FIDELITY TRANSITION FAQS
WHAT IS A CUSTODIAN AND WHY IS THIS RELATIONSHIP IMPORTANT?
As a registered investment advisor, our firm is required to have a custodian. Investments that you entrust to our firm are placed in custody with Fidelity’s clearing firm, National Financial Services LLC (”NFS”). A clearing firm is an organization that, among other things, handles the execution, clearance, and settlement of transactions. A custodian also provides statements, confirms, and tax forms for your financial accounts.
WHY WE CHOSE FIDELITY TO CUSTODY YOUR ASSETS?
A history of putting the client first.
Fidelity has a 75-year heritage of doing what is right for its clients. Their private structure allows them to put our needs ahead of company shareholders. Because of this philosophy, Fidelity has earned a reputation as one of the most recognized and trusted brands in the industry, as evidenced by the record 164% increase in new accounts opened in 2020.(1)
Size,scale,and safety of your assets.
Fidelity is one of the largest financial services providers with $11.2 trillion in assets under administration.(2)
Helping to safeguard your assets, Fidelity has arranged for insurance protection beyond the coverage available through the Securities Investor Protection Corporation (SIPC). While your assets are covered by SIPC up to $500,000, including cash claims limited to $250,000, NFS provides supplemental protection that covers your account over and above this SIPC coverage. The excess of SIPC coverage will be used only when SIPC coverage is exhausted. Like SIPC protection, excess of SIPC protection does not cover investment losses in customer accounts due to market fluctuation. It also does not cover other claims for losses incurred while broker-dealers remain in business. Total aggregate excess of SIPC coverage available through NFS’s excess of SIPC policy is $1 billion. Within NFS’s excess of SIPC coverage, there is no per-customer dollar limit on coverage of securities, but there is a per-customer limit of $1.9 million on coverage of cash awaiting investment. This is the maximum excess of SIPC protection currently available in the brokerage industry. Additionally, Fidelity adheres to a system of internal controls—led by experienced industry professionals whose primary mission is protecting its businesses and client accounts—that include risk oversight, corporate audit, security and compliance.
Deep investment in technology infrastructure and cybersecurity.
Fidelity makes a multi- billion-dollar enterprise technology spend to ensure their systems and infrastructure meet the needs of their clients. They also have a team of several hundred employees who are charged with combating cyber fraud by seeking to anticipate and prevent attacks before they happen.
Access to an extensive range of investment products and services.
Working with Fidelity enables us to offer both Fidelity and third-party investment, planning, and wealth-building products and services to help us achieve your investment objectives, in addition to other goals such as:
cash management and charitable giving.
Award winning web portal Fidelity.com/portfoliotoaccessyouraccounts.
Fidelity has made viewing your account information simple via its mobile-friendly website and app. Fidelity was named the best overall online broker in 2020 by Kiplinger’s.(3)
Record keeping that helps simplify your life.
The need to keep track of your transactions, including capital gains and losses, can be a burden—especially at tax time. Through our relationship with Fidelity, you will receive a simplified, consolidated statement each month reflecting all your investment positions and transactions. During tax season, you will receive one consolidated 1099 tax form per account which includes a Supplemental Summary which can make preparing your tax return much easier.*
WHAT DOES THIS TRANSITION MEAN FOR CLIENTS?
The most noticeable change for clients is that your investment accounts will no longer be held with Pershing. Once you complete the necessary paperwork to remain a client of Destiny Capital, your assets and account information will move to Fidelity. All future statements and trade confirmations will come from Fidelity, and you’ll access your account information through Fidelity’s client portal. Pershing will not have access to your financial information once the transfer has been completed.
CAN I NOW MAKE MY OWN DEPOSITS AND WITHDRAWALS FROM MY FIDELITY ACCOUNTS?
Yes! Fidelity’s mobile technology is great and gives you the ability to make deposits and withdrawals on your accounts. Destiny Capital is well integrated and will be able to proactively monitor and manage any money movement and help ensure alignment to goals and investment management.
WILL MY FINANCIAL PLAN OR INVESTMENTS CHANGE?
Not unless your financial circumstances or goals change. We will continuously explore and invest in solutions to elevate your experience as a client with Destiny Capital, however, our core financial planning and investment philosophies remain unchanged.
WILL THE WAY WE COMMUNICATE CHANGE?
You can continue to expect regular, proactive review meetings which have served as a cornerstone for our work together. Also, we will have more flexibility to share information with you in creative and timely ways.
WILL MY FEE CHANGE? HOW AND WHEN WILL MY ACCOUNTS BE BILLED?
Nothing is changing in terms of the fees you currently pay us or our billing cycle. The only difference is that your account information will be made available through Fidelity instead of Pershing moving forward. It will still show up on your quarterly statement, just like it does now. And, as of our transition to Fidelity, you will also receive quarterly fee statements electronically for your benefit.
POSITIVE FEE UPDATES:
- You will no longer be charged an annual fee of $43.50 for your retirement accounts as Fidelity does not charge maintenance fees for any accounts.
