. Retrieved March 9, 2023.
- ↑ "3 Ways to Use Fidelity as a Checking or Savings Account". The Finance Buff. 2023-07-31. Retrieved 2023-08-07.
- ↑ Bogleheads forum post: "Fidelity a one stop shop", manlymatt83. April 29, 2023
- ↑ "Fidelity reporting all ACH transactions to EWS". Reddit. Retrieved March 9, 2023.
- ↑ Bogleheads forum post: "Fidelity a one stop shop", lstone19. March 23, 2023
- ↑ Bogleheads forum post: "Fidelity a one stop shop", Tier1Capital. March 23, 2023
- ↑ "Fidelity Debit Card Does Not Work During Certain Hours?". Reddit. Retrieved 2023-03-25.
- ↑ Bogleheads forum post: "What does Schwab do better than Fidelity?"
- ↑ Bogleheads forum topic: "Fidelity Tips: Building an auto-rolling US Treasury ladder for EF or HSA in California", mervinj7. Jan 21, 2020
- ↑ "It's here! We've added the ability to automate your stock, ETF, and basket trades on a recurring basis–weekly, every two weeks, or monthly". Reddit. 2023-11-06. Retrieved 2023-11-20.
- ↑ Bogleheads forum post: "Re: Fidelity as a one stop shop", wenchleaf. March 28, 2023
- ↑ "Automatically invest CMA core position into non-core money market fund (ex. SPRXX)". Reddit. 2023-06-01. Retrieved 2023-08-05.
- ↑ "Money market auto-liquidation rules and margin". Reddit. Retrieved April 23, 2024.
- ↑ "Auto-liquidation in CMA accounts". Reddit. Retrieved May 4, 2023.
- ↑ "Fidelity as a one stop shop". Bogleheads Forum. Retrieved December 3, 2023.
- ↑ "Fidelity as a one stop shop". Bogleheads Forum. Retrieved December 3, 2023.
- ↑ "Is there a list of money market funds eligible for auto-liquidation in Cash Management Account?". Reddit. Retrieved March 9, 2023.
- ↑ "Is FMSXX eligible for auto-liquidation?". 2023-07-01.
- ↑ "Comment: FISXX". 2023-08-14. Retrieved 2023-08-14.
- ↑ "Does FTEXX work with auto-liquidation in a cash management account?". Reddit. 2023-03-31. Retrieved 2023-10-23.
- ↑ Bogleheads forum post: "Fidelity as a one stop shop", brew. April 22, 2024
- ↑ "Extra login security with multi–factor authentication". Fidelity. Retrieved November 11, 2024.