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Tax-Exempt Market User Manual
(RIA Users on Advisor CHANNEL® 6.8)
Table of Contents
1. Getting Started
2.
3.
4.
5.
6.
7.
8.
A. Establishing Your Firm with Fidelity Investments
B. Forms You May Use
C. Transfer of Assets
Training
A. How to Sign Up
Technology and Portfolio Management Systems
A. Installing Fidelity Advisor CHANNEL® 6.8
B. Supported Portfolio Management System Vendors
Account Access
A. Downloading data
B. Viewing All Versus Individual Accounts
C. Adding Additional Authorized Individuals
Trading and Investing
A. Trading Individual Accounts
B. Order List/Order Status
C. Creating Models and Rebalancing
D. Future Contributions and Elections
E. Electronic Trading Rules
F. Excessive Trading Rules
Payment of Investment Advisor Fees
A. Manually Submitting Fee Requests
B. Electronically Entering Fee Requests
C. Importing Fees to Excel
D. Submitting Fees
Servicing Accounts
A. Participant Account Communications
B. Distributions
C. Authorizing Additional RIA Employees
D. Fidelity Investments Resources to Support You
Appendix
A. Confirmation Letter – Example
B. Revocation Letter – Example
C. Common Errors for Tax-Exempt Market Trades
D. Excessive Trading Policy Letter – Example
E. 403(b) Account Trading Letter – Example
F. NIGO Letter – Example
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1. Getting Started
As with any new account management tool and process, it is best to familiarize yourself with the
capabilities of the program. We hope this guide will assist you in understanding the capabilities
and process of working with Fidelity Investments and Tax-Exempt Employer retirement plan
accounts.
A. Establishing Your Firm with Fidelity Investments
It will be important to work with your 403(b)/Tax-Exempt RIA Wholesaler to understand the
rules and regulations of interacting with clients in this market. They will need to confirm your
information and have it on file. The required information will consist of:
• Primary Contact
• Company Name
• Company Mailing Address
• Phone Number
• Fax Number
• SEC Registration or State CRD Number
• Tax ID for the Company
• URL
• Portfolio Management System, if your company is using a system. Please note: Not all
portfolio management systems are supported. Please check with your regional
representative.
Contact your regional 403(b)/Tax-Exempt RIA Wholesaler below, organized by state:
• Thayer Rogers – thayer.rogers@fmr.com – 800-308-4068 (AL, AR, FL, GA, LA, MS,
NC, NM, OK, SC, TX)
• Michael Welton – michael.welton@fmr.com – 866-588-3776 (CT, DC, DE, IN, KY,
MA, MD, ME, MI, NH, NJ, NY, OH, PA, RI, TN, VA, VT, WV)
• Karen Zaleta – karen.zaleta@fmr.com – 866-715-6560 (AK, AZ, CA, CO, HI, IA, ID,
IL, KS, MN, MO, MT, ND, NE, NV, OR, SD, UT, WA, WI, WY)
B. Forms You May Use
We recommend taking the time to familiarize yourself with our RIA Agreement, participant
forms, and applications you may need, and the rules and requirements of the plan.
You will receive a standard package, which will include:
• RIA Capabilities Brochure
• RIA Resource Guide
• RIA Agreement
• RIA Authorization Form
• Account Application and Transfer Forms
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All RIA agreement, authorization, and account forms should be mailed to:
Standard Mail:
Fidelity Investments
P.O. Box 770002
Cincinnati, OH 45277-0090
Overnight Mail:
Fidelity Investments
100 Crosby Parkway, KC1E
Covington, KY 41015
Standard Forms
Forms can be obtained by:
•
•
•
Visiting our website: www.fidelity.com/temria
Contacting your 403(b)/Tax-Exempt RIA Wholesaler, or
Accessing Laser App Software’s forms library (only most commonly used forms)
Below are descriptions of the most commonly used forms.
RIA Agreement Form
This form allows Fidelity to recognize you or your firm as a licensed RIA with the state, the
SEC, or both.
RIA Authorization Form
This form authorizes Fidelity to take trading and future allocation mix instructions from you, on
behalf of your client, the plan participant. The Authorization form must be completed and signed
by you, by the participant, and by the employer (if required) and received by Fidelity.
Please call the Advisory Services Group at 888-766-6815 to confirm if a plan allows for trading
and fee deduction, or contact your 403(b)/Tax-Exempt RIA Wholesaler.
•
Only individuals listed on the form will be able to call in and request information on the
account. If individuals besides the RIA require access to manage the account, please be
sure to list their names on page 3 of the form. If more than four individuals need access,
please attach a letter listing all individuals on company letterhead.
Account Application Forms
• This application is used to establish a new Tax-Exempt account with Fidelity
Investments.
• Please note that there are two versions of this form:
ƒ 403(b) Custodial Account Application Form – for individual contract
agreement (ICA) plans, such as voluntary or supplemental 403(b) retirement plans
ƒ Account Application/Enrollment Form and Beneficiary Designation – for
group contract agreement (GCA) retirement plans
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•
•
Please be sure the participant completes the Investment Options section. If the Investment
Options section is not complete, future contributions will be invested in the plan’s default
fund.
Please note: This form will only establish the account. Additional forms are required to
transfer assets from another vendor or establish payroll deduction such as a Salary
Reduction Form or Change of Carrier Form.
Transfer/Rollover Form
The Transfer/Rollover form is used when the participant may have an existing retirement plan
account held with another vendor. To move the assets to Fidelity Investments, the plan must
have Fidelity as an approved vendor.
• Other vendors may have their own forms to complete so it is important for the end
participant to see if there are additional forms or special requirements such as a
Medallion signature guarantee.
• Transfers in the Tax-Exempt market are non-ACAT and take up to 10 business days, if
all forms are in good order.
