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Who provides better Cash management? - Fidelity vs Schwab vs X
Old 07-20-2019, 12:53 AM   #1
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Who provides better Cash management? - Fidelity vs Schwab vs X

Some time ago I opened a Fidelity account in addition to my Schwab account. To see which brokerage service and short term cash management offerings I liked best, before potentially consolidating them in the future. I wanted to briefly summarize the pros and cons of their handling of cash in different types of accounts, hoping to solicit feedback on what I might be overlooking. Perhaps others could contrast against similar offerings from E-Trade, TD Ameritrade, etc. My conclusion is that Fidelity "wins" at cash management in a brokerage account, while Schwab "wins" at checking/ATM.

Brokerage:
Without any effort from the user, Fidelity keeps the cash balance of the brokerage account invested in SPAXX (Fidelity Government Money Market) currently yielding 1.99%. Schwab keeps the balance in a BankSweep account currently earning 0.30%. So Fidelity is clearly more investor friendly.

My related question is that I see mention of these accounts on my Schwab statement, so maybe there is some automated buy/sell option that I have been overlooking, that would make a Schwab brokerage account more competitive?
  • ValueAdvMoneyFd SWVXX 2.22%
  • SchInvestorMoneyFund 2.19%

Checking:
Cash in Fidelity Savings & Checking current earns 0.37%. While cash in Schwab Investor Checking earns 0.40%. (They may not be getting compared on the exact same day). So the interest rates are quite similar which would make the comparison a draw. But Schwab makes it so easy to set a travel notice for ATM cash/debit transactions that it is better choice for anyone who travels very often.

  • To set a travel notice with Schwab, just log into their website and a quickly set your date and destination as if you were booking a hotel.
  • To set a travel notice with Fidelity have to take a lot of small steps which are not difficult, but a pain to do in 2019.
  1. Dial 1-800 number
  2. enter card # into IVR
  3. listen to the options and guess which one is to set a travel notice
  4. after getting connected to an agent provide provide card # verbally again
  5. provide last 4 digits of SS
  6. provide Fidelity account #
  7. provide name as printed on the card
  8. provide last travel notice destination as an additional security check
  9. then finally provide the travel destination and dates
Fidelity makes it tempting to keep any excess cash that would otherwise sit in the checking account over in the brokerage account. But it would be tedious to monitor a small checking balance frequently in an effort to keep it topped off. Has anyone found other options, such as will Fidelity send an alert if the checking account balance is below a certain amount?
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Old 07-20-2019, 02:56 AM   #2
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That doesn't seem to me to be a compelling reason to switch. Where we are moving, we're looking at a 30-50 minute "commute" to Schwab and a 40-60 minute "commute" to Fidelity, which given that I've visited the investor center twice in ten years isn't a compelling difference either.
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Old 07-20-2019, 04:36 AM   #3
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To set a travel notice with Fidelity have to take a lot of small steps which are not difficult, but a pain to do in 2019.
That would be for the debit card, which I agree is not user-friendly.

But it's much easier for the credit card:
Screen Shot 2019-07-20 at 6.31.27 AM.png

But also, FIDO charges a foreign transaction fee, while Schwab doesn't. So I wouldn't use the Fidelity Visa card when traveling unless I really had to.

I have accounts at both, and I'm very happy with it that way.
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Old 07-20-2019, 04:47 AM   #4
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I have accounts at both, and I'm very happy with it that way.
This is something I need to think more about, but I'll do it in another thread:

http://www.early-retirement.org/foru...s-x-98800.html
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Old 07-20-2019, 04:49 AM   #5
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Originally Posted by triangle View Post
My related question is that I see mention of these accounts on my Schwab statement, so maybe there is some automated buy/sell option that I have been overlooking, that would make a Schwab brokerage account more competitive?
  • ValueAdvMoneyFd SWVXX 2.22%
  • SchInvestorMoneyFund 2.19%
I am also interested in the answer to your question. Perhaps there are other strategies available, too.
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Old 07-20-2019, 06:18 AM   #6
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Fidelity makes it tempting to keep any excess cash that would otherwise sit in the checking account over in the brokerage account. But it would be tedious to monitor a small checking balance frequently in an effort to keep it topped off. Has anyone found other options, such as will Fidelity send an alert if the checking account balance is below a certain amount?
With Fidelity, no need to move excess cash to the brokerage:

In the Fidelity cash management account you can buy any money market fund. I routinely move any large cash deposit into FDRXX govt cash reserves. The really nice thing is that Fidelity automatically pulls from a MM fund to fund outflows when the core cash is depleted.

When I finally discovered this feature, I started keeping a much larger balance in my cash management account, moving funds in less frequently.

At Schwab brokerage I move cash to SWVXX.

None of the buying of those MM funds can be automated AFAIK in the Fidelity cash management or Schwab brokerage account.
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Old 07-20-2019, 06:27 AM   #7
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That would be for the debit card, which I agree is not user-friendly.

