Month: July 2022

Move Money More Quickly – EWS is Here!

July 26, 2022

Early Warning System (or EWS) is a third party service provider that conducts real-time bank account status and ownership verification services using a consortium of checking account information with participating banks on the Integrated Cashiering Platform.

What does this mean for you and your clients? The 10-day prenote period will no longer be applied to most bank information being added to Brokerage and Illuminations accounts. About 60% of the bank info being added will go live immediately.

EWS verifies bank account status (open closed, etc.), bank ownership based on name and SSN, and provides stronger fraud and risk controls. If EWS verification is inconclusive or unavailable, standard prenote process will be used to verify bank info. If the EWS returned a “fail”, a letter will be sent to customer for security purposes. This new solution is now available and being utilized by our money movement teams. Please contact our service desk if you have any questions.

TC1278929(0722)

Read More  

Q2 Alternative Mutual Fund Update

July 26, 2022

The Approved, Watch and Restricted mutual fund lists have been updated. See below for descriptions of the lists and links as well as training requirements.

APPROVED AND PROHIBITED ALTERNATIVE MUTUAL FUNDS
The purchase of Alternative Mutual Funds that include inverse and leveraged strategies is not permitted. To assist with what funds may be purchased, there is an Alternative Mutual Fund Available List and a Watch List which is updated quarterly and may be found on the Agent Portal -> Products-> Investments -> Mutual Funds. 

  • The Approved List is a list of approved alternative mutual funds that may be purchased (once training has been completed).
  • The Watch List is a the list of alternative mutual funds that the Firm is watching to determine if they may become prohibited in the future due to failing consecutive screens, (two consecutive quarters). If you recommend purchases on the list, please be aware that they may no longer be approved to purchase in the future.
  • The Restricted List is the list of prohibited alternative mutual funds.
    • BROKERAGE: If an attempt to purchase is ma de in a brokerage account, the purchase will be blocked.
    • DIRECT: If purchased in a direct, mutual fund, you will be contacted by Compliance after to work with your client to have any new investments directed to a non-alternative mutual fund or to one of the approved alternative mutual funds. 
    • REMOVED FROM APPROVED LIST:If a fund is removed from the Available list (brokerage or direct), Compliance will contact you to let you know that the fund is no longer available for purchase and to work with your client to have any new investments directed to a non-alternative mutual fund or to one of the approved alternative mutual funds. 

TRAINING
Prior to purchasing approved alternative mutual funds, you must first complete required training in FIRE Solutions. The training may be accessed through FIRE Solutions: https://blaze.firesolutions.com/portal/login. The cost is $12.50.  Once you have completed the course, please email your completion certificate to ESITrading@NationalLife.com and this training will be added to your profile.

QUESTIONS

If you have any questions or concerns regarding the alternative mutual fund lists, please contact ESI at 800-344-7437.

TC127892(0722)

Read More  

ESI Illuminations Strategy for Tax Harvesting

July 26, 2022

While the equity markets have been sharply lower through June of 2022, it’s likely that actively managed mutual funds have increased their turnover ratios from normal levels.  Active mutual fund portfolio managers in normal years often have turnover ratios of 50 – 60%.1  Funds with a higher portfolio turnover ratio are more likely to incur higher capital gains taxes.  While the fund’s returns may be negative for 2022, the increased capital gains can create additional phantom income.  Phantom income refers to a situation whereby a client owes capital gain taxes even though the investor’s general investment portfolio might have declined in value.  While having a declining account with phantom capital gain income is seldom considered positive, there is a strategy that can help offset the income – Tax Harvesting. 

ESI Illuminations has a strategy for its mutual fund portfolios that can allow investors to realize capital losses to potentially offset the increased capital gains, while not moving to cash and missing potential upswings in the market.  The strategy is referred to Harvesting Gains and Losses.  Here is an outline of the process:

  1. Identify clients in mutual fund portfolios within Illuminations that may potentially benefit from harvesting losses. You can do this by clicking on the Gain/Loss report under the Practice Tab, and then Book of Business Reports in ESI Illuminations. (Please note that the data in the Gains/Losses report relies on the data received by the custodian, is based on previous business day’s close, and does not update intraday unlike Wealthscape.)
  2. Identify whether the losses you wish to harvest are short and/or long term. (Please note that Unrealized Losses and Available Unrealized Losses can and will differ based on model IP rules, model variance limits, trade value minimum, security, and wash sale restrictions.)
  3. To avoid Wash Sale restrictions, request to select a replacement ETF, (The wash-sale rule prohibits selling an investment for a loss and replacing it with the same or a “substantially identical” investment 30 days before or after the sale. True “wash sales” may not be permitted by the IRS, which could translate into higher capital gains than expected. Often times, the manager has NOT identified an alternate ETF and as such, none is available –proceeds from a loss harvest will be held in cash in this event and will be reinvested back into the target model security after the wash sale period expires)
  4. Submit the request via the Clients’ Service Tab in the Illuminations platform to the ESI Service Request team.
  5. You can monitor the progress of the service request by going to the Practice tab to pull up the list of service requests. From there you can click on the Service tab to see an overview of the request and the status of each task.”

Many mutual fund investors have experienced challenging returns to this point in 2022.  Adding value to clients by providing tax harvesting services through Illuminations may be of interest to many of those investors.  If you have additional questions about this opportunity, please contact ESI Business Development or Advisory Operations at 800-344-7437.

