Most of the time I have good dealings with Fido Have never had anything like this happen at their shop in the past.
This transaction has 2 days left for my rant. Going to tell the world about their awakwardness!!!
I emailed this statement to Fidelity on 11/06/12 in response to their 4 day hold on their own corporate check.
I set up this cash account for your people to direct deposit my retirement check from (a company) into. - Also you people manage the retirement distributions for (a company). Rather than making a direct deposit - You issued and mailed me a check. I then indorsed the check “for deposit only” and turned around and mailed this check (which you people issued) back with a deposit slip to be deposited in this account. Now you people tell me I have to wait 4 days to have access to - and invest these funds in my Roth IRA which is also a Fidelity account. I think this is outrageous that you put a 4 day hold on your own check.
I know for a fact that I have sent checks in the amount of $ 12,000 for my Wife’s and My Roth IRA investments and the requested purchases were made within 24 hours of the receipt of my check. Looks like you are saying you people put more faith in my personal check then your own corporate check. – If that be the case - maybe I should think about moving my family’s personal and business accounts to another mutual fund company.
Gary
Comments
I agree that this transaction seems a bit strange; as with the Check 21 Act , processing of a paper check is via imaging which reads the MICR encoding for check value, as well as the institution and routing and transit encoding. This process is very common today, even from a smart phone.
Easy for me to say; but I would bother them several times a day on the phone, if you have the patience and time, to get a proper answer from a supervisor. I am also a Fido customer and have always found their service to be very good.
I can only support your efforts and would be equally confused by this process. Please keep us posted as to the outcome, if you are so inclined.
Regards,
Catch
Gary
Will Check 21 change how fast my bank must make my check deposits available for withdrawal?
Another federal check law (the Expedited Funds Availability Act) specifies the maximum times by which your bank must make funds available to you, though most banks make funds available faster than required. Check 21 did not change these maximum hold times.
It doesn't matter that it's a rollover (that only matters for tax purposes). It doesn't matter that the money is bouncing from pocket to pocket to pocket of the same large company - they're still different pockets. I believe that's why you can't immediately invest - which you'd be able to do if you deposited the money directly into the IRA account rather than process it through a "cash account".
Is this "cash account" designated a Roth account, and was the check made payable to that account (or Fidelity) FBO your IRA? If not, then you could have deposited the check anywhere, and wired the money directly to Fidelity. This might not have lessened the total hold period, but would have lessened the time it for the money to reach Fidelity once sent.
Yes, and it is my understanding that Check 21 is separate from existing rules that are part of ACH dictates.
Thanks.
Regards,
Catch
I find this rule in the funds availibility Policies
"Section 229.12 Availability schedule
States that proceeds of local and nonlocal checks must generally be made available for withdrawal by the second and fifth business day following deposit, respectively. A local check is a check deposited in a depositary bank that is located in the same Federal Reserve check-processing region as the paying bank, and a nonlocal check is one deposited in a different check-processing region than the paying bank."
I would think a check issued by fido bank and deposited in a fido individual individual money account would be available the next day at the most!!!!!
Gary
You're describing what you would like, but it's each institution's choice to go beyond what's required by law. As far as banks are concerned, you should also check out section 229.13 - the "exceptions" section. Specifically, the rule for new accounts (opened within 30 days), that lets banks apply even longer holding periods.
When I send an EFT to WellFargo, the cash is available the next day. When I send an EFT to Chase, it is held for days. (At least this was the situation the last time I checked.) Sure, electronic transfers ought to be immediate, but it's up to each bank to set its own policies, and nothing requires them to be faster just because they've received the money. When a financial institution tells me that they're speeding things up (or otherwise simply following common sense) because I'm such I good customer, I get annoyed. Because they should be acting that way for everyone, not for "better" customers. Common sense should be the norm, but most institutions just follow the letter of the law - they're better protected that way.
(Curiosity question - what was the name of the bank on the check you deposited? For example, checks issued by Fidelity brokerage accounts are processed by United Missouri Bank (UMB). So these checks are drawn on bank accounts but not "Fidelity Bank" accounts.)
Keep in mind that everything here applies to banks, not brokerages. As Catch brought up bank rules, I responded accordingly. Likewise, as you referred to your account as a money market account (a bank term) and not a brokerage account holding a money market fund, I have again followed up with bank rules.
More than likely, you're actually talking about a brokerage account, e.g. Fidelity's Cash Management Account, which is a brokerage account where the sweep is into a bank account. I believe that since the account itself (as opposed to where it puts your money) is a brokerage, it falls under brokerage rules.
