This is a strange take. Many brokerages, like Fidelity (their “Cash Management Account”) let you write checks, send ACH, or send wire’s directly from the brokerage. They even have a debit card. It also has an account number that you can use to pay bills, it’s exposed by fidelity as a “checking” account type.
For me, Fidelity IS my bank for daily life. I only go to a physical bank like chase / bank of america if I need to deposit cash, or i need to withdraw a lot of cash.
For daily life yes, for large amounts of money, the extra layer due to not being a real bank makes a huge difference.
> large amounts of money, the extra layer due to not being a real bank makes a huge difference.
Can I ask why?
You need to get the money to an actual bank, an extra hop is just extra delay and cause for problems. See links to examples of failed wire transfer below.
In theory correct because large sums of money wired out of an account can be subject to holds for any number of reasons.
But it’s the same with banks too. The only difference is there is one fewer party in the transaction to trace (whereas Fidelity has to work with UMB which is their bank partner).
But the probability of a hold is the same, which is usually very low. I’ve been with Fidelity for over a decade now and have never had large transactions held.
Wire transfer is not really the point. It became a topic because that was posed as an "instant" way to get money out of a brokerage. I pointed out it isn't always reliable and that unreliability is a symptom of a real liquidity difference.
The point is that if I demanded money from you, you can give me your money out of a bank immediately, simply by walking into one. You cannot get money out of a brokerage account for me. You need it transferred for you to a bank first before it becomes your money. This is an actual difference to me who wants money from you now and it's not in theory.
That’s a fair point.
I guess for me it’s extremely rare for me to need (large amounts of) money “now” apart from daily needs but that’s usually charged to my credit card and paid off from my Fidelity cash management account on an interval.
I can see in emergency situations where that is true. But the currently level of liquidity that I get with brokerage accounts + cash management account works for 99.99% of my use cases.
I’m willing to take the higher interest in MMF for what is a negligible impact to liquidity for my use cases.
You can spend directly out of a money market fund at Fidelity. Yes, there is a bank involved in some transactions behind the scenes, but there is no delay and no extra step to take by the customer.
what do you recommend then? To transfer large amounts to my personal bank via ACH, and then perform a wire from my physical bank?
Keep some funds in a marginable brokerage account attached to a major bank, one with physical locations. That way if you really need funds immediately during banking hours you're good to go.