Month: July 2020

Product Updates

July 15, 2020

Alternative Mutual Fund Lists – Approved and Watch List Updated for Q2 2020

The alternative mutual fund approved and watch lists have been updated.  CLICK HERE TO VIEW.

If you have not already done so, reps must complete an education requirement before offering the alternative mutual funds to your clients.  Please see Field Notice 2019-04 for details.  If you have questions about the alternative mutual fund due diligence process, please contact ESI Business Development.

PMC Research Note 6/30/2020 – Watch List Addition: Brinker Capital and CLS Investments Approved – Qualitative Strategist Portfolios

Summary
Envestnet | PMC is placing all of the Approved–Qualitative strategies from Brinker Capital (“Brinker”) and CLS Investments (“CLS”) on “Watch” effectively immediately. PMC recently learned that Brinker Capital (“Brinker”) has entered into a merger agreement with Orion Advisor Solutions (“Orion”), with the deal expecting to close during the end of Q3 or beginning of Q4 2020. Rationale
With the support from private equity firms Genstar Capital and TA Associates, Orion and Brinker are merging to create a combined technology and TAMP provider. As part of the agreement, Brinker’s Investment Management business and CLS Investments (Orion’s ETF Strategist division) will be combined into one unit, “Brinker Capital Investments.” Brinker’s current CEO, Noreen Beaman, will serve as President and lead the investment management arm. At the same time, Orion’s CEO, Eric Clarke, will manage the technology side of the combined firm.

The deal will provide Brinker with additional capital for its growth, broaden the range of investment products and services, expand distribution, and enhance technology and services. Orion benefits by being able to provide advisors with access to differentiated solutions and expertise through Brinker’s comprehensive high net worth offering, Behavioral Innovation Lab, and proprietary investment strategies.

Currently, there are no plans for any changes to Brinker’s or CLS’ investment teams, investment process, or investment strategies. Although the CLS brand will go away and all of the strategies will be rebranded under Brinker Capital Investments. Given the uncertainty around potential departure of key personnel and integration of the two firms, Envestnet | PMC will be placing all strategies managed by Brinker and CLS on “Watch.”. We will be closely monitoring the organizations to ensure that the acquisition has no significant impact on the culture, investment teams, or investment processes.

Envestnet PMC – Changes to ESI Portfolios July 2020

Based on our recent 2020 Global Market Analysis, we are making adjustments to our model portfolios in an effort to improve their risk-return profiles in the current market environment. Click below to review our recommended changes.

Review Changes

– The Investment Proposal system is being updated with the new models, and trading is expected to begin on July 20th, 2020.

– To accomplish the model update the accounts will be placed on trade hold from July 10th through market close on July 17th. The trade holds will be removed over that weekend for trading to occur on Monday, July 20th. If the need to remove the trade hold does arise (raise cash, goal modification, etc.) please contact your client service team.

– Accounts opened after July 10th, 2020 will be invested in the updated models.

– Existing accounts with activity after July 10th, 2020 (such as distributions and additional deposits) will be invested in the new models at the time of activity.

Please refer to the 2020 Global Market Analysis Summary for guidance on these adjustments. For the detailed analysis that focuses on relative valuations, historical returns, and current macro-economic conditions, please refer to the full document.

For questions please contact your Regional Advisory Sales Team.

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IRS Issues Guidance on Waiver of 2020 Required Minimum Distributions (RMDs)

July 15, 2020

On June 23, 2020, the IRS issued Notice 2020-51 (“Notice”) which provides guidance regarding the repayment of required minimum distributions (“RMDs”) under the Coronavirus Aid, Relief, and Economic Security (CARES) Act. Under the CARES Act certain 2020 RMDs already taken can be repaid to a retirement account as a rollover. Generally, RMDs are not eligible for rollover. However, under the CARES Act, an RMD taken in 2020 is no longer required, it is voluntary and therefore not technically an RMD.

The Notice provides the following:

  • 2020 RMDs taken on or after January 1, 2020, are rollover eligible.
  • An IRA owner or beneficiary is permitted to repay distributions that would have been a 2020 RMD back into the distributing IRA.
  • The repayment of the waived RMD can occur more than 60 days after the original distribution date provided it is made no later than August 31, 2020.
  • The repayment will be treated as a rollover, except that neither the “1 rollover per year rule” nor the limitation on non-spousal beneficiary rollovers apply.

Operational impact:

  • Process repayments of 2020 RMDs as rollover contributions (ROC).
  • For repayments of 2020 RMDs to IRA beneficiary distribution accounts (BDAs), clients have the following options:
    • Send the check or wire with instructions to repay the 2020 RMD into the BDA as a rollover (ROC).
    • Submit a Service Request to process a journal from a non-retirement account or an EFT contribution to the BDA as a rollover (ROC).
    • Use Remote Check Deposit to deposit the rollover. Note: For IRA-BDAs, the only option is to deposit it as a direct rollover (DRC). The DRC will be reported correctly on a 5498 form but will appear as a direct rollover on a statement.
  • Rollovers of 2020 RMDs must be received by National Financial Services, LLC (NFS) no later than August 31, 2020.

