Month: November 2021

November 2021 Fixed Income Commentary from Maple Capital

November 9, 2021

Bond yields were in flux in October, pricing in a more aggressive path of Fed rate hikes in the process. As a result, the broad market return was negative for the month as shown in the -0.43% result for the Bloomberg U.S. Intermediate Aggregate Bond Index. The world is in the middle of a transition away from crisis-induced easy monetary policy toward some semblance of normal, and all things considered, the bond market is behaving rather well.

With respect to the yield curve, short term maturities (less than one year) remain anchored near zero since the fed funds rate remains at the zero bound and likely will through at least mid-2022. The real action in October was in the two to tenyear part of the curve, where yields rose from 6 to 25 basis points even as yields fell on the thirty year bond. These rising yields were mostly a reaction to persistent inflation coupled with increasing evidence that the labor market is tighter than the Fed believed earlier this year. Both of these facts make an earlier “lift-off” by the Fed more likely, which is why two rate hikes next year are now reflected in market yields.

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Offer More Value to Your Clients with The Premiere Select Health Savings Account (HSA)

November 9, 2021

What is an HSA?

An HSA gives individuals the flexibility to manage today’s qualified medical expenses and plan, save, and invest for future health care needs.

  • It’s an individual account designed to work together with a high-deductible health plan (HDHP).
  • It provides a triple tax advantage—pretax contributions, tax-free qualified withdrawals, and tax-deferred earnings.
  • It’s portable for the individual investor.
  • There’s no “use it or lose it”—the amounts in an HSA carry over from year to year.

The Premiere Select HSA

The Premiere Select HSA lets you help your individual clients manage today’s health care expenses and plan, save, and invest for current and future health care needs.

It’s an open architecture brokerage account, covered under an FPTC custodial agreement, with access to cash management features.

It’s integrated into the Wealthscape platform for easy user access, and it includes:

  • Easy account setup and ongoing management
  • Ability to fund and transfer assets
  • Trading, reporting, correspondence, and service features
  • Cash management features, including a debit card, checkwriting, and billpay

HSA opportunity for advisors include:

  • Helps to further diversify your business
    • Potentially increases your revenue and assets under management
    • Provides more value to your clients, deepens client relationships, and improves client retention
    • Supports small-business clients

In 2019, total HSA assets surpassed $66B, $16B of which is considered investable (i.e., not in a checking account) and is growing at a faster rate than total HSA assets.

The HSA benefits for your clients

Triple tax advantage:

  • Pretax contributions
  • Tax-free qualified withdrawals
  • Tax-deferred earnings

It’s the individual investors’ money—and it stays with them:

  • Completely portable for individual investors—Even if they move, change employers, or change health plans, their HSA stays with them.
  • No “use it or lose it”—The account belongs to the individual and does not need to be used each year.

Flexibility and choice:

  • Use it now—Easy access for current qualified medical expenses
  • Save and invest for later—Provides the option to invest some or all of their HSA money for potential growth as a way to prepare for health care costs in retirement

The Premiere Select HSA cash management capabilities:

  • HSA-specific debit card provided to registered account owner for all accounts
  • Checkwriting
  • Electronic billpay

Fidelity Has Some Great Reference Materials for You to Utilize, Too!

Health Savings Account Fact Sheet – Rep Use Only

Health Savings Account (HSA): Frequently Asked Questions – Rep Use Only

Health Savings Account Fact Sheet – CLIENT USE!

Questions? We’re here to help! Please give ESI Brokerage Operations a call at 1-800-344-7437

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City National Rochdale Now Closed to New Accounts

November 2, 2021

Effective immediately, ESI will close all investment portfolios managed by City National Rochdale (“CNR”) to new business.  This includes via AssetMark, SEI and directly with CNR.     

This decision was made following CNR’s disclosure of a Securities and Exchange Commission’s (“SEC”) Wells Notice issued to CNR’s CEO Garrett D’Alessandro, as well as an ongoing investigation of CNR by the SEC for the same alleged violations of the Investment Advisers Act of 1940. CNR’s disclosure can be read by clicking here.

CNR will provide ongoing management of the accounts currently invested in CNR portfolios.

ESI will continue to monitor the situation and provide updates as they become available. 

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ESI Operations Reminder: Required Contingent Funding on Systematic Withdrawal Plans

November 2, 2021

In the first quarter of 2021, ESI implemented an Operational policy requiring contingent funding on systematic withdrawal plans for all Brokerage accounts. The decision was made to ensure that payments requested by customers are not missed for insufficient funds. Missed payments for RMD’s or Life Expectancy plans can have negative tax consequences. Perhaps more importantly, some customers on a fixed budget depend on the monthly payments to meet various expenses or obligations. Based on negative feedback from our field regarding the impact of missed payments, the decision was made to institute this policy.

What does this mean for my client?

ESI has been requiring a primary or contingent funding method on plans set up on accounts with mutual fund holdings. If funding is not available through the primary funding method (most often 100% from the core account), the system will automatically make the funding available by liquidating a mutual fund holding. The system will liquidate the position when the plan goes into the “payout phase” (typically 1-2 days before the payment date). The trades placed as part of the plan have a reduced charge ($2.00 per trade, as opposed to $9.00 for a manual trade, and no $3.50 service fee). The $2.00 is charged to the representative of record on the account.

How can I manage the plans if I wish to make cash available for the client?

For existing plans set up prior to this year, ESI Operations currently monitors for insufficient cash 14-days before the run date. If no cash is available, the plan will be modified to add a contingent funding option. If you wish to monitor these accounts, you can use the same Wealthscape report.

Remember, the system will only liquidate a mutual fund if there is insufficient cash. By monitoring the report, you will have 13 days to place a trade to make cash available. The reports in Wealthscape can be scheduled to auto-deliver on a weekly basis to your National Life email address.

Summary:

Plans set up on Brokerage accounts holding mutual funds are now consistent with plans set up directly with a Mutual Fund company. If your client wishes to take $1000/month from their American Funds account, they need to specify which assets will be liquidated to raise cash. You can still provide those instructions on our Periodic Distribution or Systematic Withdrawal Form as well (by completing section B and specifying which assets to liquidate).

Be sure to have this discussion with your client when completing the form, and explain that if no funding method is provided, a contingent funding method will automatically be applied to ensure seamless processing of their payment.

Please contact ESI Brokerage Operations at 1-800-344-7437, Option 1 and then Option 2 with any questions.

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