• It is important to understand the current holdings at the other vendor to determine if there
are surrender fees or other charges if the account is liquidated and transferred (generally
found in annuities or mutual funds with contingent deferred sales charges).
• All transfers will be liquidated and come into the Fidelity account as cash.
Workplace Savings Contribution Form
• All contribution requests and changes of dollar amounts or percentage of salary must be
processed via the employer either by their own Salary Reduction Form (some employers
may have their own forms or have an online submission process).
• All contribution forms should be sent to the Human Resources department, NOT Fidelity
Investments.
• Please note: Some plans use a customized contribution form. The participant should
always confirm the exact form required for use to avoid delays in processing.
C. Transfer of Assets
To transfer funds from another vendor, it is important to:
• Confirm Fidelity is an approved vendor for the plan. Please contact the Advisory Services
Group at 888-766-6815 or contact your 403(b)/Tax-Exempt RIA Wholesaler.
• Confirm if there are any costs associated with the transfer such as a surrender fee from
the other custodian.
• Select the asset allocation on the transfer form. If the allocation is not selected, the funds
will transfer and be placed in the plan’s default mutual fund (typically a money market or
lifecycle fund).
Transfers are a manual process; they are not part of the ACAT system. The account will be
liquidated and cash will be transferred to Fidelity Investments.
It is important to work with a Fidelity retirement counselor when transferring funds. Retirement
Counselors have the ability to track the transfer and provide information to you in the event the
application is Not In Good Order (NIGO).
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It is Fidelity’s policy to notify participants in writing if any of their requests are NIGO. Please
note: A duplicate copy is not sent to the advisor.
2. Training
A. How To Sign Up
To obtain a listing of training classes, please e-mail fiws.training@fidelity.com. In the body of
the e-mail, please request a listing of the next dates and times for the “403(b) Account and
Trading” course. Provide your name, company name, and G number. You will receive an e-mail
back listing the next available course. To sign up, e-mail fiws.training@fidelity.com and
provide the date and time for the course you would like to attend.
3. Technology and Portfolio Management Systems
Fidelity offers high-tech solutions to help you manage participant accounts. Through the Fidelity
Advisor CHANNEL 6.8 software, you will be able to:
• View accounts, investment elections, history, positions, balances, and transactions
• Upload investment elections
• Build model portfolios
• Rebalance portfolios
• Deduct fees directly from participant account(s) – quarterly, semiannually, and annually
if the plan allows for the feature
• Batch trades – upload mutual fund trades for all accounts
• Access our dedicated Technology Support and Training Groups
Please note: You must have the Fidelity Advisor CHANNEL 6.8 software to access the account
information.
Contact Technology Support at 800-523-5518. When asked for your 5-digit customer ID, please
enter 28115 and then select 3. Hours of operation are weekdays from 8 a.m. to 8 p.m. Eastern
time.
A. Installing Fidelity Advisor CHANNEL 6.8
Fidelity will provide you with a G number and PIN to access the Fidelity Advisor CHANNEL
6.8 software. Once you obtain this information, contact Technical Support for assistance in
installing the software and setting up your download. Also, please refer to the Fidelity Advisor
CHANNEL 6.8 software installation guide, which will be provided to you in the set-up process.
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B. Supported Portfolio Management System Vendors
Fidelity supports drivers that can accept the exports from Fidelity Advisor CHANNEL 6.8 to a
portfolio management software program. In addition, Advisor CHANNEL includes a driver that
allows you to customize account information. Current systems supported are:
• Advent*
• Advisors Assistance
• Albridge*
• BlackDiamond
• Captools
• Custom Export
• Dbcams
• EZ-Data
• FIN
• Morningstar
• Navi-Plan
• Orion*
• PortfolioCenter/Centerpiece
* These vendors receive a direct data feed for all brokerage and tax-exempt accounts. All other
vendors require an export of data and a file to be fed into the portfolio management software.
Some drivers may require additional steps. Please contact the portfolio management vendor for
specific instructions on how to access the Tax-Exempt 403(b)/FPRS accounts and determine if
there are any additional fees.
Advent
• Direct data feed from Fidelity to Advent
• Obtain interface from Advent to accept 403(b) information
Albridge
• Direct data feed from Fidelity to Albridge
• Account can only be linked to one G number feeding to Albridge or account information
will be duplicated
• Contact Albridge and provide them with your G number and a few account numbers;
they will then have to turn on the data feed using this information
PortfolioCenter/Centerpiece
• File exported from Fidelity Advisor CHANNEL 6.8
Custom Export
• Ability to export information out of system into proprietary system
Orion
• Cannot directly obtain 403(b) accounts on current data feed
• Need to export information from Fidelity Advisor CHANNEL 6.8 and share with vendor
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BlackDiamond
• Cannot directly obtain 403(b) accounts on current data feed
• Need to export information from Fidelity Advisor CHANNEL 6.8 and share with vendor
4. Account Access
Viewing Accounts through Fidelity Advisor CHANNEL® 6.8
The software allows you to view all accounts, positions, balances and transactions at once or by
going into individual account views.
View Account Listing
Users can choose to View All Accounts or View Individual Accounts (Account Summary).
View All Accounts
from the toolbar or select Accounts
To view all accounts at once select the Accounts icon
> Accounts from the drop-down menu. This will provide a listing of all accounts. You can
decipher the tax-exempt accounts versus your other brokerage accounts by the account number.
The account numbers will be 14 digits long (nine digits followed by a dash and the five-digit
plan number).
View Individual Account
To view an individual account, select the Account Summary icon
or select Accounts >
Account Summary from the drop-down menu. This screen will show you one account at a
time. To change between clients, click on the Accounts drop-down and select another client
from the listing.
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To view Positions, Balances, or Transaction history, the user has the option of viewing all
accounts or viewing one account at a time. To select all Positions, Balances, or Transactions,
either select the corresponding icon in the main toolbar or select the Accounts drop-down and
make the desired selection.
