Brokerage Firm as Your Bank

Discussion of the Cash portion of the Permanent Portfolio

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Tom
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Brokerage Firm as Your Bank

Post by Tom » Fri Sep 18, 2015 12:46 pm

I'm at the point where I have enough emergency cash that I've gone full in Permanent Portfolio with the rest of my money.  I've been toying with the idea of separating my permanent portfolio cash from my emergency cash and start using Fidelity as my "bank" where I deposit my weekly paychecks so it's easier to track the cash portion of my portfolio.

I'd get a debit and credit card through them and pay all my bills that way - out of the cash portion.  Once the cash portion exceeds the 35% band I will rebalance into whatever assets need it and maybe move a little of that cash into my short-term treasury fund so it's not all basic cash.

Wondering if anyone does this or any thoughts on pros and cons to doing it this way as opposed to a traditional bank checking/savings account?
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Re: Brokerage Firm as Your Bank

Post by dualstow » Fri Sep 18, 2015 1:05 pm

- If your cash isn't safe at Fidelity, it's not safe anywhere, so nothing wrong there.
- I have looked into the Vanguard debit card, but even bogleheads aren't that excited about it. They don't like the way the statements look. Of course, the money is managed fine.
- I use a Fidelity American Express card that gets 2% back. The redeemed cash goes into a Fidelity cash account, but it's so small that I haven't bothered to characterize it as pp or not. I don't deposit earned money there.
- The reason I keep a local bank account is mainly because
                            A) I have a safety deposit box there;
                            B) if I use competitors' ATMs, the fee gets waived.
                            C) Some vendors prefer local checks. This one is nearly obsolete because I don't write checks at stores, but I guess a check with a local address & local *bank* is still useful in some bureaucratic situations.

If you go the Fidelity route, please do report back on your experience!
Last edited by dualstow on Fri Sep 18, 2015 1:06 pm, edited 1 time in total.
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Tom
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Re: Brokerage Firm as Your Bank

Post by Tom » Fri Sep 18, 2015 1:22 pm

dualstow wrote: - If your cash isn't safe at Fidelity, it's not safe anywhere, so nothing wrong there.
- I have looked into the Vanguard debit card, but even bogleheads aren't that excited about it. They don't like the way the statements look. Of course, the money is managed fine.
- I use a Fidelity American Express card that gets 2% back. The redeemed cash goes into a Fidelity cash account, but it's so small that I haven't bothered to characterize it as pp or not. I don't deposit earned money there.
- The reason I keep a local bank account is mainly because
                            A) I have a safety deposit box there;
                            B) if I use competitors' ATMs, the fee gets waived.
                            C) Some vendors prefer local checks. This one is nearly obsolete because I don't write checks at stores, but I guess a check with a local address & local *bank* is still useful in some bureaucratic situations.

If you go the Fidelity route, please do report back on your experience!
Will do - I think I'm going to do it.  I'm going to give them a call today.  I'm still going to have a regular bank account that just sits, but I can always dip into it in an emergency and then replenish, so I think it's safe enough to do the rest through Fidelity.  Will simplify my finances a bit.  I'll let you know if I go through with it and what I think.
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Re: Brokerage Firm as Your Bank

Post by PP67 » Fri Sep 18, 2015 1:31 pm

Just wish Fidelity would start handling physical safe deposit boxes as well as virtual ones!

It would be great to have a "private" safe deposit box service that is not controlled by the banking sector but that is also insured and reputable...

http://www.barrons.com/articles/fidelit ... 1428728251
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Re: Brokerage Firm as Your Bank

Post by dualstow » Fri Sep 18, 2015 1:58 pm

I wasn't able to view the full Barron's article, but is this the service? https://www.fidsafe.com/
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Re: Brokerage Firm as Your Bank

Post by sophie » Fri Sep 18, 2015 4:35 pm

So you're going to use Fidelity's cash management account?  I'm curious to see how you like it.  I've been using an online bank for convenience and the relatively high interest rate on savings.  And to avoid fees - I got thoroughly fed up with Chase on that score.

Keeping an account at a brick and mortar bank is definitely a good idea.  The online or brokerage banks not only don't have safe deposit boxes, but they also will not handle foreign checks or Ach transfers, can't give you cashier's checks unless you are willing to risk having them sent via US mail, and can't give you a medallion stamp when you lock up your Treasury Direct account (which I just managed to do, yuk).
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Re: Brokerage Firm as Your Bank

Post by mathjak107 » Fri Sep 18, 2015 4:59 pm

We use fidelity as a cma account and do all our bill paying and direct deposits through them. Been using them as a bank for 25 years.

