I recently opened a CMA account as a replacement for a
Vanguard Cash Plus account. That is, an account where we could access a better yielding treasury only MMF and get a decent yield on FDIC-insured money (non-sweep). My SO also opened a new IRA (for promotion $$) and I added to my existing IRA for promotion $$. The experience has been largely disappointing.
On the plus side:
- good promotions: fairly high bonuses for fairly low amounts brought in; relatively short 90 period for bonus
- BofA Preferred Rewards (based on Merrill balance):
increases cash back on BofA credit cards
- Decent rate on FDIC-insured account (though not a sweep account)
- Access to high yielding (institutional)
MMFs with $1 mins On the minus side:
- 24 hr phone service is limited; was told I needed to wait until 8AM for "financial advisor" to be available to deal with some issues
- preferred award system missed one new account in calculating level of benefits we were qualified for
- bond research/trading issues
Trading Treasuries:
- cannot buy Treasuries at auction except through rep with fee
- search tool is limited
--- no depth of book
--- does not display bonds if min purchase quantity is greater than one (i.e. greater than $1K)
- cannot buy a bond, even by CUSIP, if min purchase required is more than one bond
We have these accounts for the plusses above. We don't really use them for trading. E*Trade also offers access to higher yielding third party MMFs.
Comments
Leveraged or inverse ETFs.
- Vanguard won't allow purchases of ETFs such as QLD.
- Fidelity requires you to sign a statement affirming that you're a sophisticated investor, you've done your own research, you're investing aggressively, you know what you're doing.
- Schwab requires you to sign a similar statement, though tailored specifically to leveraged and inverse funds.
- Merrill puts up a big warning with content similar to the above agreements when you place a buy order for these ETFs (e.g. very volatile, not suitable for long term investing) but doesn't require you to sign anything or block the purchase.
Nontransparent actively managed ETFs.- Vanguard has no problem with purchases of ETFs such as CAPE and TCHP.
- Fidelity warns about this but permits purchases.
- Schwab has no problems, no warnings.
- Merrill doesn't seem to care about transparency per se, but blocks CAPE (not TCHP), sort of like Vanguard and leveraged ETFs. Merrill just says that CAPE is flaky (poor tracking and/or volatile). It gives the same (and more) warnings about leveraged ETFs but lets you trade leveraged ETFs.
QLTY is definitely an oddball at Merrill.According to this page, Merrill blocks ETPs on a case by case basis, rather than categorically like Vanguard and leveraged ETFs. However, Merrill does (for some such ETFs) allow you to sign a "hold harmless" agreement similar to what Fidelity requires for you to buy leveraged ETFs.
Alternative or nontraditional ETFs.
- Vanguard has no problem with purchases of ETFs like CCOR, PHDG, or HYIN.
- Fidelity requires you to sign the same statement as with leveraged ETFs.
- Schwab has no problems, no warnings.
- Merrill blocks these (as it blocks QLTY), but is fine with another nontraditional bond ETF, HYHG.
It's likely that one can trade most of these ETFs at Merrill after agreeing to "hold Merrill harmless" for whatever happens.One can argue that Merrill is superior in that it actually screens ETPs rather than block them categorically. One can argue that other brokerages are better because you know just by the type of an ETF whether you can trade it there. Merrill is clearly atypical. I'd call it weird, but that might sound political