Additional notes on viewing account information
• Column headings can be arranged or removed from view by right clicking on any screen
and selecting edit columns. Reorder columns left or right or remove the ones you do not
need to view. This will only affect the screens on your selected computer.
• The positions screen on the tax-exempt accounts may list the same fund multiple times.
On tax-exempt accounts, the source codes are tracked, so you may have a listing of the
employer source code (funds contributed by the employer) and another listing of the
same fund with the employee source code.
Adding or removing authorized individuals to accounts
If you have a new hire or a previous employee who is no longer working for the organization,
you will need to update who has authorized access to the existing Tax-Exempt accounts. All
requests should be faxed on company letterhead to the Tax-Exempt Market Operations Group at
877-808-3432.
Adding authorization for a new employee
Please send a fax on company letterhead to the Tax-Exempt Market Operations Group at
877-808-3432. In the fax, please summarize your request asking that a new authorized individual
be added to all the company’s Tax-Exempt retirement plan accounts. Please list the individual’s
name, company name, address, phone number, and G number and specify the type of access they
should have:
• View Only
• View and Limited Trading
• View, Limited Trading, and Fee Deduction
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Removing authorization for an employee
Please send a fax on company letterhead to the Tax-Exempt Market Operations Group at
877-808-3432. In the fax, please summarize your request asking removal of an authorized
individual from all Tax-Exempt accounts under your company name. Please list the individual’s
name, company name, address, phone number, and G number.
5. Trading and Investing
After you have learned how to view the accounts, you’ll want to spend some time getting
familiar with how to trade and adjust future contributions, which are referred to as elections
within the program. The Fidelity Advisor CHANNEL® 6.8 software allows you to trade an
individual account, create a model and rebalance an account(s), and change the investment mix
for future contributions using the election screen.
Important Notes
• Certain mutual funds have short-term trading fees. Please consult the individual mutual
fund prospectus for further details.
• Certain mutual funds have a $250 minimum for exchange, unless the entire position is
being closed out. Please consult the individual mutual fund prospectus for further details.
• Trades are exchanges between funds in the tax-exempt accounts. You do not buy or sell
funds; instead, they are exchanged.
• Please be sure your software already has a listing for the Fund ID in the security master.
If you do not find a listing, please contact technical support for assistance on how to add
the Fund ID prior to trading.
• The actual dollar amount withdrawn from the individual’s paycheck cannot be adjusted
through the software. Please have the employee contact the employer to adjust the
withdrawal amount from future paychecks. Please note: This request does not happen
immediately. Please allow time for processing of this request by the plan sponsor.
• The tax-exempt accounts do not have core sweep funds; all funds must be invested in a
selected mutual fund or money market.
These are a few common issues. Again, please consult the individual mutual fund prospectus(es)
for further details.
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A. Trading Individual Accounts
You access the Order Ticket screen to add an order for an individual account or group.
1. You can either:
Click the Order Ticket icon
in the toolbar.
OR
Using the Fidelity Advisor CHANNEL 6.8 toolbar, select Trading > Order Ticket.
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If you are adding an order for a FITSCo retirement account, use the FPRS tab and enter the
relevant information for the ticket:
•
•
•
•
•
•
Account
Account Source
Quantity
Quantity Type
Fund ID
XChg Fund
NOTE: The Action field defaults to EF – Exchange to Fund and cannot be
edited.
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B. Order List/Order Status
The Order List shows the current status of all orders submitted to Fidelity via Fidelity Advisor
CHANNEL 6.8, as well as those received through other means, such as phone, fax, and other
electronic trading applications. You can sort orders by any of the columns in the window or
change the column viewing order. The contents are updated when you download the latest order
status from Fidelity. This download updates the list to reflect the current status of your clients’
orders, thereby providing intraday information on their trade order status. You can perform a
majority of your work on client orders (e.g., editing, holding, and canceling and replacing orders)
using the Order List.
Viewing the Order List
1. You can either:
Click the Order List icon
in the toolbar.
OR
Using the Fidelity Advisor CHANNEL 6.8 toolbar, select Trading > Order List.
The Order List displays:
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2. Clicking on (highlighting or selecting) an entry in the list activates a set of icons (related to
order functions) in the toolbar.
You can also access these functions by right-clicking on an entry in the Order List.
NOTE: You should spend time customizing the layout of the Order List to
best meet your needs by removing columns that may not be important to you
and changing column sizes to maximize data layout without scrolling.
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Sending Orders
You can send orders in one of two ways.
1. You can either:
Click the Order List icon
in the toolbar.
OR
Using the Fidelity Advisor CHANNEL 6.8 toolbar, select Trading > Order List.
2. The Order List screen displays. There are four ways to send an order at this point.
•
Right-click an order in the Order List and choose Send Orders in the shortcut menu that
displays.
•
Highlight an order and click the Send Orders button
screen.
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on the Order List
•
Using the Fidelity Advisor CHANNEL 6.8 toolbar, select Interface > Connect.
•
Click the Download Data icon
in the Fidelity Advisor CHANNEL 6.8 toolbar.
3. If you choose one of the first two methods, the Send Orders screen displays. Send Orders
and All Orders are the default selections. However, you can choose to send just the selected
order or orders or just the orders for the current user. After making your decision, click the
Call Now button to transmit the selected orders.
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If you choose one of the last two methods, the Connect dialog screen displays. Select Send
Orders and then choose whether to send all orders or just those for the current user. Click the
Call Now button to transmit the selected orders.
NOTE: Sending Orders does not send Allocations. Allocations must be sent
separately.
Retrieving Order Status
You may also want to retrieve the status of orders you placed on behalf of your clients. Fidelity
Advisor CHANNEL 6.8 makes it simple to get up-to-date information on your order status. The
process can be done in one of two ways.
1. You can either:
Click the Order List icon
in the toolbar.