Michael Laske, Research Manager at Morningstar, Feb. 28, 2019.

TC127892(0722)

Read More  

ESI Illuminations Strategy for Tax Harvesting

July 19, 2022

While the equity markets have been sharply lower through June of 2022, it’s likely that actively managed mutual funds have increased their turnover ratios from normal levels.  Active mutual fund portfolio managers in normal years often have turnover ratios of 50 – 60%.1  Funds with a higher portfolio turnover ratio are more likely to incur higher capital gains taxes.  While the fund’s returns may be negative for 2022, the increased capital gains can create additional phantom income.  Phantom income refers to a situation whereby a client owes capital gain taxes even though the investor’s general investment portfolio might have declined in value.  While having a declining account with phantom capital gain income is seldom considered positive, there is a strategy that can help offset the income – Tax Harvesting. 

ESI Illuminations has a strategy for its mutual fund portfolios that can allow investors to realize capital losses to potentially offset the increased capital gains, while not moving to cash and missing potential upswings in the market.  The strategy is referred to Harvesting Gains and Losses.  Here is an outline of the process:

  1. Identify clients in mutual fund portfolios within Illuminations that may potentially benefit from harvesting losses. You can do this by clicking on the Gain/Loss report under the Practice Tab, and then Book of Business Reports in ESI Illuminations. (Please note that the data in the Gains/Losses report relies on the data received by the custodian, is based on previous business day’s close, and does not update intraday unlike Wealthscape.)
  2. Identify whether the losses you wish to harvest are short and/or long term. (Please note that Unrealized Losses and Available Unrealized Losses can and will differ based on model IP rules, model variance limits, trade value minimum, security, and wash sale restrictions.)
  3. To avoid Wash Sale restrictions, request to select a replacement ETF, (The wash-sale rule prohibits selling an investment for a loss and replacing it with the same or a “substantially identical” investment 30 days before or after the sale. True “wash sales” may not be permitted by the IRS, which could translate into higher capital gains than expected. Often times, the manager has NOT identified an alternate ETF and as such, none is available –proceeds from a loss harvest will be held in cash in this event and will be reinvested back into the target model security after the wash sale period expires)
  4. Submit the request via the Clients’ Service Tab in the Illuminations platform to the ESI Service Request team.
  5. You can monitor the progress of the service request by going to the Practice tab to pull up the list of service requests. From there you can click on the Service tab to see an overview of the request and the status of each task.”

Many mutual fund investors have experienced challenging returns to this point in 2022.  Adding value to clients by providing tax harvesting services through Illuminations may be of interest to many of those investors.  If you have additional questions about this opportunity, please contact ESI Business Development or Advisory Operations at 800-344-7437.

  1. Michael Laske, Research Manager at Morningstar, Feb. 28, 2019.

TC127801(0722)1

Read More  

New Previous Sales Page in Wealthscape and Wealthscape Investor

July 19, 2022

Starting on July 22, 2022, an enhanced version of the Previous Sales/Realized page will be available on Wealthscape and Wealthscape Investor. The new Previous Sales page will allow users to quickly assess overall summary and position gain loss information by account.

Key features include:

• Enhanced search options such as specific date range and view ‘since inception’

• New filter options include covered status and holding period when applicable

• Page details can be exported into a CSV file

• Ability to view lots for all positions by using the Expand All feature

To navigate to the refreshed page, click on ‘Previous Sales – New’ in menus. The existing ‘Previous Sales/Realized page’ will continue to be available for the next several months.

Click the here to read more!

TC127801(0722)1

Read More  

Updates about the Direct Transaction Review Process

July 19, 2022

The ESI Suitability team encourages you to contact us about your upcoming Direct Business transactions so that we may discuss big picture suitability topics and finer details prior to finalizing them with the client.

To provide you with the gift of time and ensure success, we recommend that you connect with us and utilize the Transaction Preview process.  By leveraging Docupace and Starting Point we can preview Direct Business paperwork before you finalize it with client signatures.  Engaging the Suitability Team before documents are signed allows us to work through any paperwork updates or questions and reduce potential back and forth with the client.

For any questions or to start the Transaction Preview process please contact the ESI Suitability team by calling 800-344-7437.

TC127801(0722)1

Read More  

Google Chromebooks and Entreda

July 19, 2022

With the launch of the Entreda Cybersecurity platform last year, National Life took a big step forward in keeping our promise to protect you and your client’s sensitive information. We’ve seen some stellar Entreda scores for both Mac and Windows machines and are excited to see so many of you taking the correct steps to keep that sensitive information secure.  

Protecting your client’s information is an ongoing process and we must continually evolve with the ever-changing landscape. Currently, the Entreda platform does not support Google Chromebooks. Chromebooks are popular in schools as they rely on an internet connection, are inexpensive and are easy to use devices.   However, because they have not evolved into the business world yet National Life has made the decision to restrict Chromebooks from accessing the agent portal for those covered by Entreda. Fortunately, this represents a very small percentage of agent portal logins. This restriction will take place on August 1st 2022. After that time, you will need to use a Windows or Mac computer to access the agent portal. Android devices will continue to be supported and won’t be affected by this decision.

We are working with Entreda to provide coverage for Chromebooks in the future so that we can support a wide variety of devices as securely as possible. Thank you for your understanding and helping us keep our promise to you and your clients.

TC127801(0722)1

Read More