Bells & whistles savings account.

Instead of performing a high-wire act with one's finances, you can take advantage of a service that is popular at almost all major brokerage firms, mutual fund companies and banks. Sometimes referred to as an asset management account, cash management account or central asset account, this relatively new personal financial management service is an all-purpose savings vehicle. It combines checking, a money-market account, brokerage margin account, and usually a bank credit card.

The first account of this kind was Merrill Lynch & Co.'s Cash Management Account. Since its debut nearly a decade ago, other brokerages and financial institutions have emulated the account, only modifying the name. A key benefit is that it allows clients to park their dollars in a money-market fund with added interest instead of a low-interest or even a noninterest-bearing savings or checking account. "An asset management account affords savers the opportunity to constantly have their money working for them," notes Vernon Brown, a certified financial planner and partner with Bilal, Brown & Williams in Tarrytown, N.Y.

The central features of these savings vehicles are almost the same: minimum account size, money-market investments, check writing, credit or debit card, interest sweep and a consolidated balance statement. Beyond the scheme of things, however, all asset management accounts vary widely, and any interested investor would be wise to window-shop different vehicles before committing his or her hard-earned savings.

Asset management accounts are not for everyone. That's obvious from the start, since these accounts require an initial deposit that can run fairly steep. Generally, account minimums range from $5,000 to $25,000 (in cash or securities). Usually, there's also an annual fee for managing the account, which may run between $25 and $120.

For many investors, the most attractive feature of an asset management account is the "sweep." This is where all accumulated interest, dividends or proceeds from the sales of securities are swept into the selected money-market fund. So, the money in the account is reinvested continuously. The sweep is usually done either daily or weekly, depending on the company. With some accounts, the sweep is not done if the funds are below a set minimum balance.

Checking It Out

Asset management accounts let clients write checks against their money-market deposits. Checking is typically free, and you can write as many drafts as you like with no limit on the check amount. Another convenience is a bill-paying service now offered with many asset management accounts. Rather than write checks, the account owner can simply get on the phone once a month and say, "Pay my mortgage, pay my utilities, pay my car payments." The account manager will then take the money out of the account and pay the bills.

Other added features of asset management accounts include free traveler's checks and the use of account credit cards in automatic teller machines. Most accounts usually offer Visa, Mastercard or American Express credit cards. This attractive plastic, however, does have some limitations. For instance, with many accounts, the card is actually a debit card where charges are immediately deducted from the cash in the account. Others are the standard credit card with charges billed monthly.

The real value of an asset management account can easily be seen at the end of the month with the issuance of the account statement. It is extremely thorough and concise. If for example, a person bought stocks with Paine Webber, had a checking account at CitiBank and acquired items with an American Express card, at the end of the month, each transaction would be reconciled and tallied in a single statement.

Asset management accounts bring order where once there was chaos, according to Thomas Littauer, president of Fidelity Preferred Services, a division of Boston-based Fidelity Investments. These accounts allow personal money management to be handled more efficiently and more effectively.

Managing personal accounts has become even easier as sponsors of asset management accounts refine their programs. With some accounts, the checks can either be coded or marked for a tax category and when the statement is issued, it not only lists the category to which checks were written (i.e., travel) but whether the checks went to tax-deductible payments.

Account owners can also borrow against cash and securities in an asset management account. So, if you had $50,000 worth of General Motors (GM) stock and $5,000 in money-market funds, but you've decided to buy a $22,000 Jeep Cherokee, the check would clear and a debit would be created in the account against the value of the GM stock.

Finding Quality And Service

If there is any real hard decision in regards to asset management accounts, it's where to establish them. The options can be broken down into three basic categories: full-service brokerage, discount brokerages and other types of investment services or a financial institution.

Where one goes depends on what one needs. With the full-service brokerage, you will get investment consultation from a stockbroker--but pay for it in commissions. With a discount brokerage, you maintain active investments but you'll get no consultation, and commissions are discounted.

For anyone who wants the convenience of an asset management account, but is not an active trader (most banks do have associated discount brokerages), the bank is the best place to be. Some banks do assign a personal banker to a customer with the opening of an asset management account.

Other differences: Asset management accounts at brokerages are not insured by the Federal Deposit Insurance Co. (FDIC), although coverage is available under the Securities Investor Protection Corp. In the past, a big difference between bank and brokerage asset management accounts was truncation, or the holding of canceled checks. Brokerage accounts did not truncate, but banks did. Not all banks do this anymore, and if this is an important consideration, check to be sure it's still done.

It makes perfect sense for anyone who has sufficient capital to open an asset management account, according to Phil Johnson, Phoenix-based certified financial planner. "Everyone needs a place to park money, and this is a good way to do it to get the highest yields on a short-term basis." So, for those seeking convenience in their savings account and better interest rates, an asset management account is worth consideration.