What is a phase?

A phased investment allows cash to be invested in periodic segments, facilitating a lower level of risk relating to market volatility. A phased investment can be added at any time, whether it be existing ringfenced cash on the account, or relating to a new expectation.

The minimum monthly phased investment is £1,000 (excluding exceptions made at customer level). The minimum total phase allows £2,880 net (£3,600 gross) for SIPP contributions.

The date is account-specific. For phasing, a "Dripfeed" movement will automatically be incepted on the day the contribution expectation is fulfilled. The first investment will take place immediately, then each instalment will take place on the same day of the following months. 

What happens in the background?

Once a phased contribution is submitted via the portal, the system creates an expectation as well as a fund instruction, ready for bank matching once the cash arrives. Upon arrival of cash, the system creates a 'DripFeed' movement. The DripFeed essentially acts as a ringfence combined with a monthly cash invest instruction. The DripFeed will reduce in value every month to increase the available cash on the account, then action an investment for the value available.

Note: The system does not create the DripFeed until all cash arrives, therefore if the contribution is paid in multiple instalments, the phased investment will not commence until the final payment has been matched. Since the DripFeed is not created straight away, if any other account actions (for example, switches and rebalances) take place in the meantime, any cash held on the account relating to the incomplete phased investment will be used.

Functionality

Phased Investment Style Contribution

A phased investment can be added using the Add Contribution wizard via the portal:

In step 1 of the application, select 'Phased Investment' as the investment style:

Then use the 'Customise Phased Investment' button to configure the values and frequency:

Manage Phased Investment Functionality

If an account has an ongoing phased investment, it will state 'Phased' in the Investor Global View. As a result, a 'Managed Phased Investment' tool will be available. The tool can also be made available via FreshDesk request provided the account is funded and there is not a phased contribution due:

 Selecting this will allow amendments to the monthly investment values and number of months remaining:

The Estimated Remaining figure is the total value of the cash holding, not the monthly phased investment amount. The system will calculate the Next Investment Value by dividing the Estimated Remaining value by the number of months which can be selected in the Remaining field.

Note: The Manage Phased Investment tool will not appear until the full cash amount is received.

Suggested Procedures

Creating Phases

Standard Cash Contributions

Provided there is no existing phase on the account, and the contribution is for a known value, which will be paid solely by the investor/employer (i.e., no tax relief is due), create a phased investment in the standard way using the Add/Amend Contributions wizard. No Freshdesk contact or subsequent amendments will be required provided cash is received as expected. If payments are made in instalments, they will be applied against the existing expectation but no phasing will take place until all the cash is received.  

Cash Transfer Contributions

For a transfer in cash, the exact cash value will be unknown until received, therefore a small amendment will be required following receipt.

The suggested process would be for the IFA to input the transfer as normal, then amend the account to ‘Trades suspended’. Once the transfer is received a Freshdesk ticket should then be raised asking that we enable phasing for the transfer. Hubwise will create a £0.01 DripFeed movement which will allow the customer to use the ‘Manage phased investment’ and set up the as required.

Removing phased investment instructions

If a phased investment is to be discontinued and all outstanding cash to be invested, use the Managed Phased Investment tool via the portal.

Update the 'Estimated Remaining' value to zero and select 'Stop Phased Investment'.

An additional window will appear with the option to instruct an invest surplus cash. 

The 'manage phased investment' tool will no longer be available once the above has been submitted. It will need to be re-enabled by FreshDesk request if requried again at a late date. 

Using Unphased Cash for a Bed & ISA

If available cash relating to an incomplete phased investment is to be used to facilitate a Bed & ISA from a GIA to an ISA account, the DripFeed will work much the same way as a ringfence.

Prior to submitting the Top-Up by internal transfer via the ISA account, first use the Manage Phased Investment tool on the GIA account to reduce the 'Estimated Remaining' value by the amount being transferred. This will release the cash amount from being considered ringfenced. The number of remaining phases can also be reduced if desired.