- There are no charges for paper statements.
- Destiny Capital will continue to cover commissions and trading ticket charges as we typically have for our clients.
- The transition to Fidelity is not a taxable event as your investments will not change.
- You will see termination charges, as outlined below, and a final annual maintenance fee
charged to your accounts on your final Pershing statement. These closing costs with Pershing will be reimbursed to all client accounts opened through us at Fidelity.
- Termination Fees: $65-$95 per account
- Annual maintenance fee: $43.50 per qualified account
HOW LONG WILL MY ACCOUNTS TAKE TO TRANSFER OVER, AND HOW WILL I KNOW WHEN IT’S DONE?
Generally, if your transfer is eligible for online submission, it typically takes less than 7 business days to complete your transfer. If for some reason you own an investment that makes your account ineligible for online submission, it could take a few weeks (because of snail mail) to complete, but we will let you know if you are one of these unique cases. And remember, since Fidelity cannot accept orders to trade based on your transferred assets until your assets have been delivered to Fidelity, it’s extremely important to complete your transfer paperwork as quickly as possible to avoid any disruption in the management of your accounts.
You will receive a notification via e-mail from Fidelity and your Destiny Capital team when your transfer is complete. Please email Alison.Yoder@destinycapital.com or Evan.Miller@destinycapital.com, if you have any questions about the status of your transfer.
WILL MY COST BASIS TRANSFER?
Your cost basis information will transfer when you complete Fidelity’s online transfer submission process. Cost basis data is typically passed within ten days after the transfer.
WILL MY PERIODIC TRANSACTIONS BE INTERRUPTED? HOW DO I MAKE SURE I GET MY MONEY?
Your Destiny Capital team will be managing the timelines for our clients that are taking regular distributions in an effort to avoid any missed or delayed checks. We will send all clients who take regular monthly distributions the last 3 months (October, November, and December’s distributions) in October to give us adequate time to move your accounts and set automatic distributions with Fidelity to begin again January of 2022.
Again, completing your forms as soon as you receive them helps us set this up for you without interruption.
WILL MY ASSETS BE SAFE WITH FIDELITY?
We have complete confidence in Fidelity as a custodian and clearing agent. As custodian, Fidelity will hold your money and investments and produce your account statements and tax forms every year. They have been managing other people’s money since 1946 and currently have $4 trillion in assets under advisement.2 Yes, you read that right: $4 trillion. So we are in good company. And with over 20 years of experience working with independent RIAs like Destiny Capital, Fidelity’s track record and reputation as a custodian and money manager are among the best in the industry. In addition, Fidelity provides us access to some of the brightest investment analysts, a dedicated cyber security and technology support team, and the important oversight and compliance we need in an incredibly regulated industry.
Please note that you will receive two1099s for 2021. One from Pershing and one from Fidelity. Your Destiny Capital team will remind you along the way.
WHAT TYPE OF FORMS CAN I EXPECT?
There will be 2 phases of paperwork for most clients. The first phase will be to open accounts and transition your assets to Fidelity and the second phase will be to customize your Fidelity experience uniquely to you. These forms will be personalized and as prepared as possible for you by our team to bring ease to your review and signature.
- NEW ACCOUNT PAPERWORK
(electronic for most clients): The new account paperwork is for opening your new accounts at Fidelity.
- STANDING INSTRUCTIONS:
This form will setup money movement instructions for your accounts that we manage and to third party accounts.
- MARGIN AGREEMENT:
This form adds margin to your account. Having margin allows you to borrow money against investments in your account.
- OPTIONS AGREEMENT:
This form gives consent to options as an investment strategy within your accounts.
- DESTINY CAPITAL CLIENT AGREEMENT:
This is an agreement you have directly with Destiny Capital that outlines our working relationship. Many clients signed an updated client agreement within the last year, however, that agreement specifically outlined Pershing as custodian which means with this transition to Fidelity, we need an updated agreement. Please note, we made updates to the client agreement to provide more flexibility with business changes in the future.
- ACCESS RIGHTS:
A form to authorize others to access your accounts (i.e. spouse, partner, POA) from only able to view to greater authority level.
- HOUSEHOLD STATEMENT CONSOLIDATION:
A form that gives permission to consolidate all your account statements into 1 statement.
- CHECK WRITING AND DEBIT CARD:
A form that sets up check writing and/or debit card rights on a specific account. New checkbooks can also be ordered.
- STANDING INSTRUCTIONS
(for clients who need standing instructions for several accounts). This form will setup money movement instructions for accounts that we manage and to many third party accounts.
* Fidelity does not provide legal or tax advice. The information herein is general and educational in nature and should not be considered legal or tax advice.
1 New investor accounts opened on behalf of institutional firms working with increased Fidelity Institutional® 164% from 9/30/19 to 9/30/20.
2 As of 06/30/21.
3 Kiplinger’s magazine, August 2020 Online Broker Survey.