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When making a trade with Health Equity HSA account, there is a notification:

NOTES:

  • The number of shares or the amount of the trade is only an estimate. The exact amount will depend on the price at completion.
  • All trades are executed at the price at close of business on the day the order is executed. The prices shown are only estimates.
  • Funds that are "Closed" for investments can only be sold, not bought.
  • Allow 3 to 5 business days for the trades to execute.
  • There is never a transaction cost associated with investing in mutual funds in your HealthEquity HSA account. There is no fee charged to buy or to sell shares, and any potential commission and/or load on funds has been waived, completely, for our Members.

Why does it take "3 to 5 business days" for the trades to execute with Health Equity HSA accounts? Is that the same for any HSA account? If so, why isn't it faster (1 business day)?

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    A few possibilities: They make money off of float, and evidently the reward is worth the risk of some customers noticing and taking their money elsewhere. Also, the transaction costs may be lowered somewhat by combining multiple orders for the same equity. Finally, the artificial delay makes it less likely that their customers will try to time the market. – Ben Voigt Jan 12 '19 at 22:22
  • @BenVoigt Thank you. Do you know whether that's typical for HSA accounts to take 3 to 5 business days for the trades to execute? – Franck Dernoncourt Jan 12 '19 at 22:26
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    I don't know what's "typical", but the HSA account available through my employer is Optum Bank, and their agreement (see F.12) appears to lock in the price as of market close the same day, if the order is placed while the market is open. – Ben Voigt Jan 12 '19 at 22:32
  • @BenVoigt thanks good to know. At least it means the wait is due to the HSA account provider's policy, and not some other constraint. I guess it's time to change my HSA account provider. You're welcome to convert your comment into an answer. – Franck Dernoncourt Jan 12 '19 at 22:33
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It is not typical, but not uncommon either.

You need to be careful though what exactly that delay means:
Buying shares/ETFs has a two-day settlement period, anywhere, with every broker. That means although you get the price of the day you send the order, it takes two full further business days until you really have those shares.
Many brokers show them right away in your account (maybe with an asterisk for 'pending settlement' or such), and many allow you to give a sell order before the two days are even over - after all, the settlement of the sale will also be two days out, so they know for sure that the shares will be there in time.

Make sure you understand what 'several days' means - does it mean until they show up online (which seems what they say, and it shouldn't bother you much), or does it mean you get the price from several days down the road (that is of course a red flag).

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