Fidelity Cash Management Account??

[audreyh1]

It’s not a separate account. You just add more features to your brokerage account when you add the cash management.

Mine are listed as separate accounts when I log in, each with their own history, positions, tax statements, etc. Our cash management account has an account number, as does our brokerage account and our separate IRA accounts.

 

[Lazyfabs]

I logged into my Fidelity account and it's listed as a brokerage account. I didn't realize there was a difference. I guess all these years I've been using my brokerage account also as my cash management account. I looked at Fidelity's FAQs on CMAs - not clear to me what the advantage is to break out a separate account when it looks like one can do the same thing in the brokerage account. Am I missing something?

It is confusing. The ‘fidelity account’ is the brokerage and the ‘fidelity cash managment acount’ is the equivalent of a checking account sort of, though it is actually a brokerage account, yes confusing.

From this table https://www.fidelity.com/cash-management/features-by-account

In the cma deposits are fdic insured up to 250k and the cash manager tool for overdrafts. One cannot invest in funds, stocks, etc in the cma, one has to transfer money to the brokerage accoint and then purchase funds, etfs, stocks, etc.

This is from one of the many footnotes

“1. The Fidelity Cash Management Account is a brokerage account designed for spending and cash management. It is not intended to serve as your main account for securities trading. Customers interested in securities trading should consider a Fidelity Account”

From the FAQ

“The Fidelity® Cash Management Account is intended to complement, not replace, your existing brokerage account. It lets you separate your spending activity from your investment activity.”

Though one can do the same thing in both, bill pay, checkwriting, etc, it was explained to me when we opened it is that the cma is for tracking and use of daily purchases and bills and the ‘fidelity account’ for investments.

I find it burdensome and use the ‘fidelity account’ for direct deposit, check writing, billpay, atm, all non retirement investments, etc, and only keep several hundred $ in the cma since its there.

If you have both on the atm cards and on the checks they are designated and labeled as such.

 

[Cobra9777]

So-called "cash management" can be accomplished in one of two ways at Fidelity: (1) set up a true cash management account, (2) enable all the cash-management features on a regular brokerage account. I've had the latter for about 20 years. I believe the former is a relatively new offering. As a practical matter, there is very little difference in the two approaches.

However, I just made a phone call to Fidelity and the rep confirmed that the core account on a true CMA (#1 above) cannot be changed from the FDIC-insured deposit sweep program. I'm set up as an agent for my in-law's Fidelity accounts and they do have a true CMA. When I click to change the core account, it says this: "There are no other core options available for your account. Additional options might be available by calling a Fidelity representative at 800-544-6666." I asked the Fidelity rep about that message and she had no explanation except that changes are allowed from time to time under certain circumstances. So maybe this is one of those things like who gets TurboTax. It might depend on balances, activity, etc.

Another difference between the two approaches is that the true CMA has access to a tool called Cash Manager. This is a kind of overdraft tool that allows you to set upper and lower balance thresholds, while specifying where and what to sell when the balance goes below the lower threshold, and where and what to buy when the balance goes above the upper threshold. This might be a more automated approach for the kind of thing COcheesehead was describing (keep most of the balance in a 2% MMF, with minimal in the core). But it does require the true CMA; it's not available for a brokerage account, even if all cash-management features are enabled. But if you have a true CMA, this tool means that the constraint on core accounts should not be a problem... just move everything to a 2% MMF and the Cash Manager tool will automatically move money to/from the core account as needed to meet all scheduled payments.

 

[gwraigty]

A big advantage, IMO, to having the separate CMA, is that it makes it easier to keep the money that you need to pay bills separate from the money that you want to invest. It would make it more difficult to accidentally invest money that you need to cover bills.

 

[audreyh1]

A big advantage, IMO, to having the separate CMA, is that it makes it easier to keep the money that you need to pay bills separate from the money that you want to invest. It would make it more difficult to accidentally invest money that you need to cover bills.

It definitely keeps it easier for me. Plus I can segregate my ATM usage from my brokerage investment account. This is a concern when I travel.

 

[COcheesehead]

Mine are listed as separate accounts when I log in, each with their own history, positions, tax statements, etc. Our cash management account has an account number, as does our brokerage account and our separate IRA accounts.

Not for this guy.

 

[audreyh1]

Not for this guy.

Well sounds like you simply added the cash management features to your brokerage account.

This is also an option for the OP.

 

[COcheesehead]

Well sounds like you simply added the cash management features to your brokerage account.

I have a separate cash management tab on my summary page that leads to an overview of all my cash positions, Billpay and credit cards, but I do not have a separate account. Those tabs lead into other pages with more options.

 

[audreyh1]

I have a separate cash management tab on my summary page that leads to an overview of all my cash positions, Billpay and credit cards, but I do not have a separate account. Those tabs lead into other pages with more options.