But it's much easier for the credit card:
Attachment 32181

But also, FIDO charges a foreign transaction fee, while Schwab doesn't. So I wouldn't use the Fidelity Visa card when traveling unless I really had to.

I have accounts at both, and I'm very happy with it that way.
Fido does not charge a foreign transaction fee on their debit card when used for ATM withdrawals. A 1% foreign transaction fee is applied only at point of sale terminals like in a shop or a ticket machine. I routinely use both the Schwab and Fidelity debit/ATM cards overseas.

I donít use the Fidelity credit card overseas as I have other cards that pay higher rewards net of transaction fee. But you still net 1% rewards overseas with the Fidelity 2% rewards VISA credit cards, so for some folks it may still be a better option if their 0% foreign transaction fee credit card pays no rewards.
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Old 07-20-2019, 06:54 AM   #8
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Thanks, I was just thinking about the credit card and forgot the debit didn't have a FTF.
I use just the Schwab debit at ATMs overseas and mainly the First Tech MC for POS purchases.
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Old 07-20-2019, 07:40 AM   #9
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Thanks, I was just thinking about the credit card and forgot the debit didn't have a FTF.
I use just the Schwab debit at ATMs overseas and mainly the First Tech MC for POS purchases.
Well, the Fidelity debit card does have a 1% FTF if you use it for purchases at a store or ticket machine.

I sometimes use it anyway at a ticket machine. Why? Because I get instant text notification of the transaction, and on a small purchase like local train tickets the 1% fee is very small. I really like the Fidelity notifications. Note: this is in the case of a machine not accepting credit cards, I use credit cards in a machine most of the time.

The Schwab notifications are almost non-existent. I usually end up logging on and checking online. They may have improved this recently as I think I noticed a brief announcement, I havenít had time to check into the details.

Another thing - I called Schwab to have them explicitly turn off overdraft protection from my brokerage to investor checking. This is on by default.
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Old 07-20-2019, 08:01 AM   #10
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I used Fidelity debit card in many countries. I never notified them in advance and have never encountered any problems so far.
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Old 07-20-2019, 08:24 AM   #11
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Quote:
Originally Posted by triangle View Post
I wanted to briefly summarize the pros and cons of their handling of cash in different types of accounts, hoping to solicit feedback on what I might be overlooking. Perhaps others could contrast against similar offerings from E-Trade, TD Ameritrade, etc. My conclusion is that Fidelity "wins" at cash management in a brokerage account, while Schwab "wins" at checking/ATM.

<snip>

Fidelity makes it tempting to keep any excess cash that would otherwise sit in the checking account over in the brokerage account. But it would be tedious to monitor a small checking balance frequently in an effort to keep it topped off.
I've had brokerage and checking accounts at Schwab and Fidelity for years. At times, Schwab checking paid more than Fidelity CMA, and vice versa. At times, they paid the same. For awhile, Ally Checking paid a lot more, so I switched to them for a few years. Ally's rate dropped gradually to the point it was almost the same as Schwab or Fidelity, so I closed the account and decided to stick to Schwab and Fidelity for my checking/online bill paying needs.

Point being, it's not worth it for me to chase checking account rates, as they can be a moving target.

I use Schwab checking and Fidelity CMA strictly for direct deposit, online bill payment, and the rare check. After bills for the month are covered, the surplus is transferred to the brokerage accounts. At Schwab, the transfer shows up instantly. At Fidelity, it shows up the next business day. Transfers from brokerage to checking have the same time table. For that, I'd agree that Schwab wins.

ATM fee reimbursements are once a month with Schwab, and the next day with Fidelity. Fidelity wins there. Online bill pay is the same. A draw.

I don't keep enough in cash to be concerned about the differences. I'm more concerned with investment options in the brokerage accounts, both of which are similar enough that I'm hard pressed to recommend one over the other for that, even.

Fidelity is my main checking account right now. At times, it's been Schwab. I have a couple of payments automatically debited from the Schwab checking. I don't find it any trouble to keep a few months worth of those payments in the account to keep it topped off. I transfer from the cash balance in the brokerage regularly (as interest/dividends accumulate) to the checking. When I've got enough in checking to cover the next few months of those payments, then I stop transferring and let the cash balance in the brokerage accumulate for new investments. It's not tedious at all.
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Old 07-20-2019, 09:15 AM   #12
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I don't want to get very far into this, but here is a factoid:

About the time Schwab made the major cuts to their mutual fund fees, they changed the sweep target in my account (and, I assume, a few million others). The sweep now goes into a Schwab bank account paying a pittance instead of going into a money market account as it formerly did. The money market accounts are still available to buy but obviously they are counting on slothful customers to reduce Schwab's cost on cash balances. Grr...

