Fidelity transfers from cash to non Fidelity funds are not same day

HardCoreProgrammer

The Fidelity website states that orders for Fidelity funds are executed on the same day if received before 12am, while orders for other funds are executed on the same day if recieved on 11am.
However, this is not the case if you are moving from ISA cash park to a Fidelity fund, as I found out. The purchase happens on the next working day.

According to their helpdesk, this is because the Fidelity cash fund needs to be "sold", before the Fidelity fund can be bought on the next working day.

Apparently, to buy the fund on the same day, you need to add money by making a payment from your debit card.
This is counter intuitive and I have asked for written confirmation.
Is anybody aware of this "feature" with the Fidelity platform?a

sunnystart

It does seem a bit odd the way they operate the cash park, I personally would like to buy funds on the day I place the order.

Where Fidelity states that orders for Fidelity funds are executed on the same day if received before 12, I have found to be correct, for non Fidelity funds there is a switch out of the cash park and the purchase happens the next working day.

I think Fidelity need to make changes to improve their platform, especially their website which seems outdated.

HardCoreProgrammer

Yes you are correct. It is transfer to non Fidelity funds which are not same day.

So if I want to buy non Fidelity funds on the same day, I must add money and make a payment from my debit card, rather than do a switch. It does not make sense.
For investments outside ISA, this means I should keep spare cash in my current account rather than cash park. For ISA obviously you cannot do that - money taken out cannot be put back in.

The title of this thread needs to be changed to correct the error.

bowlhead99

Some platforms will 'front' the purchase of a fund with their own money where they know you are selling another fund and would be good for the cash in time for settlement.

It sounds like Fidelity will do this if you are keeping the money in the Fidelity 'family' and selling out of a cash fund or other fund to buy a different one under the same management umbrella, but not if they have to commit the cash to a third party manager.

It is not unusual for funds to work the way you suggest where you have to wait for order to be accepted and start processing to release cash before you are allowed to commit the funds into something else. However, features do vary between platforms so when you decide to pay your platform fee of x% a year, should shop around to see what you can get for your money.

Just think of the 'cash park' as a fund which is invested for you in cash rather than shares. It is a fund, and so there are processes to be gone through, to make actual cash available for investment into something. Whereas with a debit card deposit, they are happy that it's as good as cash.

If your strategy is to be invested in 'funds' (OEICs, UTs etc) rather than in shares or investment trusts or ETFs which are priced every second of every day during market hours, then you are always placing orders to deal at future unknown prices. It is not a real time product where you are trying to grab a price now before it disappears. As such, deploying your cash into the opportunities is presumed to be something that you don't deem time-critical (in the grand scheme of things with a multi-year or multi-decade time horizon, a day doesn't matter) and you wouldn't pay a premium for. In the world of funds investment, a 'switch' has always taken time.

So, it's not altogether surprising they don't offer zero day settlement on the cash fund when buying external funds, even if you personally want to deal same day, others might not be bothered.

I'm not a Fidelity customer, so I can't even confirm if the way you and sunnystart have explained it is the way they think it is 'supposed' to work; just an observation.

puk999

bowlhead99 wrote: »

Just think of the 'cash park' as a fund which is invested for you in cash rather than shares. It is a fund, and so there are processes to be gone through, to make actual cash available for investment into something. Whereas with a debit card deposit, they are happy that it's as good as cash.

Changing the subject a little bit, but when it comes to Fidelity's SIPP, debit card deposits are not immediately invested. At 10am on the 20th October 2014 I ordered £800 of the Fidelity Index World P fund. The order was actually priced/purchased by Fidelity on the 22nd October, by which time the price had moved north.

Looking at my online banking after placing the order on the 20th I could see the available money had gone down by £800, although as expected the transaction wasn't yet listed, but as far as I am concerned the money has been committed/gone. When I queried this with Fidelity they responded:

When making an online top-up for your Fidelity SIPP, the payment has to clear into our client money bank account before we are able to place any deals. If you make the payment using a debit card this process can take up to two working days. I have checked your account and, whilst you placed the deal on the 20 October online, we did not have fully cleared funds until the dealing point of the 22 October and this is when the deal into the Fidelity Index World P-Acc fund was placed.

So it takes 2 working days to clear a debit card payment does it? Why then does an ISA purchase happen on the same day as the OP says?

After more questioning they responded with this:

Thank you for your message of 31 October 2014. I am sorry you feel that we are delaying investments into your SIPP. I confirm that the Fidelity SIPP does not facilitate the pre-funding of investments, which is why they cannot be made on the same day that the instruction is submitted.

Pre-funding of investments is a special feature of some of our other products, such as ISAs, which is why they are dealt on at the next available point. However, when investments are made into the SIPP, we must wait until we have received cleared funds from the customer's bank. This is the cause of the delay.

It is correct that your bank will immediately ring-fence any payment made through our website; however, they do not transmit the funds immediately. As soon as cleared funds are received we will place trades at the next available dealing point.

In this particular instance, the deal was instructed on 20 October 2014 and the money was received by Fidelity at 12pm on 21 October 2014. The deals were then placed for the next available dealing point which was 22 October 2014.

I didn't take it any further as I assume Fidelity know more about the debit card payment system than I do. It does seem bonkers to have that money "missing in action" for a couple of days. How is an investor in UTs/OEICs supposed to take advantage of dips in a volatile market when the platform doesn't consider debit card deposits good?

I feel like I'm having a rant, so if it comes across as that, apologies. I have used Fidelity ISAs for years without much of a problem but their SIPP I find very clunky in this and other ways too. I've got a smaller SIPP with BestInvest which so far I'm really happy with (and 0.05% cheaper too).

HardCoreProgrammer

puk999,
I know that the platform for SIPP is different from the ISA and investment funds. For example menu options are completely different. I would recommend buying funds in the investment fund first, put money into SIPP, then switch in SIPP and switch out in investment on the same day.

There are some investments (not in ISA) I want to transfer from HL to Fidelity. I will do a test transaction for 100 pounds using debit card tonight and report back.

puk999

HardCoreProgrammer wrote: »

puk999,
I know that the platform for SIPP is different from the ISA and investment funds. For example menu options are completely different.

They certainly are chalk and cheese which is a poor experience for the customer having to use two completely different methods.

I would recommend buying funds in the investment fund first, put money into SIPP, then switch in SIPP and switch out in investment on the same day.

Nice idea, but does that imply having double the new capital available and keeping records of the unwrapped investments for tax reporting purposes?

HardCoreProgrammer

I can confirm that when using debit card to buy a non Fidelity fund before 11am, it was priced for the same day, even before the money has left the current account!
Whereas doing a switch from Fidelity cash park, the trade does not happen until the following day. Absolutely mind boggling.

puk999, yes you need double the fund in your cash account to do what I described. It is onlu appropriate if you want to trade immediately (e.g. if market is rising quickly) and eventually put the money in your pension. In the pension board, I described a way where a transferred a pension to Fidelity without being out of the market. Please search for the thread If interested.