"Elle" <elle_navorski[at]nospam.earthlink.net> wrote in message
news:tYYwe.2107$8f7.747[at]newsread1.news.pas.earthlink.net...
- quote -

Today, on their website:

"[A]lthough you can have only one core account, you can still invest in the
other money market fund options. However, only your core account will have
check writing privileges and be used to process transactions such as
deposits in your brokerage account."

http://personal.fidelity.com/account...t/account.html

Of course, you can't believe everything you read.

This page (which I've cited before) also says that "available funds" (used
for paying checks) includes only your core account and available margin if
you have a margin account. Despite that limitation, checks written against
your core account will pull money out of Fidelity MMFs in the brokerage
account, if needed.

Fidelity did respond to my written inquiry on this matter, and confirmed
that while they'd like you to keep enough money in your core account to
cover checks, they will *automatically* pull money from Fidelity MMFs to
cover. Emphasis added.

But all of this is still different from saying that one can write checks
against the MMFs directly.

- quote -

Is it a brokerage account or a mutual fund account? "Individual account"
only specifies form of title, not type of account, e.g.
Brokerage account:
https://accountsetup.fidelity.com/ft...y?rt=brokerage

Funds account:
http://personal.fidelity.com/accounts/pdf/fachngreg.pdf

- quote -

Quoting the word "free" implies some qualification. What is it (i.e. when
is free not free)?
--
Mark Freeland
nBeOwXs[at]pacbell.net

"dumbstruck" <dumbstruc[at]gmail.com> wrote
- quote -

When did they tell you this?

As far as I know, and as of about a year ago, this is exactly what I have
with my Fidelity individual account.

The check pads are even "free."

- quote -

Maybe this is why Fidelity told me they don't allow check writing for a
money market within the brokerage. I think you want a money market,
either checkless within the brokerage or in a seperate fidelity
non-brokerage account with checks (and your core account checkless).
Especially with interest rates rising, money market funds are
worthwhile parking places, although don't have to be primary ones or
have checks.

Personally, I would rather give up margin than protect it by extreme
measures of no check or debit card access to core/cash account.
Prevents shorting but you can still invest in bear funds, although
maybe incurring short term penalties. I had hoped to do some ETF
shorting, but a Yahoo article claimed only orders for the big 3 or so
ETFs are accepted most of the time in actual practice due to some
dysfunctional incentives.

Etrade has just introduced some money market funds as choices for
cash/core accounts, although there is some tradeoff (limited checks per
month?). I think both Fidelity and Etrade are much preferable to
Ameritrade and TDWaterhouse, although who knows what the merger of the
latter will bring.

BreadWithSpam[at]fractious.net wrote:
- quote -

No kidding! I don't recall the exact circumstances/broker, it was some
years ago. But I definitely remember the conversation on the phone,
"look at the scanned account agreement, 'Margin' isn't checked off." And
it wasn't, but the account had turned into a margin account and a margin
transaction honored. They reversed it back to a cash account but I was
never clear about exactly how it had happened.

(dusting off cobwebs from head)...with another one where this happened,
there was an ACAT transfer in of some securities, from what was a margin
account at another firm, into a non-margin account. The source account
did not have a negative cash balance (outstanding loan). It may have
been something with ACAT that coded over the securities as margined, and
a Big Back Office Computer said, "oh, margined securities but
non-margined account, change account to margin". I wasn't clear on where
the error came from, but it did become a margin account w/o the "Margin"
box being checked on the application.

Neither of these was at Fidelity, BTW.

-Tad

Tad Borek <borekfm[at]pacbell.net> writes:

- quote -

Well, I imagine it depends if it's an account for which one
has signed a margin agreement. I have on my main brokerage
account so "overdrawn" would mean "potentially huge margin
loan against my holdings" instead of bounced checks. Of
course I want to minimize ACH (and paper-check) access to
that account!

But for a non-margin account, I expect that checks would
actually bounce. I'd hope so, at least. Honoring an outside
transaction (ie. check, ACH) is different from the brokerage
giving certain amount of time to deposit cash to settle, say,
an equity trade.

- quote -

Ewww. That's hideous. No way should something *imply* a margin
agreement - especially something which could easily be triggered
by outside fraud - like faked checks.

- quote -

Better safe than sorry. It's not like an outside checking
account costs much (ie. free) and sending cash from the brokerage
to the checking account by EFT is pretty painless, even though it
does take a couple of days.

--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

"Mark Freeland" <nBeOwXs[at]pacbell.net> writes:

- quote -

For this reason, I have no ATM card at all with Fidelity. And
I complained when my bank tried to give me a debit card
instead of an ATM-only card. They gave me an ATM-only card.

- quote -

Yech.


--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

"Tad Borek" <borekfm[at]pacbell.net> wrote in message
news:zsBwe.1227$0V3.1160[at]newssvr13.news.prodigy.com...
- quote -

It is a valid concern, assuming that you trade on margin (i.e. have a margin
account), which may or may not apply in your case. Conversely, one can set
up an account at a bank with overdraft protection, that is subject to
similar risks, albeit it smaller (because the overdraft protection is
unsecured and thus generally more limited).

