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Not everyone needs all-in-one asset accounts


No, you don't necessarily need to have one.

That's been my reply for years to anxious investors who wonder if they're behind the times by not having their money in a sophisticated all-in-one asset management account.

Originated by Merrill Lynch & Co., this modern concept of consolidating one's assets in one place and sweeping idle cash into a money market fund has spread throughout the financial services industry to other full-service brokers, discount brokers, mutual fund companies and banks.

Some popular features include a consolidated statement each month, check-writing privileges, credit card, automated teller machine card and cut-rate loans.

Many firms offer less expensive varieties with fewer features, in addition to costlier examples that give you the works.

"Competition for asset management account business is fierce," observed Kurt Cerulli, principal in Boston-based Cerulli Associates, which does consulting work for the financial services industry.

"Reflecting this, accounts have gotten more flexible in terms of check-writing, permitting smaller and more checks per month rather than the $250 or $500 requirements of the past."

Fact is, you can be a completely savvy and competent investor without having one of these, instead holding entirely separate savings, checking, brokerage and credit card accounts in several different places.

If you're smart enough to keep track of your money, you'll be able to do so no matter where it is. In addition, many folks prefer to have their money spread around among several firms. You just may find that the less sophisticated accounts you hold now have fewer fees and lower minimum balance requirements.

Only consider an asset management account if you're completely sold on the convenient idea of consolidation, and if superior service or products really make it worth your effort.

A firm obviously likes the idea of having as much of your money as possible, enhancing its chance of selling you more products and gaining fees from more of your account activities.

Realize that not all asset management accounts are alike.

Your choices therefore should be based upon the size of your holdings, the way that you typically invest, the features most valuable to you and the likely returns from investments that will be available.

You must shop around, and even then you'll find making a choice somewhat confusing because everyone's working hard to make their product unique.

Minimum initial investments, depending on the asset management account chosen, can be $25,000, $20,000, $10,000, $5,000 or $500. Some have no annual fees, while others charge between $80 and $125 for an account with a credit card.

Many have no minimum balances, while others require $2,000 to $10,000, or that you have assets with the institution totaling $100,000.

Some offer as many as 14 money market funds and a bank account, others just four.

Merrill Lynch offers not only its traditional Cash Management Account with $20,000 minimum requirement and $100 annual fee, but a Capital Builder Account requiring $5,000 and $60 annual fee.

That latter account charges you for some of the features of the CMA.

"The most popular features continue to be the large family of funds and the fact money is swept automatically into a money market fund," explained John Galvin, vice president with Merrill Lynch.

While Fidelity Investments still offers its original Enhanced Ultra Service Account requiring $25,000 and $60 annual fee, its U.S.A. Ultra Service Account requiring $10,000 and no annual fee is especially popular.

"Fidelity began the revolutionary idea that this kind of account could be offered without a fee when some 'bells and whistles' aren't included, thereby starting a general trend toward reducing fees," said Donna Morris, senior vice president with Fidelity.

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