With the competitive nature of the brokerage business these days and everyone slitting each others' throats on fees, it wouldn't surprise me if this little gouge becomes common. Maybe it already is.
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Old 07-20-2019, 09:26 AM   #13
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About the time Schwab made the major cuts to their mutual fund fees, they changed the sweep target in my account (and, I assume, a few million others). The sweep now goes into a Schwab bank account paying a pittance instead of going into a money market account as it formerly did.
IIRC, a variant of this technique was incorporated into Schwab's low-cost robo-advisor service. That's how they kept the published fees and loads low, quite a bit of the clients' money spent a long time in low-interest accounts that benefit Schwab.
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Old 07-20-2019, 10:05 AM   #14
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IIRC, a variant of this technique was incorporated into Schwab's low-cost robo-advisor service. That's how they kept the published fees and loads low, quite a bit of the clients' money spent a long time in low-interest accounts that benefit Schwab.
Yes. That's exactly right. I ran a $100K test portfolio with the robot for a couple of years and it was impossible to have a 100% equity AA. I think I was forced into about 5% cash.
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Old 07-20-2019, 02:42 PM   #15
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Without any effort from the user, Fidelity keeps the cash balance of the brokerage account invested in SPAXX (Fidelity Government Money Market) currently yielding 1.99%
I recently changed my account to use FIDELITY TREASURY MONEY MARKET FUND (FZFXX). Prior to that it was in CASH yielding 0.37% in my March statement.

FZFXX is 2.05% right now, SPAXX 2.03%.

There are perhaps 20 money market options available but most of them require enormous balances.
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Old 07-20-2019, 02:51 PM   #16
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FDRXX is a little better than SPAXX at 2.04%. SPAXX is currently yielding 1.99%. I use FDRXX in my cash management account.

In my brokerage account I move most of my cash into FZDXX premium MM fund currently yielding 2.23%, or it gets transferred out to a high yield savings account if higher yield is available.

FZDXX requires $100K initial investment, but after that you can draw it down to a much lower amount. Minimum may be as low as $2K - that’s buried somewhere in the prospectus.
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Old 07-21-2019, 03:31 AM   #17
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With Fidelity, no need to move excess cash to the brokerage:

In the Fidelity cash management account you can buy any money market fund. I routinely move any large cash deposit into FDRXX govt cash reserves. The really nice thing is that Fidelity automatically pulls from a MM fund to fund outflows when the core cash is depleted.

When I finally discovered this feature, I started keeping a much larger balance in my cash management account, moving funds in less frequently.
Can you please clarify this? Are you saying that if there isn't enough money in core cash, and you write a check to the electric company on your Cash Management Account that UMB/Fidelity/whatever needs to clear, they'll pull it from whatever holdings are in that account? or only from "money market" holdings? And are money market holdings in that account always FDIC insured?
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Old 07-21-2019, 06:49 AM   #18
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Can you please clarify this? Are you saying that if there isn't enough money in core cash, and you write a check to the electric company on your Cash Management Account that UMB/Fidelity/whatever needs to clear, they'll pull it from whatever holdings are in that account? or only from "money market" holdings? And are money market holdings in that account always FDIC insured?
Yes, if you have say $5 in your core account, and $1000 in a MM fund, and you write a check for $125 to the electric company, Fidelity will automatically pull $5 from your core account, and $120 from your MM fund to fund the check. This is very convenient.

After the core account, they redeem only from the money market funds in the account as these are considered cash. If you look at your Balances view of any Fidelity account, all the MM funds are totaled together and included in available cash for withdrawal.

No, money market funds are not FDIC insured at all. Only the Cash Management Account core fund is FDIC insured because that is held at banks, but unfortunately pays a low interest rate. If you want higher yielding cash that is FDIC insured, then a high yield savings account at a bank is a better option, and do your own transfers to Fidelity as needed. I did it that way for years until MM fund rates improved significantly.
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Old 07-26-2019, 12:06 PM   #19
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My related question is that I see mention of these accounts on my Schwab statement, so maybe there is some automated buy/sell option that I have been overlooking, that would make a Schwab brokerage account more competitive?
  • ValueAdvMoneyFd SWVXX 2.22%
  • SchInvestorMoneyFund 2.19%
I called today and asked about SWVXX. You need to buy shares, and earn about 2% at this time. There is a 24-hour turn-around, so not a great choice if you are a frequent trader.
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Old 07-26-2019, 12:34 PM   #20
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I called today and asked about SWVXX. You need to buy shares, and earn about 2% at this time. There is a 24-hour turn-around, so not a great choice if you are a frequent trader.
Yes. That's the one we use and it appears to be competitive. We just draw once every month of two for needed expenses. Any possible "trade" will come at the end of the year when we look again at AA. So the one day settlement is a non-issue for us. A week to settle would not even matter. It's just a PITA that we have to fool with it at all vs the Good Old Days of automatic MMF sweeps.
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