In addition, the IRS issued supplemental guidance that impacts both IRA and employer sponsored plans that permit coronavirus related distributions to eligible employees. An additional update summarizing the guidance will follow shortly.

For more information on the IRS guidance relative to the waiver of 2020 RMDs, please refer to IR-2020-51

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Reg BI Now In Effect! Here’s a recap of what you need to know.

July 15, 2020

Regulation Best Interest – or Reg BI – is a landmark regulation that went into effect on June 30, 2020. This new regulation addresses broker-dealer business specifically, and will officially replace the industry’s long-standing, transactional “suitability” standard with a “best interest” standard for most business.
 


How does Reg BI impact my business?
Reg BI introduces a best interest standard that impacts process, forms and communication with clients, so it’s important that you understand the changes and how to implement them into your business.
 


What do I need to know, and where do I start?
ESI has provided training resources in multiple formats to help you get up-to-speed quickly. Below is a suggested training format:

  1. Find the Reg BI page on the NL website. The Reg BI page houses all the communications, training and reference materials associated with the Regulation. To reach the page, log in to the NL website. The Reg BI link is under ESI in the left column.
     
  2. Start with the mandatory training, available 24/7 in FIRE Solutions. This training provides a big picture overview of the Regulation. Note: The course must be completed by July 15, 2020.
     
  3. Review the Field Notices and recorded training. In addition to the mandatory training, ESI has been rolling out training webinars that provide information in short, easy-to-digest recordings. While the mandatory training provides a broader overview of Reg BI, the recorded trainings are topic and ESI-specific and will provide you with details pertaining specifically to our business process. Field Notices are included under the Communications dropdown. Recorded trainings are available under the Training Resources and Requirements dropdown.

    Recorded training topics and Field Notices cover:
  4. Overview and Introduction
  5. Rollovers
  6. Account Selection
  7. Reg BI Disclosure and Form CRS
  8. FIRE Solutions Mandatory Training
  9. Mutual Fund Cost Analysis
  10. No-Load Mutual Funds and Exchange-Traded Funds (ETFs)
  11. Sales Contest Incentives
  12. New Forms and Other Account Document Updates
  13. Form CRS Acknowledgement
  14. Reg BI Training specifically for Non-Registered Personnel
     
  15. Review the Forms Updates dropdown. Reg BI impacts several existing forms and has resulted in the creation of some new forms as well. The Forms Updates dropdown includes links to new and updated forms, as well as links to guides and recordings to help you navigate process changes. New guides and recordings include:
  16. Guide to Forms Updates – Summary of the changes to most transaction specific forms
  17. Regulation Best Interest Forms – Recorded Training
  18. Direct Business Forms Guide – Comprehensive guide to ESI forms for new direct business accounts
  19. ESI Additional Investment Documentation Requirement – Comprehensive guide to ESI forms for additional Investments
  20. Qualified Plan Rollover Guide – Overview of changes to the Qualified Plan Rollover Disclosure form
    1. Qualified Plan Rollovers and Reg BI – Recorded Training
  21. Financial Planning-Consulting and Purchase Disclosure Form Changes – Recorded Training
  22. Retail Brokerage and Illuminations Form Requirements Guide – Comprehensive document that breaks down new business paperwork requirements by Retirement/Non-Retirement accounts by product (Retail Brokerage and Illuminations business).
  23. Explicit Hold Memorandum Form Guide
  24. Explicit Hold Memorandum Form – Recorded training


Does Reg BI impact my existing clients?
On June 15th, ESI sent out our Annual Privacy mailing to all existing clients – both brokerage and direct – and included both the new Customer Relationship Summary (Form CRS) and our Regulation BI Disclosure. Sending these documents ensured that all clients received a copy of the new disclosure prior to the regulation’s effective date of June 30, allowing you to continue to provide recommendations on their existing accounts without having to deliver these documents yourself.  This only applies to individuals who were clients of the Firm prior to June 30th.  After June 30th, recommendations are subject to delivery criteria as explained in our training materials.
 

Questions? Contact ESI at 800-344-7437.

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Keeping Momentum in Challenging Times

July 6, 2020

The third installment of Rep Insights: A Conversation Together featured Nick Pontilena of Integrated Financial Concepts in New Jersey and Travis Ramsdell of the Maffe Financial Group in Connecticut. Both consistent and high-level producers, Travis and Nick have demonstrated an ability to keep momentum in their respective practices, despite the challenges of the past few months. In this session they share their thoughts on the activities, practices, and changes they’ve undertaken to keep serving their clients and their business. Click here for the recording.