I haven't found the regulation yet, but judging from the fact that a variety of brokerages put a 4 business day hold on check (and EFT!) deposits, I expect this to be the legal rule (just as 229.12 is the rule for most bank accounts).
Second off, even though you know they issued the paper check, Fido has no way of knowing that until it has been cleared and verified through all the aforementioned layers. Could be a fake.
Third off, your Roth IRA is not the same legal entity as you so if Fido allowed you to transfer the uncleared funds into it then they might as well let you wire transfer them to Nigeria because they have no means of legally recapturing the funds if the check turned out to be fraudulent.
Not happy? Then next time deposit your checks at an actual bank instead of the hodgepodge bank/brokerage frankenstein that Fido provides as a convenience...but if you did that then you'd probably be waiting even longer to access your money.
The Check stub shows FIDELITY SERVICE CENTER
The check could probably say anything since everything now runs on electronic routing codes.
Payment Type Installment
Check Number: \\\\\\\\\
Has a barcode with no supporting information for it!!
Funding breakdown
Pension - XXXXX
Since the check has been returned - I have no other infotmation to offer.
I used the term cash account that is what the term that the fido retirement rep called it.
If I used the term money market account I was wrong.
I agree with nearly everything Banned wrote - there are lots of different legal entities involved, and Fidelity would have little recourse should something go wrong. That's the main reason why large institutions simply follow rules mechanically - it's safer.
The one point Banned made that I disagree with is the speed of getting funds available to trade via a real bank. If you use a bank with friendly policies (many banks put in writing that while they are legally allowed to hold deposits for 2-5 business days, their policy is to make the money available sooner to regular customers) and wire the funds from that bank to Fidelity, you could have the funds for trading within a couple of days. That saves most of the hold period and all of the paper mail time.
Even if the bank were not "friendly", the hold would likely have been two business days, not four, and the wire would still have saved days in transmission.
To Max - the system is designed with rules that make everything work. Lots of rules tend to seem arbitrary, especially in isolation. Which is why institutions are loathe to make exceptions. If you read through all the comments on any SEC proposal, for example, you'll see interesting comments about situations, both rare and common, that might slip through the cracks. The SEC (like other regulatory agencies) takes these comments and exceptional cases into consideration when refining proposed rules. The end result is often a rule that makes little sense to the casual observer, but is carefully designed for its intended purpose and also deal with the unusual situations.
(In contrast, much legislation, especially that proposed for political rather than practical reasons, really is IMHO nonsensical.)
THANKS TO ALL - I HAVE LEARNED A LOT TODAY.
MORE RESEARCH INDICATES THAT THE FUNDS WENT TO AN FDIC-INSURED DEPOSIT SWEEP
ACCOUNT (I THINK AT) WELLS FARGO
GARY
- List of Cash Management Account banks (and a little bit about how the sweep works).
- Cash Management Account FDIC-Insured Deposit Sweep Program Disclosure - the full gory details, including how banks are assigned (including your ability to decline certain banks), the fees the banks pay to Fidelity for sending money their way, and key disclaimers in bold.
Fidelity also posts people's reviews - often a good way to get better insight into how something actually works before trying it out yourself. A number of them talk about the long holds on the account, including:
Nov 2, 2012 - it takes at least a week (4-6 business days) for any deposit into this account to clear -- whether it's a transfer from another banking account, a check, or a direct deposit.
Aug 30 and 3, 2012 (same post) - funds were not available right away ... they advised it is 4 business days after
May 30, 2012 - Like with other reviewers ... longer than normal holds on cash deposits.
May 21, 2012 - ACH transfers to the account and deposited checks are held for 5 business days before the funds are available to use.
April 16, 2012 - Transfers from your bank take 8-9 calendar days before you can use the money, even to transfer to other Fidelity accounts (such as making an IRA contribution). This is in spite of the fact that it takes as little as 2 calendar days for them to get the money from your bank.
1. the multiple references as " your people " in your original communication to Fidelity does nothing to gain you any friends; and
2. the 4-day holding period increasingly appears a blessing in disguise. seems your targeted mutual funds are getting much cheaper to buy.
That's all folks!!
...You mean like THIS?
Conversation between Techno-Geek/Customer Service employee and Dilbert, stolen from the comic strip:
Techno Geek: We need to enhance our sector-relevant support for a suite of integrated risk assessment tools. Do you understand?
Dilbert: Maybe. Is your point that you don't know how to communicate?
Techno Geek: No.
Dilbert: Oh. Then I didn't get it.