Fidelity lets you designate the brokerage account as a cash account, which
will not cover overdrafts:

"'Available funds' refers to the money available to you on any given day. It
is calculated by taking the collected balance in your core account plus any
available margin loan value if you have a margin account."
http://personal.fidelity.com/account...t/account.html

- quote -

ATM cards with Fidelity have a different problem. This is my form of
paranoia - I do not want debit cards; it is easier to challenge items on a
charge card. But a debit card is the only form of ATM card from Fidelity.
http://personal.fidelity.com/product...nt/cards.shtml

- quote -

An interesting possibility, but not something I see in the Fidelity
Brokerage Customer Agreement or Margin Account Agreement. (As always, this
not intended as legal advice - I'm just observing on what I see, which may
or may not reflect reality.)
http://personal.fidelity.com/accounts/pdf/custagree.pdf

Specifically, the brokerage agreement, absent a margin agreement, reads:
"I understand that checks will be dishonored if the collected balance in my
account is insufficient to honor a check in full." Section 7, p. 3. Later
in that same section, the agreement does define "collected balance" as "the
total value of the core account and margin loan", ibid at 4.

But in Section 9, it specifically notes that "all debit items includ[e]
checks" and "payment of any debit items ... will be made first from amounts
contributed by [the investor] and available that day, or from the proceeds
of redemption of transaction fund shares [i.e. core account balance], and
second, *should [the investor] ... have selected the margin option, from
margin loans*" p. 9. Emphasis added.

So there is an explicit statement that creating a debit (e.g. writing a
check) does not trigger a margin agreement (otherwise the emphasized clause
would have no force).

Curiously, though, it appears I was wrong about shielding cash in other
MMFs. The sentence I was quoting above about sources of money to cover
checks goes on to say: "third, should these sources prove insufficient or
not applicable and at Fidelity's discretion, [payment will be made] from
other Fidelity MMFs in [the investor's] account, which [Fidelity] is hereby
authorized to redeem to pay such items."

Whoops.

I think I'll send Fidelity a note, since this appears to be in contradiction
to the marketing page I quoted above, saying that they could only tap into
your core account and margin (if you had a margin account), but not
specifically your MMFs.
--
Mark Freeland
nBeOwXs[at]pacbell.net

Mark Freeland wrote:
- quote -

I think this is a valid concern. For any brokerage account I'd be sure
to check whether an "overdrawn" check/debit from that core account will
be honored, and trigger a margin loan against the brokerage account
holdings. I think it does with Fidelity retail but I'm not sure.

If there's margin on the account you see this when you go to an ATM, it
sometimes shows a number available for withdrawal that's based on the
margin amount not the MM balance. So you're in a dark alley while
trekking in some third-world country, and the ATM spits out a receipt
with a big number on it. Yeesh!

And I've seen it happen with some brokerage firms even when it looked
like there wasn't a signed margin agreement on file. I'm not sure if it
was a mistake or if it was buried somewhere in the brokerage account
agreement - that overdrawn checks are an assent to the margin agreement,
or something like that.

For such an account (margin) there is that concern...you have $500 in
money market, $150k in stocks, and someone figures out how to write a
sizable debit or check against the account - up to the margin amount not
just the $1k in MM.

Separating checking & brokerage entirely is the surest way to guard
against this. I haven't heard of this kind of theft happening (yet) but
it seems possible.

-Tad

<BreadWithSpam[at]fractious.net> wrote in message
news:yob4qbhnv7j.fsf[at]panix1.panix.com...
- quote -

You can mitigate risk by (mentally) reclassifying the Fidelity cash account
as your "transaction" account, or as Fidelity calls it, your "core" account.
Think of it is your checking account - the place from which you write checks
or transfer money to cover expenses, including, yes, purchases of
securities.

This account can be separate from your "cash" account, where you keep idle
cash. It might be Fidelity Cash Reserves (which pays a higher rate of
interest than "Fidelity Cash"), or a Spartan MMF (which pays a higher rate
of interest than the corresponding non-Spartan fund you are restricted to in
the core account), or any MMF you want.

You'll still have the problem of moving money between the two accounts, but
that's no different than what you do now - it will also be faster, because
you won't have to wait for ACH transactions to clear. I've been told by
Fidelity that many people use Cash Reserves with a brokerage account
precisely because it does give a better return. The "firewall" is just a
side benefit (or, depending upon your point of view, a side annoyance :-).
--
Mark Freeland
nBeOwXs[at]pacbell.net

"sid" <sridhara[at]yahoo.com> writes:

- quote -

I've been uniformly pleased with Fido's customer service. Even at
odd hours of the night, I've had no trouble getting help.

- quote -

I'm actually not a fan of using my brokerage's cash account as
a checking account. Maybe I'm a little paranoid, but I prefer
my checking account to be entirely separate. I can do electronic
transfers between my brokerage account and my checking account but
having to do that myself acts as a firewall between them. Since
I don't hand out checks from my brokerage account and I don't
enable electronic transfers from my brokerage account to anywhere
other than my checking account, it minimizes the possibility that
someone (on purpose or by accident) can suck away at funds from
my brokerage account.

In any case, I'm overall quite happy with Fido. Their website
doesn't suck, services are generally priced reasonably, and the
collection of products one has access to through them is excellent.

--
Plain Bread alone for e-mail, thanks. The rest gets trashed.
No HTML in E-Mail! -- http://www.expita.com/nomime.html
Are you posting responses that are easy for others to follow?
http://www.greenend.org.uk/rjk/2000/06/14/quoting

sid wrote:
- quote -

Fidelity customer service is excellent. I have never encountered an
outsourced rep.

- quote -

I would think it would make things worse (just my guess).

I was thinking of switching to Fidelity from TDWaterhouse because of
some unpleasant customer service experiences (they seem to have
outsourced customer service). I don't trade very much and can keep the
minimum they need to avoid any fees. A well functioning online banking
tied to brokerage account is very important for me. Fidelity has a
single money management account that you can use as checking account
also whereas TDW keeps checking and brokerage accounts separate. Other
than this I know very little about Fidelity brokerage/banking. Will the
recent merger with Ameritrade change things in any way at TDW? If for
the worse, I want to run out the door quick. What do others think?