An Advisor’s Guide to Fidelity BrokerageLink®

An Advisor's Guide to Fidelity BrokerageLink?

Fidelity BrokerageLink? integrated brokerage services combine the convenience of a workplace retirement plan account with the additional flexibility of a brokerage account, giving your clients expanded investment choices and the opportunity to actively manage retirement savings. Many 401(k) and 403(b) plans offer BrokerageLink, and most plans that offer BrokerageLink allow advisor access.

Broader Choice

BrokerageLink provides your clients with the opportunity to select from thousands of mutual funds and other investment options--beyond the investment options offered directly through their employer's retirement plan. Depending on the guidelines set by each employer plan, available investments through BrokerageLink may include, but are not limited to: mutual funds, exchange-traded funds (ETFs), exchange-traded notes (ETNs), closed-end funds, stocks, bonds, certificates of deposit (CDs), foreign securities, mortgage securities, U.S. Treasury securities, unit investment trusts (UITs), Real Estate Investment Trusts (REITs), and options. BrokerageLink accounts must be set up by the plan participant, and once established, advisors can potentially play an active role in helping their clients manage their retirement assets.

How Fidelity BrokerageLink Works

During the plan service implementation process, the plan sponsor decides:

? Whether the plan will offer BrokerageLink as an option

? Whether to cap the percentage of assets that can be transferred to BrokerageLink accounts

? The eligible security types and securities for BrokerageLink accounts

? What, if any, additional account maintenance charge applies to participants for BrokerageLink accounts

? Whether third-party access is allowed

? Whether to allow advisor fee deductions

? Whether advisor trading away is allowed

With a BrokerageLink account as part of a workplace retirement plan, your clients may fund the account in two ways, if allowed by their plan:

? Selecting BrokerageLink as one of their payroll contribution investment elections, and/or

? Exchanging money from one of their existing plan options

Assets entering a BrokerageLink account must flow through the BrokerageLink core position, Fidelity? Government Cash Reserves (FDRXX), and assets leaving a BrokerageLink account must flow through the BrokerageLink Default Fund, which is a specified fund (generally a money market fund or a Stable Value fund) chosen by the Plan Sponsor, within the standard plan account.

Core Position Functionality

The diagram below illustrates how payroll contribution investment elections can be directed to the core position in a BrokerageLink account. In addition, your clients may choose to exchange their money between BrokerageLink and their standard plan options.

CORE POSITION

Payroll Contributions

Standard Plan Options

Purchases

Sales

Standard/Core Investment Options

BrokerageLink Core Position

Purchases

Sales

Securities Mutual Funds Other Investment

Options

Transfers between a BrokerageLink account and the Standard Plan Options must be set up by your client.

Transfers to BrokerageLink from the Standard Plan Options

When your client transfers money to BrokerageLink from the standard plan options, assets are first invested in the BrokerageLink core position. This is because when the transfer is placed to move money into BrokerageLink, a settlement period is involved:

? When the transfer is placed, most investments will have 90% of the assets immediately available to trade through a Fidelity Representative. (Ten percent of the transfer amount is held in reserve in the core position to allow for market fluctuation.)

? Once a market close has passed, 100% of the transferred amount is available to trade through online channels or a Fidelity Representative.

? Depending on plan provisions, account maintenance fees may be deducted automatically from the standard plan options. For this reason, it is suggested that your clients keep at least $500 invested in their standard plan options at all times. If funds are not available in their standard plan options, Fidelity reserves the right to transfer funds from BrokerageLink to the standard plan options to cover the fees. Additionally, other trading and service fees may apply.

Transfers from BrokerageLink to the Standard Plan Options

When money is transferred from a BrokerageLink account to the standard plan options, assets are first transferred from the core position and are credited in the standard plan options' designated BrokerageLink Default Fund (generally a money market fund or a Stable Value fund) on the next business day. At that time, an exchange may be initiated from the BrokerageLink Default Fund to another standard plan option investment.

Putting It All Together

Once you and your client have decided that BrokerageLink would be a helpful option, there are a few guidelines to consider:

? Plan rules govern BrokerageLink accounts and advisors agree to abide by them.

? Advisors will need to set up a new G number specifically for use with BrokerageLink accounts.

? Access to BrokerageLink accounts is supported on Wealthscape and is similar to other brokerage accounts.

? Advisor's investment availability and pricing schedule for transactions initiated through Wealthscape generally apply.

? Block trading is allowed, however prime brokerage is not permitted in BrokerageLink accounts unless the plan specifically allows for it.

? Advisors may not deduct fees from BrokerageLink accounts, unless the plan specifically allows for it.

? Plans use their discretion in deciding the maximum fee deduction allowed by an advisor.

Setup Process

Step 1: Determine whether BrokerageLink is a plan option and have your client open an account To determine whether BrokerageLink is available and third-party access is permitted in the plan, a participant may check online or call his or her plan service center. The participant may open a BrokerageLink account either online or by using the paper application included in the BrokerageLink kit, which may be requested from the plan service center.

Step 2: Establish BrokerageLink G number If you don't already have one, request from your client service team a BrokerageLink G number for use with all BrokerageLink accounts that you manage.

Step 3: Secure account access With the participant, complete and return the Registered Investment Advisor BrokerageLink Authorization and Indemnification Form. When your G number is added to the account, your pricing schedule and investment options, as allowed by plan rules, apply.

Step 4: Consider setting up automatic investment instructions Via a Service Center request, mutual fund allocation instructions can be added to a BrokerageLink account. As payroll contributions come into the account, mutual fund purchases will be initiated.

An Advisor's Guide to Fidelity BrokerageLink? | 2

For more information, please contact your Fidelity Relationship Manager.

1.967373.106 0823

 ................
................

In order to avoid copyright disputes, this page is only a partial summary.

Google Online Preview   Download