Do your clients have questions about social security or Medicare? Allianz has a new guide available.
TC119718(0221)1
Month: February 2021
ESI Executive Leadership Quarterly Update – Recording Now Available
Click here for a recording of our last Quarterly Field Update! During the last session, ESI’s Executive Leadership Team reviewed results of Q4 2020 and shared some insight into what you can expect from ESI in 2021.
TC119718(0221)1
Tapping into Maple: Inflation Worries
It is no secret that the federal government has been spending a lot of money during the past twelve months to combat a historic pandemic and the ensuing economic troubles from lost jobs and reduced consumer spending particularly in the service sector. All this support and years of low rates and supportive financial conditions—and the support of the Federal Reserve to not raise rates too quickly – has a lot of investors concerned about the potential for run away inflation in the years to come. Read the full article here.
TC119718(0221)1
5 Lessons From 5 Decades of Asset Allocation
Key takeaways from Morningstar’s 5 Lessons From 5 Decades of Asset Allocation:
- Our asset allocation approach has drawn on our research over the past 44 years, research spanning five decades for which we’ve won 11 Graham and Dodd Awards.
- In the early days, Ibbotson Associates pioneered strategic asset allocation based on rigorous research.
- Our asset allocation approach evolved when research pointed to the fact that expected returns vary over time in ways that are predictable, creating opportunities for investors to enhance returns. Today we call this valuation-driven asset allocation.
- Our history has taught us five lessons: 1) to be long-term minded, 2) to use a simple framework for assessing value, 3) to deeply assess fundamentals, 4) to think contrarian, and 5) to understand where you are in the capital cycle.
Click here to read the full article.
TC119718(0221)1
Illuminations 2.0 is NOW LIVE!
Over the past month members of ESI’s Business Development team have been sharing videos about the upcoming changes to the ESI Illuminations platform. While each video spotlights a different new feature coming to Illuminations, there’s one thing they all have in common. They are all the result of bundled pricing.
Bundled Pricing
Every year ESI Illuminations evolves – new functionality, new managers, more portfolios – but in 2021 the evolution of Illuminations is taking a big leap forward with the introduction of bundled pricing. As of today, February 15th, the first phase of ESI Illuminations 2.0 is live, and bundled pricing is now in effect for all new business. This means that there are no longer separate transaction/trading fees on Illuminations accounts; they are bundled into the platform fee and provide unlimited trading.
In addition to these new platform fee schedules, the following changes are now also live:
- Moving to the lowest cost share class (F3) in American Fund portfolios
- Change to billing in advance as opposed to the current process of billing in arrears
Get the Details
Details about these new updates, including new fee schedules, can be found in the ESI Illuminations 2.0 Overview video and Frequently Asked Questions document.
This is the first step in an exciting year for Illuminations! New features and enhancements will continue to be introduced over the next several months so look for more information as we implement Illuminations 2.0!
Miss any of our recent videos?
- Jeff Wood spotlights ESG options coming in future platform enhancements.
- Sandy Colvin spotlights the evolution of the Team Approach.
- Lou Martinez spotlights the impact of bundled pricing to ETF portfolios.
TC119718(0221)1
Register Today! Rep Insights Discussion with Scott Maitland and Rich Kelly
This series began in 2020 as a forum for ESI Reps to hear what others were doing to keep their business going…growing, in a rapid and unpredictably changing environment. In just a few months, the series evolved to look beyond recent events and instead focus on long-term, business-building insights from some of ESI’s most successful practitioners.
To kick off the 2021 series, we’re excited to welcome Rich Kelly and Scott Maitland, both from the Pacific Northwest. With some of the most unique marketing we’ve seen at ESI, both Rich and Scott have set themselves apart by successfully emphasizing their personal passions in their business building efforts. If you’ve been considering marketing beyond “business as usual,” then you won’t want to miss this session.
ESI Rep Insights – 2021 Episode 1
Tuesday, February 23rd
4:00 PM EST/1:00 PM PST
Register Here: https://nationallife.zoom.us/j/93475418563
TC119621(0221)1
New Fiduciary Rule & Updated ADV 2A and 2A-Appendix
| ESI Compliance | Field Notice 2021-04 February 10, 2021 |
Massachusetts Fiduciary Rule
In March 2020, Massachusetts published a new Fiduciary Rule, with an enforcement date of September 1, 2020. Although it is similar to the heightened requirements that came with Regulation Best Interest (“Reg BI”), there are some differences of which Registered Representatives (“RR”) who are licensed in Massachusetts should be mindful.
