Month: June 2022

ESI Elite Symposium Starts Off Strong This Week!

June 14, 2022

Monday evening we welcomed this year’s ESI Elite Symposium attendees and began our business sessions first thing Tuesday morning with a jam packed agenda!

We began the morning hearing from ESI’s President & CEO, Ata Azarshahi where he congratulated all of ESI on their 2021 success of $1.5 billion in sales (up 31% over 2020!) and reported on 91% growth in total AUM since 2016! How are we doing this? Because of YOU – ESI’s rep base, where we are seeing more and more ESI reps hitting major sales milestones each year. Ata closed out his remarks thanking our top producing agencies and reps – noting that 2021 was the first time ESI has seen two reps, Steve Simon and Mark Vosk, finishing the year in over $1 million of GDC each!

Following Ata, we heard from Rebecca Dunne, VP of Affiliated Distribution, who we are excited to have as the next leader of the Affiliated channel starting this summer! Rebecca also started off by congratulating everyone on a record breaking life sales year for the channel hitting $78 million of WNAP in 2021! Rebecca attributed this to the strong partnership ESI shares with the Affiliated channel, but was sure to remind us that “last year, was so last year” and ESI and Affiliated will continue to partner closely. To ensure a strong 2022, we are working on solutions around succession planning, teaming, and additional comprehensive, advice-based solutions which encompass all asset classes.   

Before our mid-morning break, we received a quick re-cap of everything the ESI Field Committee has accomplished in the past year from co-chair Tyler Degeneffe –from getting Entrada and AdvicePay through the door to introducing two new members to the Committee, Michelle Lawrence and Gary Liskow. National Life’s Lee Revels also joined us for an annuity update pointing out that NL Annuities sit in the top decile of offered rates in comparison to our competitors, and reminded us of the bond characteristics of a fixed indexed annuity.

Dan Randall, VP of ESI Product Management kicked off the second half of the day showcasing new opportunities for ESI Illuminations – specifically the expansion of our Separately Managed Accounts (SMAs) offering! This enhanced SMA line-up can help you differentiate your services, provide increased transparency of ownership, give you the ability to customize at the client level, and provide tax overlay opportunities. We have added eleven new high conviction managers including names such as Columbia and Principal.

We then received an economic update from Chief Investment Officer, Jason Doiron. JD shared that what we’ve experienced in more modern times, is the Fed (starting with Alan Greenspan) gradually changing the way inflation is measured, moving from the traditional (Paul Volker and prior) calculation of looking at both asset inflation and consumer price inflation to a more concentrated focus on consumer price inflation. This fundamental shift has created unprecedented times, and while we’re watching the Fed begin another tightening schedule, we’re looking at the second highest CPI on record – at the fast acceleration rate we’ve ever seen – and unemployment at an all time low, it is unclear if they can land this softly. So what’s the best performing asset Jason has today? Not cash! Instead, a vehicle which not only provides a guaranteed death benefit, but also provides great tax advantages, and coupon potential with interest crediting.

Chairman, CEO & President, Mehran Assadi closed out the day stating “I love ESI!” (so do we, Mehran!). 2021 was the best year in history for the company for both profitability and top line growth, and with this growth oriented leadership team in place at National Life, he is confident that ESI can grow sustainably and responsibly to achieve its goal of 1,000 productive reps. Mehran shifted into addressing National Life’s big, scary goals of $750 million of WNAP and $5 billion of annuities – SPADs in particular – confident that we can achieve and exceed these opportunities, concluding the day re-affirming JD’s comments on life insurance being a valuable asset class. As amongst the global uncertainty we are facing today, our life insurance products are no longer just a sale for the mortality play, but living benefits as well; giving us the advantage we need to move forward and achieve our future growth goals.  

What an exciting start to ESI’s Elite Symposium in Park City, UT! We’ll be sure to share more highlights in next week’s Insights so stay tuned!

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Global Market Outlook: Dented, Not Derailed.

June 14, 2022

Russia’s invasion of Ukraine creates near-term risks for markets, but also casts a shadow over the longer-term outlook. The immediate threat comes from high energy prices, rising food prices and disrupted supply chains. The longer-term issues are a new cold war between Russia and the West, increased military spending and a further blow to globalization. The war is a defining moment for Europe, which now needs to unwind decades of Russian energy dependence, accelerate its sustainable energy transition and rebuild military capability.

Markets had plenty to worry about before the invasion, including the onset of U.S. Federal Reserve (Fed) tightening, the impact of COVID-19 lockdowns on supply chains and inflation and the outlook for China with problems in the real estate sector, its zero-tolerance COVID-19 policy and heavy-handed regulation of technology firms.