I use fidelity 85% and vanguard about 10%. I use local banks for about 5%
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Re: Brokerage Firm as Your Bank

Post by PP67 » Fri Sep 18, 2015 5:12 pm

dual, I couldn't get you link to work but if you google "Fidelity virtual safe deposit box", the Barron's link shows up and you can read the article...  At least I did a minute ago...
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Re: Brokerage Firm as Your Bank

Post by Tom » Fri Sep 18, 2015 5:18 pm

sophie wrote: So you're going to use Fidelity's cash management account?  I'm curious to see how you like it.  I've been using an online bank for convenience and the relatively high interest rate on savings.  And to avoid fees - I got thoroughly fed up with Chase on that score.

Keeping an account at a brick and mortar bank is definitely a good idea.  The online or brokerage banks not only don't have safe deposit boxes, but they also will not handle foreign checks or Ach transfers, can't give you cashier's checks unless you are willing to risk having them sent via US mail, and can't give you a medallion stamp when you lock up your Treasury Direct account (which I just managed to do, yuk).
Yes, I'm going to try out their cash management account.  I just set it up actually and I like it so far already.  I was able to fund it with money from my core account in 30 seconds.  One thing I hated about them being separate was having to transfer cash from my bank account.  To not pay a wire fee I'd do an electronic funds transfer, but that would take about 5 days and at that point prices of what I wanted to buy would be totally different.  With all my cash in Fidelity I'll now be able to transfer funds and make the purchase immediately.

Just waiting on my debit and credit card now and to set up Bill Pay.  I'll then be fully functioning with it.
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Re: Brokerage Firm as Your Bank

Post by mathjak107 » Fri Sep 18, 2015 5:23 pm

About the only thing i don't like is the brokered cd's at fidelity are quite low. I would like to increase them to 90% of my business but i still use local banks for cd products.

We are  private access clients and get special perks like webinaires and web meetings with fund managers.
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Re: Brokerage Firm as Your Bank

Post by dualstow » Fri Sep 18, 2015 8:19 pm

PP67 wrote: dual, I couldn't get you link to work but if you google "Fidelity virtual safe deposit box", the Barron's link shows up and you can read the article...  At least I did a minute ago...
Ok, thanks. My link is still clickable over here on my screen, for what it's worth.

--
Sophie, have fun unlocking your treasury direct account. I waited for years and years before jumping through all the hoops. I figured I'd leave it locked and protected from ID thieves while I wasn't using it.
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Re: Brokerage Firm as Your Bank

Post by sophie » Mon Sep 21, 2015 4:42 pm

dualstow wrote: Sophie, have fun unlocking your treasury direct account. I waited for years and years before jumping through all the hoops. I figured I'd leave it locked and protected from ID thieves while I wasn't using it.
I know, I was thinking about your experience with this in fact!  I'm glad you got it unlocked finally.  Why on earth did they have to make it so complicated???

I have to go visit a bank for a medallion stamp and then mail in the form.  Is there more to it than that?
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Re: Brokerage Firm as Your Bank

Post by Fred » Mon Sep 21, 2015 5:18 pm

Not clear if this is what you were thinking but Fidelity actually has a banking service through UMB bank. I use it as my bank, depositing both mine and my wife's paychecks into it and paying all my bills from it. Makes it really easy to transfer from your bank to/from any Fidelity account. All ATM fees worldwide are refunded into your account so you actually have better access to ATM cash without fees than you would with a local bank. And if you need to deposit a check, like everything nowadays, there's an APP for that on your smartphone.

I can't see myself ever taking advantage of it but if you have more then 250k that you keep in the bank they have a way of sweeping the accounts into different banks and getting around the FDIC limit. I think you can keep up to a million and have it still be insured.
Last edited by Fred on Mon Sep 21, 2015 5:20 pm, edited 1 time in total.
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Re: Brokerage Firm as Your Bank

Post by dualstow » Mon Sep 21, 2015 5:55 pm

sophie wrote:
dualstow wrote: Sophie, have fun unlocking your treasury direct account. I waited for years and years before jumping through all the hoops. I figured I'd leave it locked and protected from ID thieves while I wasn't using it.
I know, I was thinking about your experience with this in fact!  I'm glad you got it unlocked finally.  Why on earth did they have to make it so complicated???

