Field Notice 2020-27
Field Notice 2020-23: Form CRS Acknowledgement, issued on 6/23/2020, discusses the instances when the new Acknowledgement of Form CRS Delivery is required.

Upon further review of this process, to ensure all clients receive the Form CRS (Client Relationship Summary), the Acknowledgement of Form CRS Delivery (“Acknowledgement”) is required to be completed every time you deliver the Form CRS.

When Form CRS is Required
For new customers:

1. For new brokerage and direct business customers, the Form CRS (Client Relationship Summary) must be delivered prior to or at the time of:
2. Opening an account or changing the broker/dealer on a direct business account;
3. Recommending an account type, securities transaction, or investment strategy that involves securities (e.g.: recommending a customer open a brokerage account, or purchase a specific security or variable product), or
4. Placing an order for the retail investor. 
5. For new advisory clients, the Form CRS must be delivered prior to or at the time of entering into an advisory contract with the investor.
   1. Only required for co-advised (Illuminations, Directions, Morningstar, and SEI), not solicitor accounts.

For existing customers:
Reg BI specifies certain other instances which trigger subsequent delivery requirements.  Form CRS must be delivered to existing customers when you:

1. Open a new account that is different from their existing account(s);
2. Recommend a rollover from a qualified plan into a new or existing account;
3. Recommend or provide a new brokerage or advisory service or investment that doesn’t necessarily involve the opening of a new account and would not be held in an existing account (e.g. ownership changes)

Evidence of Delivery
The Acknowledgement of Form CRS Delivery is attached after the Form CRS (Client Relationship Summary). The Acknowledgement is:

• Signed by you certifying that you provided the Form CRS to the customer.
• Completed every time you deliver the Form CRS to a customer.
• Submitted with account paperwork.
• Not signed by the client.

QUESTIONS
If you have any questions, please feel free to contact Operations at 800-344-7437.

TC116029(0820)

Field Notice 2020-28
With the recent implementation of Regulation Best Interest, ESI is reminding reps that the use of annuities within qualified accounts is generally limited to (click links for approved products):

• Indexed Annuities

• Registered Indexed Linked Annuities (RILA, aka Hybrid Variable Annuities)
• Variable Annuities with income riders

In certain circumstances variable annuities without income riders will be considered for qualified accounts if all of the following conditions are satisfied as outlined in FN2018-12:

• The annuity will provide a leveraged or enhanced death benefit over the contract premium.  Return of premium, contract value only, or potential step-up only death benefits are not eligible; there must be a roll-up feature.
• The annuitant is age 60 or older
• The annuitant is uninsurable or heavily rated, making life insurance unavailable or too expensive.
• The annuitant’s primary goal is for the annuity is to transfer maximum assets to their beneficiaries
• The premiums are not needed for living expenses, and only accessed in the event of an emergency

The use of variable annuities without income riders or leveraged death benefit riders (as described above) would be considered investment-only variable annuities which are only permitted in non-qualified accounts. 

Existing Annuities in Qualified AccountsInvestment-only variable annuities in qualified accounts that were established prior to 6/10/2017 are permitted to make additional investments, however since the investment strategy may be replicated with other lower cost and/or more liquid investment options, such as mutual funds, consideration should be given to utilizing those other options.

QUESTIONS
If you have any questions, please contact your supervisor or ESI Suitability at 800-344-7437.

TC116029(0820)