Using a Brokerage "Cash Management Account" as Primary Checking

I’ve done this in the past and have one now, with Wells Fargo Advisors (the former A.G. Edwards, if anyone remembers them). I’ve always called them ‘Brokerage Checking’ accounts (each firm has a different name for them, but usually has one, and the cash portion is ‘swept’ (hence the term ‘sweep’, which is sometimes used) into a money market or FDIC-insured or government fund account each day.

My idea was basically this: Put my payroll (or part of it) into the account, then pay my bills from it, and then, at the end of the month, move whatever money was left over into an investment as even a conservative one (e.g., income fund) is far better than a savings or checking deposit account. Then you don’t have to ‘commit’ a portion each month and it should work easier psychologically, at least for me.

I think the idea is sound, however it has not worked for me. The reason is the abysmally poor interest rate in the ‘sweep’ portion where the cash goes. Wells Fargo Advisors (not WF bank, which I don’t deal with if I can help it due to the low-quality customer-service reps who answer the phone) pays around .12% (or .0012) at present. As a result, I pay everything out of that account first as even my regular CU checking is far superior to that and I never have anything left over to move to the Intuitive Investor (robo-advisor ETF account) that I have with them.

Fidelity seems better at least to me, as they provide sweep options for their brokerage checking account (like multiple funds to pick sweep options, as most used to do) and one of them is a government bond fund paying around .7-.8% which is at least reasonable for money to sit for a month or two until my bills cycle. Then I can use Fidelity GO (their robo-advisor) or just move it into a fund (perhaps the whole idea of robo-advisors is a silly fad that does not really save any money over picking a good actively-managed fund).

I asked fidelity a long time ago why they seemed to give decent accounts to people just starting out (even though I am not just starting out any more) and they said that it worked for them to build loyalty and a good customer base who stayed with them. I think i may give that a try - you never know, perhaps they were telling the truth.

Anyway, I hope this ramble is helpful. Just how I was thinking about this particular topic.