Since buying power will be invoked on the GIA for the internal transfer, it is advisable to release some additional cash from the phased investment to cover the fee requirement if applicable.

Creating a phase using existing ringfenced cash

The managed phased investment tool will not appear without an existing phase, therefore Hubwise will need to intervene if a phased investment is required for existing cash on the account.

Use a ringfence to raise and protect any cash required, then apply 'Trades Suspended' account status and contact Hubwise via the Ops Dealing Freshdesk group. Hubwise will then create a DripFeed movement for the value of £0.01 so that the managed phased investment tool can be used.

Note: Once the phased investment details have been added, the account status should be amended and the ringfence should be removed via the portal to make the cash available for investment.

Adding and amalgamating a second phased investment

The back office can only facilitate one phasing instruction at a time, since only one DripFeed can be present per account. If an additional contribution is to be paid and added to the existing phase, it should be amalgamated.

Input the contribution via the portal but select it to be held in cash (ie 'Deposit £x into the account' on step 3 of the application), then monitor the surplus cash MI report or transfer MI if applicable for receipt.  Upon receipt of payment, use the manage phased investment tool to increase the monthly values and remaining months as applicable.

Note: Since the DripFeed acts as a ringfence, if the second contribution arrives and the phasing amendment is not made in time for the next scheduled phased investment, all available cash will be invested except the value remaining on the DripFeed, including the cash from the second contribution.  This will also happen if the cash is received prior to any regular investment actions such as income reinvests and DFM model switch/rebalances.  It is therefore recommended to use trade suspend statuses as required to prevent this and remove the suspension once the phases have been amalgamated.

FAQ

What if the client is sending money in instalments but the total investment amount has now changed?

If instalments have already been made you will need to raise a Freshdesk ticket requesting for the total expectation to be amended.

What if cash received does not match the expected amount?

In the event the cash is greater than the expectation, and there are no other matching expectations, the system will match it as a 'Top-UpNoX' (No Expectation) and create a ringfence for the total amount received, then send a notification. In these cases, reduce the ringfence by whatever value is to be phased for the first month, and action an invest surplus cash via the portal. Then contact the Ops Dealing team via Freshdesk and request phasing to be set up for the remaining months.

If the cash received is less than the expectation, it will be part-matched and left in cash. The expectation will then be reduced to the outstanding value to await further cash received. Any cash received prior to the expectation being completely fulfilled will not be protected from other account activity.

Transfers from another manager do not follow the above rules. The 10% matching threshold is used in these cases.

How do we set up phasing for pension contributions with Tax Relief?

Hubwise cannot facilitate phasing based on the gross contribution amount. Set up a standard contribution (ie single investment style, not phased), amend the account to 'Trades Suspended' status and contact Hubwise via the Ops Dealing Freshdesk group. Hubwise will then create a DripFeed movement for the value of £0.01 so that the managed phased investment tool can be used. The following options are then available, as an example based on £2880 net contribution:

1. £2880 received – set up phased investment of £2880 over 3 months. Use invest surplus cash to invest the £720 tax relief once received.

2. Set up phased investment of £3600 over 4 months – this carries a risk that £720 would be raised to fulfil the ringfence if a rebalance or switch is actioned prior to tax relief being received.

When should ringfencing vs trading suspended be applied with phasing?

Ringfencing should not be used alongside phasing. If set up correctly and as per the guide the system will automatically ringfence the required amounts.

Trading suspended should only be used in cases as outlined.

How can we phase a new investment when the account is receiving a regular contribution so they don't conflict with each other?

These are 2 separate processes which work together in tandem if set-up correctly.

What happens if a payment is received that is greater than the expectation?

It will be applied as 'Top-UpNoX' and ringfenced, we will send a notification as normal. If we receive part payments no phasing will begin until the expectation is fulfilled.

What happens if we want 2 different investments to be phased that come in at different times?

This is not possible and instructions should be amalgamated as per the procedure. If set-up correctly this will work without manual intervention.