I have a separate cash management tab too. And it shows all the accounts that are billpay capable.

But I also have a separate cash management account that I can see in all the other views such as summary, position, balances, activity/history.

Cobra’s post explains the two options pretty clearly.

 

[COcheesehead]

I have a separate cash management tab too. And it shows all the accounts that are billpay capable.

But I also have a separate cash management account that I can see in all the other views such as summary, position, balances, activity/history.

Seems like you have different registered accounts for some reason, but what do I know. I like the simplicity of not having a separate account, but all the features.

 

[audreyh1]

Seems like you have different registered accounts for some reason, but what do I know. I like the simplicity of not having a separate account, but all the features.

Sure no problem. I use the Fidelity “true” cash management account as a type of checking account for bill paying and overseas ATM usage. I like having it segregated from my much larger Fidelity brokerage account which holds my retirement portfolio investments. I only withdraw from the brokerage account once a year for my annual income and I have never enabled billpaying in the brokerage account.

 

[Cobra9777]

A big advantage, IMO, to having the separate CMA, is that it makes it easier to keep the money that you need to pay bills separate from the money that you want to invest. It would make it more difficult to accidentally invest money that you need to cover bills.

This is a very real issue, not just a matter of convenience or security. We don't have a true CMA at Fidelity, but we have two regular brokerage accounts, one that holds securities and one that holds cash (and has all cash-management features enabled). Previously, we had it all combined in one brokerage account.

Then, a few years ago, I had a very large bill-pay scheduled (year-end property tax). I also did a tax-loss-harvesting transaction (sell one security, buy another). The buy side of that transaction consumed all of our "cash available for withdrawal" that I had earmarked for the property tax payment. This left a large balance in "cash available for trade." But no more cash would be "available for withdrawal" until after the trade settled and after the property tax was scheduled for payment. Fidelity's system consumes cash in the order of liquidity. I had to make an emergency transfer from Ally to cover the property tax. After that, we opened a separate brokerage account to hold securities and kept all cash transactions in a separate brokerage account, which solved the problem.

Seems to me, it's almost a no-brainer to keep the two separate. The slightly more difficult decision is whether the CMA should be a true CMA or a brokerage account with all cash-management features enabled. There are pros/cons to both approaches. So the answer will depend upon how one intends to use the CMA.

 

[audreyh1]

Seems to me, it's almost a no-brainer to keep the two separate. The slightly more difficult decision is whether the CMA should be a true CMA or a brokerage account with all cash-management features enabled. There are pros/cons to both approaches. So the answer will depend upon how one intends to use the CMA.

This is also of importance for me as I deliberately segregate my retirement investments from my accounts that manage living expenses, bill paying, etc. I think I would go nuts if it were commingled and I don’t think I would be able to rebalance properly - or feel very confident about it.

But I don’t really think it matters whether you use a second brokerage account with cash management features enabled or a “true” management account. Unless, as you pointed out earlier, the overdraft feature was of importance.

 

[COcheesehead]

This is a very real issue, not just a matter of convenience or security. We don't have a true CMA at Fidelity, but we have two regular brokerage accounts, one that holds securities and one that holds cash (and has all cash-management features enabled). Previously, we had it all combined in one brokerage account.

Then, a few years ago, I had a very large bill-pay scheduled (year-end property tax). I also did a tax-loss-harvesting transaction (sell one security, buy another). The buy side of that transaction consumed all of our "cash available for withdrawal" that I had earmarked for the property tax payment. This left a large balance in "cash available for trade." But no more cash would be "available for withdrawal" until after the trade settled and after the property tax was scheduled for payment. Fidelity's system consumes cash in the order of liquidity. I had to make an emergency transfer from Ally to cover the property tax. After that, we opened a separate brokerage account to hold securities and kept all cash transactions in a separate brokerage account, which solved the problem.

Seems to me, it's almost a no-brainer to keep the two separate. The slightly more difficult decision is whether the CMA should be a true CMA or a brokerage account with all cash-management features enabled. There are pros/cons to both approaches. So the answer will depend upon how one intends to use the CMA.

Margin on the account would have solved it as well.

 

[Cobra9777]

...But I don’t really think it matters whether you use a second brokerage account with cash management features enabled or a “true” management account. Unless, as you pointed out earlier, the overdraft feature was of importance.

Or you want to change the core account...

I like having a high-yielding core account. But I'd like to have access to the Cash Manager tool as well. For most, this is probably a subtle distinction.

 

[audreyh1]

Or you want to change the core account...

I like having a high-yielding core account. But I'd like to have access to the Cash Manager tool as well. For most, this is probably a subtle distinction.

Well that’s true! I forgot already!

I use a high yield savings account (1.9% yield) to hold my year’s worth of spending money, and just schedule monthly transfers to the Fidelity cash management account to cover bills. Transfers show up in a couple of days.