Our theme for 2022 prior to the invasion was The Great Moderation. We expected global growth to moderate from the post-lockdown surge in 2021 but remain above trend. The consequences of the invasion are lower global growth, with Europe taking the largest hit, and higher inflation. Even so, global growth this year should still be above trend, provided hostilities ease and global energy prices stabilize. Above-trend growth should support equities over bonds and cash, but the conflict has created significant uncertainty, which means more market volatility.

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RUSSELL INVESTMENT’S Q2-2022 GLOBAL MARKET OUTLOOK

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Tapping Into Maple: Inflation Cures Inflation

June 14, 2022

For most of the twenty-five years prior to 2020, low inflation was the norm in the US (and in most developed economies). PCE* inflation, the Fed’s preferred measure for inflation, spent most of that time below 2%. In fact, in the aftermath of the Great Financial Crisis (GFC), deflation was the chief worry of policymakers. Other factors that contributed to the exceptionally low inflation data include:

  • Globalization, which allowed businesses to reduce costs by sourcing labor and materials abroad;
  • Slow GDP growth, particularly after the GFC since financial crises result in more sluggish and gradual recoveries which made it challenging for businesses to raise prices;
  • Less investment spending by businesses following the GFC, which also kept GDP growth in check;
  • Credibility of the Fed as an inflation-fighting central bank, which fostered low inflation expectations and became a self-fulfilling prophecy until 2021;
  • New business models exemplified by Amazon which intensified retail competition and put real-time pricing information in the hands of consumers like never before.

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New Forms Requirement is In Effect!

June 6, 2022
As you know, as a result of the DOL Rule, ESI has referred to doing business under two Prohibited Transaction Exemptions, also known as PTE 84-24 and PTE 20-02.

Compliance with PTE 84-24 took place in December of 2021.  It was largely focused on disclosure of third-party compensation from the recommendation to purchase insurance products such as fixed-indexed or variable annuities.

PTE 20-02 has a compliance date of June 30th, 2022.    By utilizing 20-02, reps can continue to receive third-party compensation for advice related to ERISA and IRA-based accounts, as long as certain criteria are met.  PTE 20-02 will be used for brokerage, mutual fund, and advisory business.  To comply with PTE 20-02 ESI has updated disclosures on various forms and created two new forms: the IRA-to-IRA Disclosure Form and the IRA Transfer of Assets Form. In addition, revisions have been made to the Defined Contribution Rollover Recommendation and the Defined Benefit Rollover Recommendation forms. Note that these new/updated forms have been available for use, however, starting June 1st ,  the new versions of all forms must be used regardless of when they were signed. Beginning, June 30th, if an error is made on the form, it is outdated, or it is missing, the business may need to be rejected per the regulation since disclosure must occur pre-transaction. The Operations Team may send reminder emails and/or call to remind reps of the upcoming changes while in the transition period.

The two new IRA to IRA Disclosures and the four revised Rollover Disclosures contain elements of the Best Interest Supplemental Worksheet.  As such, the Best Interest Supplemental Worksheet is no longer needed when one of these forms is required.

As we approach the enforcement date, you are encouraged to review the communications, training and reference materials that have been distributed over the past nine months. All communications and related materials can be found on the NL Agent Portal. Simply log in, click on Training, and choose the DOL Training Page.

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Coming Soon to ESI Illuminations…

June 6, 2022

Coming soon, an expanded list of SMA’s, separately managed accounts.  Based on the feedback of ESI Advisors, we are greatly expanding our list of SMA’s.  Our offering will make additional choices available within the various asset classes to assist advisors in meeting the diversification goals of their clients.  Stay tuned for additional details to be shared during the week of June 13th.

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ESI and NLG Closed In Observance of Juneteenth National Independence Day

June 6, 2022

National Life Group and ESI – along with the NYSE and NASDAQ – will be closed on Monday, June 20, 2022 in observance of Juneteenth National Independence Day. Please be aware that many (if not all) of our strategic partners will be closed that day as well. We will re-open Tuesday June 21st with normal business hours.

While Juneteenth may be a newly federally recognized holiday, people in cities and towns across the U.S. have celebrated June 19th for a century and a half as on June 19, 1865, enslaved African Americans in Galveston, Texas were told they were free.  The announcement in Galveston put into effect the Emancipation Proclamation, which had been issued more than two and a half years earlier on January 1, 1863, by President Abraham Lincoln.  In recognition of Juneteenth, to honor the struggle for, and the progress made toward racial equity, National Life and ESI are adding this federal holiday to our list of office-closed holidays going forward.

Thank you for all you do for National Life and the communities we live in.

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