Standard Life Payment-Processing Delay as Market Dropped

Thrugelmir

will_b said:

Thrugelmir said:

will_b said:

123mat123 said:

SL don't "gain" if you pay a higher or lower price, so no motivation for them to be "imaginative"...

If I give them £1000 to invest in a fund that costs £1 per unit, and they invest it straight away, I get 1000 units.  But if they wait a few days and the price of the units drops to £0.80 per unit, and then they invest, they can buy 1000 units to put in my account for £800, and there's £200 left over.  Overall the gains from processing delays when markets fall might be balanced out by the losses from processing delays when markets rise, but in this case surely that £200 has to go somewhere?  Perhaps I'm missing something!

(EDITED just to add that, although I doubt there is any abuse, it does still seem to me to be feasible, as my simple example aims to demonstrate.)

Cash will be invested according to time and date received not the processing date. The world of business doesn't work in real time. There's a lag. 

But my pension is invested in SLI MyFolio Market V, which is a fund of funds comprised of external funds like:

L&G UK Index Trust

Vanguard FTSE UK All Share Index

Vanguard US Equity Index

So to provide SLI MyFolio Market V units to me, at some point SLI actually has to buy into those funds that they don't have control over, no?  When markets are dropping, the later they buy those funds, the cheaper they get the fund units.

Again, I could well be missing the point, apologies if I am!

At the macro level the fund administrators will know the total amount of cash they have to invest that trading day. Not just from you but all investors. Once the block trade is complete and the units bought. The process will start of allocating the units back to individual investors accounts. 
While you are buying. Remember that many people may well be selling at the current time. Individual accounts will need to be updated accordingly. 
In these turbulent times trading activity from investors is well above the norm. 

dunstonh

SUMMARY: a big payment was paid in to my Standard Life pension on the Tuesday, they didn't process the payment for several days (much slower than usual) as the market was plummeting, but then when they did eventually process it, they bought my fund units at the earlier higher price rather than the later considerably-lower price.  So I got considerably less fund units as a result.

That is exactly what they should do and all the big insurers do it.  Standard Life prefund contributions and tax relief as well.

This time of the year for pension/investment companies is a bit like Christmas weeks for shops.   You get all the company directors and self employed making ad-hoc lump sums before the end of business year/tax year.    With the drops in values, top ups will increase in volume but so will the calls from the nervous.

will_b

That's great, thank you everyone.  I've updated my original post just to summarize the discussion so that people don't see it and think Standard Life were doing anything wrong when it is clear to me now that they weren't.

Thrugelmir

will_b said:

That's great, thank you everyone.  I've updated my original post just to summarize the discussion so that people don't see it and think Standard Life were doing anything wrong when it is clear to me now that they weren't.

Fully understand your concerns. These are troubled times which causes all sorts of personal anxiety. Keep asking questions as they arise. They'll be plenty of people around to answer them in the days ahead! 

will_b

Thrugelmir said:

will_b said:

That's great, thank you everyone.  I've updated my original post just to summarize the discussion so that people don't see it and think Standard Life were doing anything wrong when it is clear to me now that they weren't.

Fully understand your concerns. These are troubled times which causes all sorts of personal anxiety. Keep asking questions as they arise. They'll be plenty of people around to answer them in the days ahead! 

Thanks!  I'm glad I posted here before calling Standard Life and wasting their time and embarrassing myself