I started out mainly using it for overseas ATM access, so I never planned to hold a large amount of cash in it in case my ATM card was compromised.

 

[Huston55]

But if you have a true CMA, this tool means that the constraint on core accounts should not be a problem... just move everything to a 2% MMF and the Cash Manager tool will automatically move money to/from the core account as needed to meet all scheduled payments.

This is what we do; so, we earn ~2% in FZDXX until the day the cash is needed to pay a bill, at which time the $$$ is auto-transferred from FZDXX to the core account for bill pay. Like others, we keep the core account & FZDXX in a separate “expenses” account. If/when FZDXX runs low, we replenish it from other accounts that we’ve designated to liquidate for expenses (currently our taxable investments account). It couldn’t be easier.

 

[audreyh1]

Originally Posted by Cobra9777 View Post
But if you have a true CMA, this tool means that the constraint on core accounts should not be a problem... just move everything to a 2% MMF and the Cash Manager tool will automatically move money to/from the core account as needed to meet all scheduled payments.

This is what we do; so, we earn ~2% in FZDXX until the day the cash is needed to pay a bill, at which time the $$$ is auto-transferred from FZDXX to the core account for bill pay. Like others, we keep the core account & FZDXX in a separate “expenses” account. If/when FZDXX runs low, we replenish it from other accounts that we’ve designated to liquidate for expenses (currently our taxable investments account). It couldn’t be easier.

OK - I should just do this regardless. I occasionally have some large credit card bills to pay off. Well, the money only sits in there for a few days though, but there is usually a minimum of $2K in the account.

I never realized I could add other securities to my CMA.

I'll be studying that cash manager tool.

 

[albireo13]

Hmmm ... I have a Fidelity brokerage account already (inactive) but, didn't know about the CMA. I may open an account. Sounds powerful.

 

[catotx]

I started holding FZDXX in the CMA account recently, and it gets liquidated automatically to meet any debits like ACH, checks and billpay.

How much do you keep in FZDXX?

My strategy so far has been to top it up to $10k at the end of every month. Don't know if I will get a complaint from Fidelity about it not meeting the $100k initial balance. Anyone knows?

 

[Dtail]

I started holding FZDXX in the CMA account recently, and it gets liquidated automatically to meet any debits like ACH, checks and billpay.

How much do you keep in FZDXX?

My strategy so far has been to top it up to $10k at the end of every month. Don't know if I will get a complaint from Fidelity about it not meeting the $100k initial balance. Anyone knows?

There are no rules about keeping it to any balance after meeting the 100k initial rule.

 

[Huston55]

There are no rules about keeping it to any balance after meeting the 100k initial rule.

This is what the Fido rep told me when I set it up. I like to keep a minimum of 3mos expenses in FZDXX because, I set it up to auto-transfer to pay bills so I didn’t have to worry about that so, I don’t want to have to worry about a low balance either.

 

[audreyh1]

This is what the Fido rep told me when I set it up. I like to keep a minimum of 3mos expenses in FZDXX because, I set it up to auto-transfer to pay bills so I didn’t have to worry about that so, I don’t want to have to worry about a low balance either.

Well it is certainly something to consider.

One thing I have noticed about the Cash Management Account [-]that is not available on the brokerage accounts[/-] - I can schedule cash transfers at a future date.

I take that back. It looks like transfers to external accounts from Fidelity brokerage accounts as well external accounts can now be scheduled in the future. This feature used to not be available at all, and for a while I'm pretty sure it wasn't available on the brokerage accounts.

You can't schedule transfers between internal accounts - those occur immediately.

 

[audreyh1]

OK - I'm confused. The Fidelity Cash Manager Tool describes Fidelity Cash Manager Tool as being linked to another account. Not to another fund within the Cash Management account.

For folks keeping funds in a MM, is that MM fund in a brokerage account? Or did you actually buy that fund within the Cash Management Account and the Cash Manager Tool allows you to link to it?

That aspect is not mentioned at all. And the Cash Manager Tool setup seems to want to link to another account.

 

[catotx]

The Fidelity offerings are somewhat confusing. Basically you can use either the brokerage or CMA account for your daily day-to-day finances.

Comparison:

Brokerage
o Can use a MMF as sweep.
o MMF is purchased automatically when there is a credit in the account.
o As far as I know, ATM fees are not reimbursed unless you meet some balance requirement.

CMA
o Only FDIC available as sweep (low APY), but you can buy a MMF (e.g. FZDXX).
o The MMF held in the CMA will be liquidated automatically to meet debits (you don't need to link or do anything).
o Any credit to CMA goes to the FDIC sweep -- you need to manually purchase the MMF if you want a higher APY.
o ATM fees are reimbursed.
o Optional : You can link a brokerage account to the CMA to provide additional funding possibilities.

Link: https://www.fidelity.com/cash-management/features-by-account