Background
As you know, Reg BI took effect on June 30, 2020. While not a fiduciary standard, it requires that you act in your retail customers’ best interest when making recommendations, without placing your (or the Firm’s) interests ahead of your customers’. Your best interest obligation is satisfied if you comply with four additional obligations, specifically: disclosure, care, conflicts of interest, and compliance. These changes were previously communicated to you through series of Reg BI trainings available on the ESI website (www.equity-services.com).
In contrast, the Massachusetts regulation expressly adopts a fiduciary standard. It applies to both current and prospective customers but excludes certain institutional clients. In an effort to strengthen investor protections, it adopts a duty of loyalty for broker dealers and their RRs, requiring that investment advice and recommendations be provided “without regard to the financial or any other interests of any party other than the customer.”
What does this mean?
Under the Massachusetts rule, disclosing conflicts alone does not satisfy these new requirements. Broker dealers and their RRs must “make all reasonably practicable efforts to avoid conflicts of interest, eliminate conflicts that cannot reasonably be avoided, and mitigate conflicts that cannot reasonably be avoided or eliminated.” To that end, the regulations state that “[i]t shall be presumed to constitute a breach of the duty of loyalty for a broker dealer or an agent to [make a recommendation, if it] . . . is made in connection with any sales contest.” RRs licensed in Massachusetts need to be mindful of these enhanced standards when making recommendations to their Massachusetts customers.
Impact on incentive programs
These standards will affect qualification for some of the sales contests in which you may have participated in the past and for those in which you may qualify in the future. For example, commissions earned through the sale of securities to Massachusetts residents, or commissions earned by Massachusetts based RRs, after September 1, 2020 cannot count toward qualification for sales contests.
Please note that credits associated with incentives offered by the home office (e.g. Presidents Club, ESI Elite Symposium, etc.) will be calculated to ensure compliance with the Massachusetts Fiduciary Rule. Additionally, agency incentives that strictly utilize club credits, as calculated by the home office, will also be in compliance with the Mass Rule.
Questions
If you have any questions, contact your Branch Office Supervisor or you can reach ESI Compliance at 800-344-7437 or ESICompliance@nationallife.com.
| EFA Compliance | Field Notice 2021-05 February 12, 2021 |
Form ADV Part 2A & 2A-Appendix 1 Update
Effective February 12, 2021, ESI Financial Advisors (“EFA” or “the Firm”) updated its Form ADV Part 2A (ES0408) and ADV Part 2A-Appendix 1 (ES0408A) disclosure brochures (“Brochures”) to reflect changes to the Illuminations platform pricing.
The Brochures describe the various products and services offered by EFA, and provide required disclosure of fees, disciplinary events, and conflicts of interest. Note that delivery of a brochure is not required for accounts on which EFA acts in a solicitor’s capacity.
The updated versions of these forms are available on the ESI Illuminations website and through the NLG website, via MerrillConnect. Please destroy and discontinue use of any previous versions of these disclosure documents, and only use the current versions.
SUMMARY OF CHANGES
The ADV Part 2A (Item 5) and the ADV Part 2A-Appendix 1 (Item 4) have been updated to incorporate the implementation of asset-based pricing and related disclosures and conflicts. The changes also incorporate the closing of the ESI Illuminations Flagship program to new investors, effective 3/17/2021.
DELIVERY REQUIREMENTS
ADV Part 2A
The Form ADV 2A must be delivered to all advisory clients at or before the time of entering into an investment advisory agreement. This includes clients with accounts in one or more of the following programs:
- ESI Illuminations;
- EFA Financial Planning/Consulting Agreements;
- American Funds Retirement Plan Platform;
- AssetMark (adviser model);
- Morningstar;
- Saratoga Advantage Trust; and
- SEI
- TD Ameritrade Retirement Plan Platform.
