We are seeing increased demand from advisers looking to move client assets into new Centralised Investment Propositions (CIP) on the platform, from one of the many DFMs now available on Fidelity Adviser Solutions. There are several points to consider when approaching this exercise, which are highlighted in this article along with some of the main considerations.

The initial engagement is with the DFM provider, who will be able to confirm their availability on the platform. They will contact their dedicated Fidelity team to obtain your agency details and make the necessary arrangements to create and publish the agreed portfolios. Once that’s completed, you can add new money or rebalance existing assets into the MPS.

New clients and new contributions are straightforward as they can be invested immediately into MPS. The DFM fees can be set up at the same time.

Transfers on the other hand will depend on whether they are being completed as cash or via re-registration. A cash transfer is available into an ISA and Pension Account and can be invested immediately into the model portfolio (please see the section below on instructions for new and existing clients). Re-registration however, which is the only option for Investment Accounts due to the potential impact of CGT, may need the account to be rebalanced upon receipt if the assets being re-registered are not currently invested in the same MPS on the ceding platform.  If you require capital gains reporting, please obtain the adjusted acquisition costs from the ceding platform, which can then be entered into the Fidelity platform.

Please note, the same MPS held on different platforms may still have minor differences in funds due to the availability of restricted share classes. Fidelity will automatically convert into a cheaper share class, if available, as part of the re-registration process, unless you opt out of this.

If you are looking to consolidate books of business from other platforms and providers onto the Fidelity platform and into your CIP, please speak to your Business Development Manager or your usual representative for additional guidance.

For existing Fidelity clients, you can rebalance the current assets into the MPS and set up the DFM fee once client agreement has been obtained. Alternatively, just link the account to the relevant MPS, which doesn’t switch any funds, and let the DFM rebalance at the next agreed date (when taking this approach, please remember to set up the DFM fee as it’s a two-stage process). In our experience, however, it’s better for you to take control of the initial rebalance.

When doing so, you need to consider that:

• A new Fidelity fee agreement will be required to facilitate the DFM fee. The fees are set up online, so this can simply be held on file in the event of an audit.
• Regular Savings Plans (RSPs) will need to be updated to ensure future contributions are directed into the MPS. Please note that tax relief on pension contributions, once received from HMRC, will be applied to the investment choice applicable at the time of receiving the net contribution.
• Regular Withdrawal Plans may need to be updated to ensure the disinvestment strategy remains appropriate. We always use any cash first, but you set up the strategy for any shortfall. Proportional is a good option for MPS as it ensures the disinvestment strategy follows the latest asset allocation.

We are often asked if there are black out days for rebalancing, to avoid disruption to client income. This isn’t necessary on the Fidelity platform; income can continue to be paid providing there’s enough available assets to disinvest from. However, consideration needs to be given to the very first rebalance, which may include selling all funds when moving to MPS. In this instance, it would be advisable to rebalance immediately after the monthly payment.

When submitting most instructions for new and existing clients, such as new contributions and rebalances, we automatically link the account to the relevant MPS and there is nothing further for you to do. However, in some instances you need to link the account separately and set up the DFM fee. Examples include drawdown transfers, first time crystallisations, corporate and trust business, and new regular contributions for employers.

You may wish to ask your chosen DFM partner the following questions when moving client assets:

• Do they include cash within the MPS? By cash, I’m referring to the cash account, rather than a cash fund. Fidelity do not require any cash management, however, some DFMs prefer to include it for consistency with other platforms, who do require this. 
• If they don’t use cash in their models, ask them if they will exclude any cash, made available by you, from their bulk rebalances, as this will allow you to hold cash separately for income purposes.
• If they do hold cash, or aren’t prepared to exclude it from bulk rebalances, you should not try to manage cash balances outside of the asset allocation. Instead, you should use Fidelity’s auto disinvestment process.
• When bulk rebalancing, they have the option to update any Regular Savings Plans, to re-direct them into the latest portfolio. This is a big time saving for you, so check they will do this.
• Regular Withdrawal Plans can also be updated by the DFM, however, this will not be relevant where you’ve set the disinvestment as proportional.
• Some corporate and trust accounts, mainly private trusts, SSAS investments and SIPPs with multiple trustees, are currently held on a different operating system. These accounts do not have access to a product cash account, so where the DFM includes this, they will need to select an alternative cash fund for these accounts only. DFM fees for these accounts will also need to be paid via you. 

Another point when making a recommendation into MPS, is that ISA, Investment Account, Pension Savings and Drawdown Accounts can each have a different MPS, but it’s only one model per account. You cannot blend it with other models or investment solutions. However, you can hold more than one ISA and Investment Account.

Finally, please remember that any changes to models containing brokerage assets will incur brokerage charges.

Please note this article does not cover every aspect of the process for moving client assets and further information can be found here.