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OR
Using the Fidelity Advisor CHANNEL 6.8 toolbar, select Trading > Order List.
NOTE:
• When you update your order status, the Order List displays all orders no
matter their origin. For example, it shows those submitted for Fidelity
Advisor CHANNEL 6.8 and AdvisorChannel.com, those called in to
the Trading Desk, and those submitted via a third-party order
management system.
• For a complete list of status codes, refer to the online help using the key
word “Order Status” or by pressing [F1] on your keyboard.
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2. The Order List screen displays. There are four ways to retrieve your order status at this point.
•
Right-click anywhere in the Order List and choose Order Status in the shortcut menu
that displays.
•
Click the Order Status button
•
Using the Fidelity Advisor CHANNEL 6.8 toolbar, select Interface > Connect.
•
Click the Download Data icon
on the Order List screen.
in the Fidelity Advisor CHANNEL 6.8 toolbar.
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3. If you choose one of the first two methods, the order status downloads. If you chose one of
the second two methods, the Connect dialog screen displays. Select Request Order Status
and click the Call Now button.
C. Creating Models and Rebalancing
(Individual or Group of Accounts using AllocatorPro)
Allocator Pro is a suite of modeling tools that may help you to automate the investment process,
increase the quality and consistency of your portfolio construction, and reduce trading errors.
Portfolio modeling is handled using the Rebalance Account function found in the Allocator Pro
menu. Rebalance Account allows you to rebalance an account or a group of accounts against a
specific model. Models are sample portfolios that include mutual fund securities with an
assigned percentage.
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Models Overview
Models are portfolio tools you can create to determine the quantitative positions your client
accounts should be holding based on your interpretation of current market conditions for your
brokerage and FITSCo retirement accounts. You can define a model either by creating a new one
or by basing it on an existing model or account. A model must contain at least one security.
For each security added to the model, you must define the target percent of holdings you want to
achieve. A model’s total target value must be balanced, meaning it must equal 100% before you
can save it. When current account holdings fall outside the target values, you can rebalance the
account based on the model assigned to it. When rebalancing occurs, exchange orders are
generated for tax-exempt accounts to bring holdings in line with the established target values.
You also must specify a tolerance range above (maximum) and below (minimum) the targets you
establish.
Viewing the Model List
Using the Fidelity Advisor CHANNEL 6.8 toolbar, select Allocator Pro > Model List.
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A screen displays showing the currently defined Models.
Creating a Model
1. Using the Fidelity Advisor CHANNEL 6.8 toolbar, select Allocator Pro > Model
Definition.
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The Model Definition screen displays.
The column titles of the Model Details section of the screen vary with the radio button
selection for the Min/Max Values criteria.
The screen above is the Percent selection. The screen below is the Dollars selection:
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2. Complete the Model Name field and click the Add button to display the Add Model
Definition screen.
3. The fields that display on the Add Model Definition screen vary with the choice of the
Min/Max Values criteria on the Model Definition screen. The example shown below is the
Percent selection. Complete the fields for the model and click OK.
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4. The information you established on the Add Model Definition screen displays in the Model
Details section. Use the buttons on the side of the screen to add, edit, or delete criteria. Click
OK when you are finished.
NOTE: You cannot save a model until it is balanced.
If you attempt to do so, a warning message displays
and prevents you from saving it.
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Assigning a Model
1. Using the Fidelity Advisor CHANNEL 6.8 toolbar, select Allocator Pro > Model
Assignment.
The Model Assign screen displays.
NOTE: Assigning a model does not create trades nor does it automatically
balance an account against that model.
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2. Select the model you want to assign from the Models drop-down menu.
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3. Choose the accounts to assign to the model. The Account Group drop-down menu selects
the overall account category. You can then refine your assignment by:
•
•
•
Selecting the Unassigned account only check box.
Selecting the Select All Accounts check box.
Individually selecting accounts in the list (click on an account to select it). Use Shift
Click to select a series of accounts in order or use Ctrl Click to select individual
accounts in the list.
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4. Click the Assign button. The selected accounts display in the Assigned Accounts area of the
screen.
5. Click the Save button to complete the assignment.
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NOTE: You can also assign a model:
•
Using the Model drop-down menu on the Owner tab of the Account Summary screen.
•
By right-clicking on an account in the Accounts List screen and selecting Assign
Model from the shortcut menu that displays.
•
By clicking the Assign Model icon in the Account List toolbar.
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Unassigning a Model
1. Using the Fidelity Advisor CHANNEL 6.8 toolbar, select Allocator Pro > Model
Assignment.
The Model Assign screen displays.
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2. After selecting the model from the Models drop-down menu, select the account(s) in the
Assigned Accounts section of the screen and click the Unassign button.
3. The accounts move from the Assigned Accounts field to the Account field on the left of the
screen. Finish by clicking the Save button.
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Rebalancing Accounts
To understand the robust capabilities of Allocator Pro, we suggest you attend a training class. To
learn when the next course is being offered, e-mail fiws.training@fidelity.com. In the body of
the e-mail, please request a listing of the next dates and times for the rebalancing course. Provide
your name, company name, and G number. You will receive an e-mail back listing the next
available courses. To sign up, e-mail fiws.training@fidelity.com and provide the course date
and time you would like to sign up for.
Using the Fidelity Advisor CHANNEL 6.8 toolbar, select Allocator Pro > Rebalance Account.
When current account holdings for your brokerage and TEM retirement plan accounts fall
outside the target values of their assigned model, you can use the Rebalance Account function to
bring these holdings back in line. When you perform a rebalance, exchange orders are generated
for the tax-exempt account to bring holdings back in sync with the target values without
deviating from the tolerable minimum and maximum ranges.
Note: Rebalancing an account effects how the existing funds are invested but it does not handle
future contributions (money coming into the account). Please be sure to also adjust future
contributions.
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D. Future Contributions and Elections
Contributions are the dollar amount of funds being sent to Fidelity from the employee’s payroll.
