Warm referrals from your network is the ideal prospecting source! Send us your most effective idea(s) for generating referrals. We’ll compile all of them and share them in ESI Insights. Send your ideas to ESIBusinessDevelopment@nationallife.com .
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New Social Campaigns Available on Hearsay
Pre-built social media campaigns in Hearsay can help you easily pre-schedule multiple posts on a specific topic. Four new campaigns include:
To access and utilize Hearsay campaigns, simply log in to your Hearsay account, click on the Content dropdown and choose Campaigns.
Quick Tip for Faster Searching
Have some specific topics you’d like to post about? Click on the Filter button and then choose a topic from the available Tags.
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Looking for NL application processing deadlines? Click here.
For important reporting updates for RMDs and annual retirement account fees, click here.
Holiday Phone Hours for ESI Call Center
12/23 – NYSE open until 4 – ESI phones close at 4:00 EST
12/26 – National Life and ESI closed for Christmas Observed
1/2 – National Life and ESI closed for New Year’s Day Observed
ESI BROKERAGE OPERATIONS – IMPORTANT DATES
Nov. 15, 2022
Annual Maintenance Fee Waiver Request form must be received at ESI by November 15, 2022. This optional form is submitted by Registered Representatives that wish to absorb IRA fees on behalf of client accounts.
Nov. 1-19, 2022
IRA Custodial Fees – Retirement accounts that have instructions on file to pay the annual maintenance fee via journal or EFT may have the fee deducted from the account as early as November 1st through November 19th, 2022.
Nov. 22, 2022
IRA Custodial Fees – $40 per account, included as a statement message on September 30, 2022 statement, will be applied to client accounts November 22nd.
Dec. 7, 2022
Systematic Withdrawals from Retirement Accounts scheduled for payment between December 12th and December 31st will be “pulled forward” in the December 7th nightly cycle. Trades at the client’s instruction should be placed, if necessary, to satisfy the distribution. Partial distributions will be made on December 31st if cash is available in the account. This deadline will allow for corrective actions on incorrect banking or address information.
Dec. 15, 2022
Roth IRA Conversions – It is strongly recommended forms be received, in good order, by December 15th. After this date, conversions will be made on a best efforts basis. Under no circumstances can a request be backdated.
Required Minimum Distributions – It is strongly recommended requests be received, in good order, no later than December 15th to ensure proper processing. This will allow time for corrections to incorrect banking and/or address information.
Alternative Investments 2022 Annual Custody & Valuation Fees – $35 per registered position, $125 per unregistered position, ($500 maximum Fee) are applied to accounts with eligible positions. If insufficient funds exist in the core fund, an unsecured fee posting will be placed in the account for the outstanding balance of the fee. Fee postings which are not resolved by February 1, 2023 will be reversed and charged to the Registered Representative’s commissions.
Dec. 27, 2022
Systems Deadline for New 2022 Periodic Distributions Plans – must be established and approved in ICP by December 27, 2022 in time to pay in 2022. Beginning December 28, 2022, Fidelity Clearing & Custody will establish periodic distribution plans for 2023 only.
Dec. 31, 2022
Fidelity Clearing & Custody Fee Processing and Balance Reminders – In order for a client to avoid the $35 non-qualified account custody fee, they must have one commissionable transaction settle in 2022 or have a $10,000 balance in the core money market fund on December 31, 2022.
Last trade date for 2022 regular way settlement is December 29, 2022.
Dec. 30th and 31st, 2022
IRA Distributions
December 30th, 2022 is the last day an EFT can be sent out of an IRA account as a 2022 distribution, if same day settlement is available.
Distributions processed on December 31st as a check, will be reported in the 2022 tax year.
Dec. 31, 2022 & Jan. 2, 2023
Fidelity Clearing & Custody – “Inactivity” Fee Assessed & Charged – Client accounts are assessed for eligibility/waiver of Custody Fee on December 31, 2022 and, if eligible, are charged the fee on January 2nd, 2023.
Jan. 5-31, 2023
Securities Liquidations to cover Unpaid Fee Postings – ESI home office will begin the process of liquidating securities to cover unpaid fee postings related to the NFS IRA Custody Fee and non-qualified “Inactivity Fee”. Accounts with eligible securities will have trades placed to cover “debit” balances related to fee postings, as well as applicable transaction charges. Customer confirmations will be marked “To Cover Debit”. Representative’s will be charged the $25.00 service fee if ESI home office has to place trades.
Please contact ESI Operations at (800) 344-7437 with questions.
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Today, consumers expect their advisors to provide a wider range of solutions and expertise, so it’s no surprise that many Reps are turning to a teaming model to expand their business opportunities. To support Rep teams, ESI is providing the resources and information needed to establish and operate as a formal team.
What’s the Benefit of Forming a Team?
There are many reasons a rep may choose to form or be a part of a team, including:
Definition of a Team
A team is defined as two or more Reps working together who have a formal business plan on file with Equity Services. The business plan must specify:
Recognition and Reporting
The ESI Elite Symposium is ESI’s annual incentive conference, and members of an ESI Team may qualify in multiple ways:
Team Qualifications:
To qualify for additional EES attendees, total production should represent a “$450k unit” per team member and each team member must do at least $150k of GDC. More details to follow.
A Teaming production report will be maintained on the agent portal and updated monthly. The report will include the Team name, agency, broker dealer concession amounts, advisory fees, and total YTD fees and concession.
Additional Teaming incentives coming in 2023!
Learn More
For questions contact the ESI Business Development Team at 800-344-7437.
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“Bond yields rose in October, but this time in a much more mixed fashion. The two year Treasury yield increased by 20 basis points, while the thirty year bond rose by 39. The broad market as represented by the Barclays U.S. Intermediate Aggregate Bond Index had a total return of -0.80%, while the Barclays Municipal Bond Index returned -0.83%.