ADV Part 2A-Appendix 1
The Form ADV 2A – Appendix 1 is specific to the Firm’s wrap program (i.e. ESI Directions) and must be delivered to all advisory clients with accounts in the ESI Directions program at or before the time of entering into an investment advisory agreement.
QUESTIONS
If you have any questions regarding the Form ADV 2A or Form ADV 2A-Appendix 1, please contact ESI Compliance at 800-344-7437.
TC119621(0221)1
Transamerica Annuity Product and Rider Closures
Communication from Transamerica:
ANNUITY PRODUCT AND RIDER CLOSURES
You deserve a product partner that is dedicated to delivering and maintaining solutions that evolve with the ever-changing market environment. While we remain committed to the long-term success of our annuities business, we are making adjustments to our product offerings as we transition our focus from Minimum Guaranteed Withdrawal Benefits to accumulation and protection.
This is well represented through our continued offerings of Investment Only Variable Annuities which include policy value, return of premium and annual step-up death benefit options and the Transamerica Principal Optimizer SM (TPO) rider offered with a Transamerica variable annuity. For an additional fee, this optional rider allows clients the opportunity to invest with open allocation and a principal guarantee after a 10-year waiting period.
Effective February 26, 2021, the products and riders listed below will no longer be available.
1) DISCONTINUED PRODUCTS
The following annuity products will no longer be available for new sales.
- Transamerica Secure Retirement Index®
- Transamerica Secure Retirement Index® II
2) DISCONTINUED RIDERS
The following annuity riders will no longer be available for new sales.
- Additional Death DistributionSM (ADD)
- Additional Death Distribution+SM (ADD+)
- Retirement Income Choice® (all versions)
- Retirement Income Max® (all versions)
- Transamerica Income EdgeSM (all versions)
- Transamerica Income Plus®
For existing policyholders, we will discontinue the ability to add these riders as of March 31, 2021. (Check the prospectus for specific rider availability)
For Additional Death DistributionSM (ADD) and Additional Death Distribution+SM (ADD+), the spouse will continue to have the option to re-add the rider at the time of the death claim, if the Spousal Continuation option is chosen.
TC119621(0221)1
Updated Info for Symmetry Partners
For updated Symmetry information that includes a new sales map and practice management resources, see the ESI Illuminations platform. You’ll find updated materials under the Platform tab.
TC119621(0221)1
Reminder: Get Ready for ESI Illuminations 2.0!
Over the past month members of ESI’s Business Development team have been sharing videos about the upcoming changes to the ESI Illuminations platform. While each video spotlights a different new feature coming to Illuminations, there’s one thing they all have in common. They are all the result of bundled pricing.
Bundled Pricing
Every year ESI Illuminations evolves – new functionality, new managers, more portfolios – but in 2021 the evolution of Illuminations is taking a big leap forward with the introduction of bundled pricing. Starting on February 15th there will no longer be separate transaction/trading fees on Illuminations accounts; they will be bundled into the platform fee and provide unlimited trading.
With the introduction of this new pricing structure we’re opening the door to new features in the future, such as:
- New Separate Account Managers
- ESG (Environmental, Social and Governance) Portfolios
- Strategist UMA (Unified Managed Accounts)
- Overlay Management that includes customized tax strategies
Laying the Foundation: Changes Effective February 15th
The first step in the implementation of Illuminations 2.0 goes into effect on February 15th and will include:
- New Platform Fee Schedules: All new accounts will be charged a “bundled” platform fee that includes trading expenses and provides unlimited trading at no additional expense to the rep or client.
- Moving to the lowest cost share class (F3) in American Fund portfolios
- Change to billing in advance as opposed to the current process of billing in arrears
Get the Details
Details about the upcoming changes, including new fee schedules, can be found in the ESI Illuminations 2.0 Overview video and Frequently Asked Questions document.
This is the first step in an exciting year for Illuminations! New features and enhancements will continue to be introduced over the next several months so look for more information as we implement Illuminations 2.0!
Miss any of our recent videos?
- Jeff Wood spotlights ESG options coming in future platform enhancements.
- Sandy Colvin spotlights the evolution of the Team Approach.
- Lou Martinez spotlights the impact of upcoming platform changes to ETF portfolios.
TC119509(0221)1