In: Categories » Legal and finance » Investing » Checking Out Hybrid Online Banks and Brokerages
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The Financial Services Modernization Act of 1999 allowed banks and brokerages to offer a full menu of financial products and services. This deregulation, among other things, means that your brokerage can offer you the same products and services as your bank, including having your accounts insured by the Federal Deposit Insurance Corporation (FDIC). Combining your bank and brokerage can reduce the amount of fees you have to pay and the time you spend online monitoring your accounts. Kiplinger’s (www.kiplinger.com) has coined a new name for these combination entities — bankerages. Bankerages offer asset management accounts that combine your banking accounts and brokerage accounts. You receive a monthly statement that reflects all the activities of your bankerage accounts (which can even include an equity line of credit with your bankerage). Banking with your brokerage has many advantages. For example, you can easily transfer money from your brokerage account to your banking account, savings, or money market fund. (I talk more about money market funds in Articles 6 and 12.) When it’s tax time, all the information you need is in one easy-to-find location. Another advantage of having all your financial asset information at one location is that you don’t have to visit Web sites that are scattered around the Internet to determine the status of your portfolio. The following lists several of the attributes you should look at when evaluating a bankerage: Account aggregation: This trait enables you to see simultaneously all the different types of investments and accounts you have with one financial institution. Low brokerage charges: Some bankerages offer low-cost commissions for sales personnel. Mutual fund management and brokerage fees charged by bankerages are also low. Wide range of services: Some bankerages offer incredible amounts of high-quality research. Other online bankerages provide cost-basis information so that you can easily determine your taxable gains or losses. Bill-payment services: Some online bankerages provide free bill-payment services. (For more about online bill-payment services, see Article 17.) Low banking fees: Banking fees charged by bankerages can vary widely. Some online bankerages offer free or low-fee ATM costs. Some bankerages have sweep account programs that automatically transfer funds above (or below) a certain amount to higher-interest-earning accounts at the close of each business day. Good rates: Some bankerages offer higher yields on certificates of deposit (CDs) than others. Additionally, some bankerages offer higher rates on interest-bearing checking accounts than others. The following are a few examples of bankerages: Fidelity (www.fidelity.com) states that applying online takes approximately 10 to 15 minutes. If necessary, you can save your application and return within 30 days to complete it. Fidelity is a winner when it comes to low banking fees, low brokerage fees for index mutual funds, and research. NetBank (www.netbank.com) offers an online application. If you don’t like online applications, you can always download its paper application. Applicants need a U.S. Social Security number to apply for an account. Citibank (www.citibank.com) requirements to open an account include U.S. citizenship with a U.S. address, a driver’s license or state ID, and a second form of identification, such as a U.S. passport, credit card, or U.S. military ID. All applicants must be at least 18 years old and provide a valid Social Security number, mother’s maiden name, and employment address. If you’re not a U.S. citizen, try calling 800-374-9700. Wells Fargo Bank (www.wellsfargo.com) allows you greater control of your finances with just one password. With Wells Fargo OneLook, you can securely manage both your Wells Fargo and non–Wells Fargo accounts. You have online access to your bill-paying services, checking, savings, credit card, mortgage, loans, and investment accounts.
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