The funds are invested based on the Future Elections established for the account. Elections are
the fund or allocation mix assigned to the account. Different plans may have several source
codes so it is important to confirm you are working with an individual code or all source codes
for a selected plan. Elections have one or more allocations to one or more mutual funds, and the
sum of these allocations must add up to 100 percent. Users can review all elections for all
accounts or review the elections established for the individual account.
Review All Elections for All Accounts
Select Accounts > FPRS – Election List. The display window will show all elections. You can
then sort this screen by account number or other column headings.
Review Individual Account Elections
Select Accounts > Account Summary > FPRS Elections tab. This will provide you with an
individual view of the existing investment elections.
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Adjust the Election Mix
While the advisor cannot change the dollar amount being pulled from the paycheck, they can
adjust how the funds are invested in the account. You can change an election mix for an
individual account, all accounts you have authorization to under a select plan, or change the
elections for a specified group of individuals. To adjust the election mix select Accounts >
FPRS – Election Details. You can now select if you will work with an individually selected
account, selected plan, or selected group. After the adjustments have been entered, the user will
need to send the requested changes to Fidelity for processing.
Notes
• You must use whole percentage amounts and not fractional amounts
• Please note: This will adjust the way future contributions are invested in the account; it
does not alter how the existing funds are invested today.
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Election Detail Screen Shot
Once you have adjusted the elections, you must send the requested changes to Fidelity. Select
Systems > Connect to Fidelity. Check off the “Send FPRS Elections” and then hit the “Call
Now” button.
E. Electronic Trading Rules
You must comply with the Fidelity Advisor CHANNEL 6.8 electronic trading rules when you
create and place client orders.
In some cases, Fidelity Brokerage Services LLC trading restrictions override Fidelity Advisor
CHANNEL 6.8 electronic trading rules. Therefore, changes to these restrictions may affect the
trading rules at any time and without notice. If you have further questions about these rules,
please contact the Advisory Services Group at 888-766-6815.
General Rules
•
•
•
You must have a current margin agreement on file with Fidelity before you can trade on
margin in a brokerage account.
You can only purchase mutual funds in a cash account. Most mutual funds become
marginable after being held for 30 days or more.
You and your client must be approved by Fidelity Brokerage Services LLC to buy and
sell options using Fidelity Advisor CHANNEL 6.8.
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•
•
You must be approved by Fidelity’s Trading Desk in order to send electronic orders to
buy and sell options.
If you do not want your order displayed in the quote according to SEC order handling
rules, please contact Fidelity’s Trading Desk to process the order.
Mutual Fund Exchange Rules
•
Exchanges may only be performed between funds in the same fund family.
Cross Fund Family Order Rules
•
•
•
•
A Cross Fund Family Order is performed only between different fund families.
In order to place these orders, Third-Party Administrators (TPAs) must have a signed
agreement on file at Fidelity.
Both the buy and the sell sides of a TPA order are executed on the same day.
The buy side of an order is placed upon receipt of the sell-side execution.
F. Excessive Trading Rules
Fidelity has long discouraged excessive trading by mutual fund investors. For many reasons,
excessive trading can be expensive and burdensome for long-term shareholders. It can reduce
returns to long-term shareholders by increasing fund costs, such as brokerage commissions.
Also, it can disrupt portfolio management strategies by forcing untimely and unwanted buying
and selling of portfolio securities.
Historically, we have used a variety of tools to discourage excessive trading in Fidelity funds,
including fair-value pricing, redemption fees, and the monitoring of roundtrip transactions.
In 2004, the SEC announced that funds would need to either implement policies designed to curb
excessive trading, or explain in their fund prospectuses why they felt it was not necessary to do
so. We viewed this as an opportunity to review and further strengthen its policies and procedures
around excessive trading. As a result, we adopted new policies concerning excessive trading,
effective December 2004.
Below, you will find Fidelity Retirement Service’s policy around excessive trading. We believe
that these trading policies along with our continued use of fair-value pricing and redemption
fees, when appropriate, will help protect investors from the costs associated with excessive or
short-term trading and benefit our funds’ shareholders. We appreciate your business and hope
you understand the importance of these policies.
Fidelity Retirement Services Excessive Trading Policy
•
Monitoring is based upon the concept of roundtrip within a fund.
•
A roundtrip transaction occurs when a participant exchanges in and then out of a fund
option within 30 days.
•
“Fund” is defined as:
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ƒ
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Fidelity funds: except Fidelity money market funds
FMTC Commingled Pools, and certain other FMTC products
Non-Fidelity mutual funds where Fidelity is directed to apply this excessive
trading policy by a Fund Manager
Plan sponsor products, at the plan sponsor’s direction
•
For this purpose, exchanges do not include systematic contributions or withdrawals (i.e.,
regular contributions, loan payments, hardship withdrawals) as permitted by the plan,
only participant-initiated exchanges greater than $1,000.
•
Participants are limited to one roundtrip transaction per fund* within any rolling 90-day
period, subject to an overall limit of four roundtrip transactions across all funds* over a
rolling 12-month period.
•
The first roundtrip in any fund* results in a warning letter.
•
Participants with two or more roundtrip transactions in a single fund* within a rolling 90day period will be blocked from making additional purchases of the fund for 85 days.
•
Participants with four or more roundtrip transactions across all funds* within a plan
during any rolling 12-month period will be limited to one exchange day per calendar
quarter for a one-year period.*
•
Participants can still exchange among funds that are not subject to the policy and the
restriction does not impact a participant’s ability to exchange out of any fund.
•
FMR continues to reserve the right, but does not have the obligation, to reject any
purchase or exchange transaction at any time, as provided for in prospectuses and other
governing documents for its mutual funds and other investment products.
•
Fidelity continues to reserve the right to amend these rules in the future.
* For funds subject to the policy.
