Guide to Wrap term deposits

Wrap term deposits (TDs) are held with Macquarie Bank or ANZ. These providers offer competitive interest rates over 1, 3, 6 and 12-month terms, the details of which can be found on the Wrap Online homepage under ‘Term Deposits’.

Applications for Wrap TDs close each business day at midnight with the investment being made the following business day. The timeline:

• Day 1: Order submitted and authorised by midnight (client receives today’s rate)
• Day 2: Cash debited from cash account, order sent for processing (this is the start date of the TD)
• Day 3 (Day 4 for super/pension accounts): TD issuer confirms order and applies Day 1 interest rate. TD visible in online reports.

How do I place orders?

Applications are accepted daily via the online transacting screen. Orders authorised before midnight on a business day will be processed and placed with the TD issuer the following business day.
 

How do I invest in a term deposit for my clients?

1. Log in to Adviser Online
2. Hover over Transacting and select Portfolio transacting
3. Search for the account using the account name or number
4. Select the TD, complete all required details and submit and authorise the order using your Access Code and password.
    

How will I know which term deposit to choose?

The name of each TD indicates its issuer, term, maturity date and interest rate.
 

What will happen if I have placed a pending application, but have not authorised the order before the end of the day?

The order will display in Work In Progress the following day as a pending application order. The interest rate and maturity date displayed will be automatically updated on a daily basis.
 

Switching into term deposits

Where an application into a TD is made via a ‘switch’, funds will not be sent to the TD issuer until the proceeds from the redemptions are received. Where multiple redemption orders are being made, this could result in multiple applications into TDs on different commencement dates.
 

Are there any Wrap features that are unavailable for term deposits?

Due to the nature of the investment type, the following Wrap features are not available for TDs:

• automatic cash management
• automatic rebalancing
• dollar cost averaging
• pension draw-downs.
   

When I invest in a Term Deposit through Grow Wrap or Voyage, is my investment guaranteed under the Financial Claims Scheme?

The Financial Claims Scheme applies per account holder per ADI up to a cap of $250,000. When you invest in a TD via the Wrap platform your funds are pooled with other investors and held in custody. As a result, you don’t directly become an account holder in the product and will only have a pro-rata entitlement to the cap amount of $250,000. This entitlement ranks in proportion with all other investors deposits. This means that investors do not receive full protection under the Financial Claims Scheme.

What is APS210 and how does it impact term deposits on the Wrap platform? 

In December 2021, APRA released guidance on Prudential Standard APS 210 and Prudential Practice Guide APG 210 dealing with liquidity. This guidance provided further clarity around the liquidity treatment of deposits made by Personal Investment Entities (PIEs). Term Deposit (TD) providers across the industry have reviewed their definitions of PIE based on this guidance. As a result, our Term Deposit issuers are placing restrictions on how much can be invested by our clients in a Term Deposit. This will depend on the entity type and whether the Term Deposit issuer considers your client to be a PIE.
 

What actions are we taking to help term deposit providers meet their APS210 obligations? 

We’re reducing the maximum investment order limit of $1,999,999 for Wrap on-platform Term Deposits provided by ANZ. The limit applies to new investment orders. This change extends to new Term Deposits, as well as Term Deposits that are being rolled over on maturity.
 

What are the definitions of PIE across the term deposit providers on the Wrap platform?

What if I want to invest in ANZ Term Deposits $2mil and above for my non-PIE clients? 

Our platform will no longer allow you to place an investment order on ANZ Term Deposits for more than $1,999,999. If you have a non-PIE client who would like to invest $2 million or more in Term Deposits, you’ll need to place more than one order.

What could happen if I invest in Term Deposits for my PIE clients in aggregate exceeding the $1,999,999 investment limit? 

If you invest an aggregate amount of $2 million or more in ANZ Term Deposits for your PIE clients, these Term Deposits may be cancelled without any financial compensation. Please make sure you’re considering existing Term Deposit investments for each Term Deposit provider before proceeding with any transactions.

Does Wrap Online have a minimum investment order limit for TDs?

Yes. Wrap Online has a minimum investment order limit for Term Deposits which has been set at $10,000.

After the order has been authorised, how long does it take before the TD appears in online reports?

This can take up to three business days for investment accounts and four business days for super and pension accounts. For example, if the application was made on a Monday, the TD would appear in online reports from the following Wednesday or Thursday. Please refer to the ‘term deposit application timeline’ for further information about this process.
 

How can I track when my clients’ term deposits will mature?

The name of the TD will reflect the maturity date. An adviser alert is also sent two weeks before a TD matures that details the investments and the clients impacted.
 

How are maturities and subsequent rollovers processed by Wrap?

Under ordinary circumstances, on maturity, the principal and/or interest is paid into the client’s cash account on the day the funds are received from the issuer for investment accounts, and the following day for super and pension accounts. Where an election is made to roll over, an automatic application will be made into the next TD for the same term, from the same issuer and the amount specified (principal only or principal and interest). For investment accounts, the start date will generally be the next business day. For super and pension accounts, the start date will generally be two business days after maturity.

What interest rate will my client receive for rollovers?

Under ordinary circumstances, clients will receive the interest rate published on the maturity date for investment accounts. Super and pension accounts will receive the interest rate that is published on the business day after the maturity date. This difference is due to the different processing times described above.

When does the cash become available after maturity?

For investment accounts, the cash is generally available on the afternoon of the business day after maturity. For super and pension accounts, the cash is generally available two days after maturity.

Does the maturity election carry over when moving between super and pension accounts?

No. As the election is made for the account, when the TD is moved to a new account, the default election of cash-out will apply. The election can be updated online once the TD is in the new account.

Are there any transaction fees for rollovers?

Where a rollover of a TD is successfully executed, no transaction fees will apply to the purchase of the new TD or the maturity of the existing TD.
 

Are there any costs to breaking a term deposit early?

Each TD issuer generally has its own costs associated with breaking a TD early. Please refer to the product issuer’s offer document for further information on break fees.

Margin lenders don’t offer value for TDs on Wrap.