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Goldman Sachs Select: A Liquidity Solution for Your Clients

July 6, 2020

Are your clients looking for a liquidity solution that doesn’t involve liquidating their investment portfolios? Securities-based lines of credit, (SBLOC) allow borrowers to access cash with their portfolio serving as collateral—qualified equities, bonds or funds that are already owned. Principal can be re-paid at any time during the life of the loan – only interest is due monthly.   The loan underwriting process is generally much quicker than some of the more traditional means of credit and the loan interest rates are often lower.

During market downturns, using SBLOC can prevent clients from needing to sell a security at a loss.  During a rising market, it may mean avoiding having to recognize capital gains at an inopportune time.  Also, during times of economic uncertainty having access to capital can address short and long-term cash flow needs.

SBLOC may be used for a wide range of needs, including:

  • Bridge financing
  • Tuition
  • Real Estate
  • Business investments
  • Capital calls
  • General cash flow needs
  • Home renovations
  • Startup funding
  • Tax obligations

To learn more:

  • View the overview brochure. (Note that the brochures are currently only available to IARs. A Rep-use version is in process.)
  • Contact your Goldman Sachs rep for more information.

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Reg BI Now In Effect! Here’s a recap of what you need to know.

July 6, 2020

Regulation Best Interest – or Reg BI – is a landmark regulation that went into effect on June 30, 2020. This new regulation addresses broker-dealer business specifically, and will officially replace the industry’s long-standing, transactional “suitability” standard with a “best interest” standard for most business.

How does Reg BI impact my business?
Reg BI introduces a best interest standard that impacts process, forms and communication with clients, so it’s important that you understand the changes and how to implement them into your business.

What do I need to know, and where do I start?
ESI has provided training resources in multiple formats to help you get up-to-speed quickly. Below is a suggested training format:

  1. Find the Reg BI page on the NL website. The Reg BI page houses all the communications, training and reference materials associated with the Regulation. To reach the page, log in to the NL website. The Reg BI link is under ESI in the left column.
     
  2. Start with the mandatory training, available 24/7 in FIRE Solutions. This training provides a big picture overview of the Regulation. Note: The course must be completed by July 15, 2020.
     
  3. Review the Field Notices and recorded training. In addition to the mandatory training, ESI has been rolling out training webinars that provide information in short, easy-to-digest recordings. While the mandatory training provides a broader overview of Reg BI, the recorded trainings are topic and ESI-specific and will provide you with details pertaining specifically to our business process. Field Notices are included under the Communications dropdown. Recorded trainings are available under the Training Resources and Requirements dropdown.

    Recorded training topics and Field Notices cover:
    • Overview and Introduction
    • Rollovers
    • Account Selection
    • Reg BI Disclosure and Form CRS
    • FIRE Solutions Mandatory Training
    • Mutual Fund Cost Analysis
    • No-Load Mutual Funds and Exchange-Traded Funds (ETFs)
    • Sales Contest Incentives
    • New Forms and Other Account Document Updates
    • Form CRS Acknowledgement
    • Reg BI Training specifically for Non-Registered Personnel
       
  4. Review the Forms Updates dropdown. Reg BI impacts several existing forms and has resulted in the creation of some new forms as well. The Forms Updates dropdown includes links to new and updated forms, as well as links to guides and recordings to help you navigate process changes. New guides and recordings include:
    • Guide to Forms Updates – Summary of the changes to most transaction specific forms
    • Regulation Best Interest Forms – Recorded Training
    • Direct Business Forms Guide – Comprehensive guide to ESI forms for new direct business accounts
    • ESI Additional Investment Documentation Requirement – Comprehensive guide to ESI forms for additional Investments
    • Qualified Plan Rollover Guide – Overview of changes to the Qualified Plan Rollover Disclosure form
      1. Qualified Plan Rollovers and Reg BI – Recorded Training
    • Financial Planning-Consulting and Purchase Disclosure Form Changes – Recorded Training
    • Retail Brokerage and Illuminations Form Requirements Guide – Comprehensive document that breaks down new business paperwork requirements by Retirement/Non-Retirement accounts by product (Retail Brokerage and Illuminations business).
    • Explicit Hold Memorandum Form Guide
    • Explicit Hold Memorandum Form – Recorded training

Does Reg BI impact my existing clients?
On June 15th, ESI sent out our Annual Privacy mailing to all existing clients – both brokerage and direct – and included both the new Customer Relationship Summary (Form CRS) and our Regulation BI Disclosure. Sending these documents ensured that all clients received a copy of the new disclosure prior to the regulation’s effective date of June 30, allowing you to continue to provide recommendations on their existing accounts without having to deliver these documents yourself.  This only applies to individuals who were clients of the Firm prior to June 30th.  After June 30th, recommendations are subject to delivery criteria as explained in our training materials.
 

Questions? Contact ESI at 800-344-7437.

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