Also, please note, funds that are not already subject to the policy reserve the right to choose to
adopt the policy at any time. Prior to placing a trade, you should always verify whether the
particular fund is affected by the policy.
6. Payment of Investment Advisor Fees
Not all plans allow for fees to be deducted from a participant’s account. It is important to
confirm that the plan allows for fee deduction prior to submitting fees.
Once the fee requests have been processed, a check will be mailed to the Registered Investment
Advisor.
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A. Manually Submitting Fee Requests
If you do not have access to Fidelity Advisor CHANNEL 6.8, you may still request fees to be
deducted from a participant’s account once Fidelity has received the Registered Investment
Advisor Authorization form. When requesting fee disbursements, you must provide the
following information on company letterhead:
• Plan name and number
• Participant Name and Social Security Number
• Dollar amount of fee
• Mutual Fund (not more than two)
• Source number from which the fee should be deducted (voluntary, employer, employees,
etc.)
• If you submit your fee deductions on a spreadsheet, you must group your requests by plan
name or number (e.g., all participants of the same employer together).
Fax request to 877-808-3432 or mail the request to:
Fidelity Investments
P.O. Box 770002
Cincinnati, OH 45277-0090
Overnight Address:
Fidelity Investments
100 Crosby Parkway, KC1E
Covington, KY 41015
The following restrictions regarding fee deductions apply:
•
•
•
Fidelity Investments will not deduct fees from non-Fidelity mutual funds or annuity
amounts
If Fidelity is unable to process a fee request, Fidelity will call you for further instructions.
If multiple fees cannot be processed, Fidelity will fax a list of the fees to you with an
explanation of the problem.
Page 39 of 52
B. Electronically Entering Fee Requests
The Fidelity Advisor CHANNEL 6.8 software allows you to electronically submit fee requests.
To submit an individual fee amount:
Select Account > Fee Ticket
OR
Select Account > Fee List. The Fee List window displays. Select the Add New Fee Ticket icon
on the toolbar or right-click anywhere on the Fee List and select Add New Fee from the display
menu.
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On the Fee Ticket window, use the drop-down menus to enter your information.
1. Using the Account drop-down menu, select the account to which you want to apply the
fee.
2. Using the Source drop-down menu, select the source of funds for the selected retirement
plan.
3. Using the Fund Symbol drop-down menu, select the fund to which you want to apply the
fee.
4. In the Dollars box, enter the dollar amount to charge.
5. In the Date box, select the date of the fee or use the current date (default) that displays.
This information assists you in managing fees in the Fee List.
6. Click the Create button to save the fee to the Fee List.
7. You will then need to submit the fees to Fidelity.
Note: Review the Fee List before sending to confirm the information is valid and no typos exist.
We suggest spot checking the transaction history to ensure the fees were processed.
C. Importing Fees to Excel
You can create a file in Excel and save to import into Fidelity Advisor CHANNEL 6.8.
1. In Excel populate the following columns with the data using the format given.
A = FPRS Account Number (Text format)
B = 4-Digit Fund ID (Text format) >> Note: Leading zeros are required
C = Source Number (Text format)
D = Fee Amount (Text format) >> Note: No dollar sign ($) or commas (,)
E = Date (Date format: MM/DD/YYYY)
2. Save the file as a CSV (Comma delimited) (*.csv) file to a location on your hard drive.
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3. In Fidelity Advisor CHANNEL 6.8, go to the File/Import/Fees menu selection and browse to
the location you saved the fee file to. In the Browse for Fee Import File dialog box, change
the “Files of type:” to “All Files (*.*)” and then select the fee file. Click on the Open button
after selecting the file. Then click on the Import button within Fees import window (shown
below).
If you wish to rename the .csv file extension to a .txt file extension, you may then open the file in
Notepad or WordPad and view the format.
An example of this is shown below.
999999999-99999,0055,4,100,07/25/2005
You may import the .txt file instead of the .csv file if you prefer.
Add fees for FITSCo retirement accounts by specifying the account, plan name, and fund to
which the fee is applied.
D. Submitting Fees
After the fees have been entered into the system, they will need to be sent to Fidelity for
processing. We recommend you review all fees prior to sending. To review the fees go to
Accounts > Fee List. Confirm the fees listed are correct.
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To submit the fees, select Systems > Connect to Fidelity. Check off the “Send FPRS Fees” and
hit “Call Now.” Your fees will now be sent to Fidelity.
Note: Confirm all fees have successfully been sent to Fidelity. We recommend reviewing the
accounts a few days later to ensure the transaction has processed.
7. Servicing Accounts
Below is a summary of Fidelity Investments communications to your end client:
A. Participant Account Communications
Based on the activity in the account, the following communications may be sent directly to your
client, the plan participant. Please be advised of the various communications and why they may
be sent to your client. Samples of the letters mentioned below are in the Appendix.
•
•
•
Welcome Letter – acknowledgement of account opening.
Excessive Trading Policy – for further details, please read about excessive trading in
Section 5F of this document. See Appendix D for a sample copy.
Not-In-Good-Order (NIGO) – application was received but information provided was
incorrect or incomplete. This can be related to a new account, transfer, or RIA
Authorization form. See Appendix F for a sample copy.
Page 43 of 52
Statements
• Quarterly statements are delivered to participants beginning the second week of the month
following the end of each quarter.
• Once all statements for a particular plan have been delivered, duplicate statements are then
sent to you – plan by plan. Statements are mailed throughout the month. (You may not
receive all your statements until the last week of the month).
If at the end of the statement mailing period you discover missing statements, please call the
Advisory Services Group at 888-766-6815.
B. Distributions
All distribution requests must come directly from the participant via the participant services
group, 800-343-0860.