I have to go visit a bank for a medallion stamp and then mail in the form.  Is there more to it than that?
If memory serves, no. The frustrating part for me is that more than one phone rep told me I would not need the medallion stamp, "if you could just answer a few simple questions." It was no use telling each rep that failing those questions got my account locked in the first place. Rather like telling a paranoid person that everything is fine and no one is out to get them. So, I played along and failed the questions to their great surprise.

Why did I even bother to call more than once? Because I considered unlocking the account several times, always months apart, and wanted to make sure I had the most current forms from them. In the end it was very easy, and I should not have bothered with the phone until the forms were submitted.
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Re: Brokerage Firm as Your Bank

Post by Libertarian666 » Sat Oct 03, 2015 9:32 am

sophie wrote: So you're going to use Fidelity's cash management account?  I'm curious to see how you like it.  I've been using an online bank for convenience and the relatively high interest rate on savings.  And to avoid fees - I got thoroughly fed up with Chase on that score.

Keeping an account at a brick and mortar bank is definitely a good idea.  The online or brokerage banks not only don't have safe deposit boxes, but they also will not handle foreign checks or Ach transfers, can't give you cashier's checks unless you are willing to risk having them sent via US mail, and can't give you a medallion stamp when you lock up your Treasury Direct account (which I just managed to do, yuk).
Fidelity handles foreign currency transactions very well, as far as I know. My brother is getting an annuity payment from a foreign bank, in foreign currency, and it goes into his Fidelity foreign currency account. They charge 1% when he wants to convert it to dollars, which is a bit high but not totally ridiculous. And since his regular bank can't/won't handle it at all, this is a big improvement.
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Re: Brokerage Firm as Your Bank

Post by foglifter » Sat Oct 03, 2015 1:21 pm

Fred wrote: Not clear if this is what you were thinking but Fidelity actually has a banking service through UMB bank. I use it as my bank, depositing both mine and my wife's paychecks into it and paying all my bills from it. Makes it really easy to transfer from your bank to/from any Fidelity account. All ATM fees worldwide are refunded into your account so you actually have better access to ATM cash without fees than you would with a local bank. And if you need to deposit a check, like everything nowadays, there's an APP for that on your smartphone.

I've used my Fidelity debit card many times while traveling overseas and always got a good exchange rate when getting local currency from ATMs. Also, according to the rep Fidelity does not charge foreign transaction fee on ATM transactions, 1% fee is deducted only if you make a purchase (which I never do as I use CapitalOne credit card for purchases).

Fred wrote: I can't see myself ever taking advantage of it but if you have more then 250k that you keep in the bank they have a way of sweeping the accounts into different banks and getting around the FDIC limit. I think you can keep up to a million and have it still be insured.

Fidelity gives a very detailed information about "program banks" as well as the realtime status of what balances are kept in which banks. In my experience even smaller amounts (few hundred $) are spread over 2-3 banks. You have a full control over which banks you want or don't want to use. Here's the list of banks currently available for my account:


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Re: Brokerage Firm as Your Bank

Post by Tom » Fri Oct 09, 2015 12:02 pm

I'm all set up with my debit and credit card and have all my bills switched over to this account now.  Only thing I'm waiting on is my wife's credit card and our checks.  But so far so good - has really simplified things already and I haven't noticed a difference from using a regular bank.
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Re: Brokerage Firm as Your Bank

Post by foglifter » Fri Oct 09, 2015 12:16 pm

Another great tool from Fidelity is Full View. I'm using it to track all my banking, retirement, and credit card accounts.
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Re: Brokerage Firm as Your Bank

Post by MachineGhost » Fri Oct 09, 2015 3:07 pm

foglifter wrote:
Another great tool from Fidelity is Full View. I'm using it to track all my banking, retirement, and credit card accounts.
mathjak mentioned that in another thread.  Is it comparable enough to replace Quicken?
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Disclaimer: I am not a broker, dealer, investment advisor, physician, theologian or prophet.  I should not be considered as legally permitted to render such advice!
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Re: Brokerage Firm as Your Bank

Post by sophie » Fri Oct 09, 2015 5:06 pm

Thank for the tip Foglifter!  It works very well, and incidentally Fidelity's security has got to be better than Intuit's.

I doubt it would be a total quicken replacement, but it depends on what you do with it.  This is easily enough for what I need it to do (i.e. record transactions in YNAB).
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