C. Authorizing Additional RIA Employees to Existing Accounts
Send a fax request on corporate letterhead to Tax-Exempt Market Operations Group at 877-8083432. In the letter to Operations, please state your company name, tax ID number, and G
number, and specify the individual being added. Specify the authorization they should have on
account: inquiry and/or trading. Please state if they are authorized for specific accounts (list the
account numbers) or if they should be authorized for all accounts under the G number.
D. Fidelity Investments Resources to Support You
403(b)/Tax-Exempt RIA Wholesaler Team:
• Thayer Rogers – thayer.rogers@fmr.com – 800-308-4068 (AL, AR, FL, GA, LA, MS,
NC, NM, OK, SC, TX)
• Michael Welton – michael.welton@fmr.com – 866-588-3776 (CT, DC, DE, IN, KY,
MA, MD, ME, MI, NH, NJ, NY, OH, PA, RI, TN, VA, VT, WV)
• Karen Zaleta – karen.zaleta@fmr.com – 866-715-6560 (AK, AZ, CA, CO, HI, IA, ID,
IL, KS, MN, MO, MT, ND, NE, NV, OR, SD, UT, WA, WI, WY)
Tax-Exempt Advisory Services Group– 888-766-6815.
Hours of Operation: Weekdays from 8 a.m. to 5 p.m. Eastern time.
Services include:
• Account information – balances, transactions, history, vesting status, etc.
• Exchanges and Contributions
• Fee Deduction
• Client data not downloaded into Advisor CHANNEL
• Employer plan information – trading and/or fee deduction policy
• Informing you of the available investment options within the plan
• Prospectuses
• Correspondence – account setup, exchange confirms, quarterly statements and transfers
• Individual forms and kits
Page 44 of 52
Retirement Counselors – Contact your 403(b)/Tax-Exempt RIA Wholesaler to determine the
assigned Retirement Counselor for a specified plan.
• Inform you of specific plan rules and policies related to solicitation, marketing, and
communications that may vary from existing rules and policies set forth in this guide.
• Facilitate paperwork in order to set up accounts, transfer assets, or obtain vesting letters
or required signatures from the human resources or benefits office.
• Assist you in tracking transfers; please be sure to share with them the name, plan number,
and SSN of all transfer requests before submitting paperwork.
Fidelity Advisor CHANNEL 6.8 Technical Support team – 800-523-5518.
Hours of Operations: Weekdays 8 a.m. to 8 p.m. Eastern time.
Services include:
• Assist in the installation of software
• Support for technology-related questions
• Exporting data and information from Fidelity Advisor CHANNEL 6.8
Page 45 of 52
APPENDIX
Appendix A
Appendix B
Appendix C
Appendix D
Appendix E
Appendix F
Confirmation Letter – Example
Revocation Letter – Example
Common Errors for Tax-Exempt Market Trades
Excessive Trading Policy Letter – Example
403(b) Account Trading Letter – Example
NIGO Letter – Example
Page 46 of 52
Appendix A: Confirmation Letter – Example
Fidelity Investments Institutional Operations Company, Inc.
P.O. Box 770002
Cincinnati, OH 45277-0090
800-343-0860
September 25, 200x
Jane Doe
101 Main Street
Any Town, FL 33527
Ref: W1111-25SEP07
Dear Jane Doe:
We recently received and processed your Limited Trading Authorization form. Per your request we have
authorized ABC Management to obtain information and receive duplicate statements on your 457(f)
account under University of XYZ. This authorization will be in effect until Fidelity Investments is
otherwise notified in writing. Please be advised that all account statements will continue to be sent to the
address on record of your account.
[Please note: Your plan doesn’t allow individuals other than the participant the ability to place trades on
your 457(f) account. Also, your plan doesn’t allow advisor fee deductions on this plan.] – if required.
If you have any questions, please call a Retirement Services Specialist toll-free at 800-343-0860 or for the
hearing impaired, call 800-259-9743 (TTY), Monday through Friday, 8 a.m. to midnight, Eastern time,
and refer to the reference number noted above.
Sincerely,
Fidelity Investments Institutional Operations Company (FIIOC)
Page 47 of 52
Appendix B: Revocation Letter – Example
Fidelity Investments Institutional Operations Company, Inc.
P.O. Box 770002
Cincinnati, OH 45277-0090
800-343-0860
October 4, 200X
John Doe
1234 Main St.
Houston, TX 77025
Ref: W014564-30SEP07
Dear John Doe:
We recently received a request to revoke trading authorization on your account. Per this request we have
revoked ABC Advisor Investments from trading, receiving duplicate statements, deducting fees, and
obtaining information on your Fidelity 403(b) account under University of Texas.
If you have any questions, please call a Retirement Services Specialist toll-free at 800-890-4015 or for the
hearing impaired, call 800-259-9743 (TTY), Monday through Friday, 8 a.m. to midnight, Eastern time,
and refer to the reference number noted above.
Sincerely,
Fidelity Investments Institutional Operations Company (FIIOC)
Page 48 of 52
Appendix C: Common Errors for Tax-Exempt Market Trades
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
•
261 – Advisor does not have update access to client
266 – Participant SSN/Plan not found in FPRS
266 – Plan/SSN not found on Advisor file
266 – Client is not associated with Advisor
267 – Client has no balance for source/fund
267 – Not enough money in source/fund for fee
267 – Not enough vested money in source/fund for fee
267 – More than one Primary ID assigned to Firm (Solution is to check with TEM Advisor
Maintenance Facility (AMF) to verify if SSN of participant is linked to more than one Primary G
number)
268 – Employer plan not found on plan file (we may no longer be an approved vendor and the
plan is with another company or the employer has changed the plan and a new plan was created
with an updated plan number)
271 – No security access allowed – security error
271 – No available bucket for assigning contribution mixes
272 – Client not found – Check TEM AMF system
272 – Firm not found – Check TEM AMF system
272 – Secondary G# not found – Check TEM AMF system
273 – Invalid source for plan
273 – Firm has no primary IP number (G number)
274 – System unavailable; try again shortly
277 – Trade time has passed for this transaction
277 – Plan/SSN has RIA fee
278 – Client IP already exists
278 – Duplicate client
278 – Rep already exists
278 – Advisor 2nd IP already exists
278 – Firm already exists
279 – Invalid data in fee amount
280 – Source restricted by plan
281 – Plan does not allow update access
282 – Too many Advisor IP #s passed in one segment
283 – More than one 2nd IP for Primary ID
284 – Plan does not allow for Advisor fees to be deducted from the accounts
284 – Advisor does not have update access to client
284 – Client does not allow for fees
285 – Too many funds received for update (max is 30)
287 – Required SSN not supplied
288 – Firm # not found on Advisor file
290 – Advisor has no TAX ID number (update AMF system in TEM)
298 – Total not 100% of mix pct
Page 49 of 52
Appendix D: Excessive Trading Policy – Example
Dear Participant:
Thank you for your recent inquiry regarding your Fidelity Investments employer-sponsored retirement
account. In response to your request, I have included an explanation of our Excessive Trading Policy
below.
Please note: In December 2004, Fidelity changed its monitoring practices for roundtrip transactions
in its mutual funds as part of our ongoing effort to identify and discourage excessive trading.
Fidelity’s monitoring is based upon the concept of a roundtrip within a fund. A roundtrip transaction
occurs when a participant exchanges in and then out of a fund option within 30 days. For these purposes
a “fund” is defined as: 1) Fidelity mutual funds, except Fidelity money market funds, 2) FMTC
Commingled Pools, and certain other FMTC products, 3) Non-Fidelity mutual funds where Fidelity is
directed to apply this excessive trading policy by a Fund Manager, and 4) customized plan investment
options, at the plan sponsor’s direction.
Roundtrip transactions do not include systematic contributions or withdrawals (i.e., regular contributions,
loan payments, hardship withdrawals) as permitted by the plan, and only include participant-initiated
exchanges greater than $1,000. Participants are limited to one roundtrip transaction per fund within any
rolling 90-day period, subject to an overall limit of four roundtrip transactions across all funds over a
rolling 12-month period. The first roundtrip in any fund results in a warning letter.
Participants with two or more roundtrip transactions in a single fund within a rolling 90-day period will
be blocked from making additional purchases of the fund for 85 days. Any four roundtrips across all
funds in a rolling 12-month period will result in the participant being limited to one exchange day per
quarter for 12 months. This applies to all investments subject to the Excessive Trading Policy.
Participants can always sell any fund position. Once the 12-month exchange limitation expires, any
additional roundtrip in any fund in the next 12-month period will result in another 12-month limitation of
one exchange day per quarter.
Fidelity continues to reserve the right, but does not have the obligation, to reject any purchase or
exchange transaction at any time, as provided for in prospectuses and other governing documents for its
mutual funds and other investment products. Fidelity continues to reserve the right to amend these rules in
the future.
If you have any questions, please call a Retirement Services Specialist toll-free at 800-343-0860 or for the
hearing impaired, call 800-259-9743 (TTY), Monday through Friday, 8 a.m. to midnight, Eastern time,
and refer to the reference number noted above.
Sincerely,
Fidelity Investments Institutional Operations Company (FIIOC)
Page 50 of 52
Appendix E: 403(b) Account Trading Letter – Example
[Advisor]
RE: 403(b) account trading at Fidelity Investments®
Dear [Advisor]:
In order to help protect the shareholders of our mutual funds and partners’ funds, please use the following
as a guide to alert Fidelity Investments of any large trades you are placing on behalf of your clients.
Warning calls alert portfolio managers that large trades have been placed in their respective funds.
Portfolio managers utilize warning calls to assist them in their investment decisions. Estimates of funds to
be deposited or withdrawn from a fund allow the portfolio manager to take advantage of investment
opportunities and to plan transactions to support their targeted cash levels.
Purchase limits are established for funds based on its portfolio size. On the buy side, they are used to
limit the amount received so it can be properly invested. On the sell side, they are set up to protect the
other shareholders from large swings of cash.
Each fund has a set warning call dollar limit that is subject to change. The dollar warning call notification
limits are set by the fund companies and are updated periodically based upon fund type.
Please use the following table as a guideline for large trades. If you are placing trades in a fund whose
total exceeds the limit, please call the Fidelity Tax-Exempt Advisory Services Group at 888-766-6815 to
report the trades on the date they are placed.
Fund Group
Fidelity Equity Funds
Fidelity Index Funds
Outside Funds
Vanguard Funds
Call when aggregate trade
per fund is greater than…
$1 million
$500,000
$1 million
All trades
For example, exchanges you place for 20 of your clients into Magellan® for $50,000 each (totaling $1
million) would need to be reported, but 20 exchanges of $25,000 would not require a warning call.
Thank you for your continued relationship with Fidelity, and we look forward to working with you in the
future.
Sincerely,
Fidelity Investments
Page 51 of 52
Appendix F: NIGO Letter – Example
Fidelity Investments Institutional Operations Company, Inc.
P.O. Box 770002
Cincinnati, OH 45277-0090
800-343-0860
March 27, 200x
John Doe
5543 Two-One St
Podunk, UT 84123
Ref: W01234-56MAR08
Dear John Doe:
We recently received your Limited Trading Authorization form. Unfortunately, we are unable to process
your request. A copy of your request is enclosed.
This is what we need to process your Limited Trading Authorization:
(NIGO reasons entered here).
Please return your completed request to Fidelity Investments in the enclosed envelope. We regret any
inconvenience this may cause you. If you have any questions, please call a Retirement Representative
toll-free at 800-343-0860 or for the hearing impaired, call 800-259-9743 (TTY), Monday through Friday,
8 a.m. to midnight, Eastern time, and refer to the reference number noted above.
Sincerely,
Fidelity Investments Institutional Operations Company (FIIOC)
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