The bond market continues to be driven by expectations of Fed policy changes. On November 2, the FOMC announced its fourth consecutive rate hike of 75 basis points, bringing the Federal funds overnight rate to a range of 3.75% to 4%. Despite some evidence of either moderating inflation (from improved supply chain dynamics) or outright deflation (home price declines), not enough progress has been made, so we expect just a moderate downshift in the Fed’s pace: we expect a 50 basis point rate hike on December 14 and more to come in 2023.”
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Cybersecurity
Cybersecurity is the practice of protecting networks, systems, hardware and data from digital attacks. It encompasses everything pertaining to protecting sensitive data – personally identifiable information (“PII”), protected health information (“PHI”), personal information, intellectual property, data, and industry information systems – from theft and damage attempted by criminals and adversaries.
This Field Notice outlines some important best practices around ESI’s cybersecurity requirements. For more best practices and guidance, please review Field Notice 2021-09 Cybersecurity and ESI’s Written Supervisory Procedures.
Branch Cybersecurity Policy
It is recommended that each branch have a documented cybersecurity policy. Here are some items to consider including in the policy:
Important Reminders
Below is a list of important reminders around security and protection of information:
Anti-Virus and Encryption
Everyone associated with ESI must have anti-virus software on all computers that access or store clients’ PII. In addition, all portable devices and external media (e.g. zip drive, flash drive, mobile phone, laptop, disks) that access or store clients’ PII must be encrypted. Backup drives should be encrypted to prevent unauthorized access in the event they are stolen or lost.
Anti-virus/anti-malware software vendors that are compliant with Entreda:
Encryption vendors that are compliant with Entreda:
Entreda
Everyone is required to have the Entreda Unify System (“Entreda”) software installed on all computers and laptops that access or store clients’ PII or are used to access the agent portal. Entreda monitors the security of the computer system, including any key security control deficiencies status deficiencies.
Once installed, Entreda calculates a security risk score based on certain criteria including auto-screen lock, WiFi, password, and encryption settings, among other factors. A device must maintain a passing score of 660 or above to be compliant. Failure to install Entreda or maintain a passing score of 660 will prevent users from accessing the agent portal. Please refer to FN 2021-19 Entreda Unify Systems for more details.
If you no longer utilize a device for business purposes, all ESI data must be permanently removed from that device. Once removed, please contact Rich Whalen (rwhalen@nationallife.com) to confirm and allow him to remove the device from Entreda reporting.
Questions
If you have any cybersecurity-related questions, please contact your supervisor.
Private Placement Offerings
Equity Services, Inc. (“ESI”) permits its Registered Representatives and Investment Adviser Representatives (collectively “Representatives) to invest in private placement offerings for their own accounts. However, ESI’s Code of Ethics requires that all RRs and IARs obtain approval BEFORE investing in a private placement offering. This notice is a reminder of ESI’s process for the review and approval of private placement offerings.
Procedure
Requests for review of a private placement offering should be emailed to the ESI Compliance team at ESICompliance@nationallife.com. With the initial request, include a copy of the offering statement and/or subscription agreement and any other collateral materials you have which describe the program.
Once the necessary information has been received, ESI will complete its review and approve or deny the request. If approved, the Representative will receive an Approval and Stipulation Letter (along with instructions on how to confirm the transaction in Star Compliance) which they must sign and return to Compliance before investing. The letter enumerates the conditions under which they may participate in the offering (see “Stipulations” below). If denied, the Representative will be notified of the reason for the denial in writing.
You may not invest any capital in a private placement offering prior to receiving approval from ESI. To do so is a violation of ESI’s Code of Ethics and could subject you to disciplinary action. Once you are approved to participate in a program, future additional investments in the same program do not require pre-approval but must be entered into Star Compliance for review by Compliance and for quarterly and annual reporting.
IAR Quarterly Reporting
For IARs, private placements are reportable on the Quarterly Transaction Report covering the quarter in which the transaction occurred, as well as on the Annual Holdings Report, for as long as the holding is maintained.
If the request is approved, the initial transaction and holdings information will automatically populate the quarterly and annual reports, as appropriate. NOTE: Private placements are not included on any brokerage firm data feed. Consequently, any subsequent transactions (buy/sell) in the holding must be manually entered into Star Compliance via the “Private Transactions” tile.
Stipulations
The list below represents the standard stipulations that accompany approval to participate in a private placement offering. The Firm reserves the right to add any additional stipulations, as warranted.
Clients’ Investments in Private Placements
Currently, ESI does not offer private placements. As such, Registered Representatives and Investment Adviser Representatives are prohibited from offering, recommending, evaluating, or in any way facilitating a client to invest in a placement offering. A Representative who facilitates an investment in, or refers a prospect to, a private placement offeror is considered to have engaged in an unapproved private securities transaction, or “selling away”. This includes even just introducing a potential investor to an underwriter or offeror for a private placement. Selling away is a serious FINRA rule violation, and often results in significant regulatory sanctions.
Questions
If you have any questions about this requirement, please contact ESI Compliance, at 800-344-7437.
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Recently updated, the Financial Risk Management client seminar addresses the question, “How do you manage 30 years of retirement?”. Focusing on three primary areas of risk, the seminar demonstrates how life insurance, managed money, and annuities can work together to help mitigate that risk.
Format
This seminar can be used in a live or digital format. For important regulatory parameters, please see Video Conferencing for Online Seminars and Speaking Events.
Target Audience
This seminar works well for both clients and prospects. While it does focus on long-term retirement needs, the education it provides is appropriate for any age group.
For clients, it’s an opportunity to reconnect and remind them of all the solutions you provide. Invite clients as a value-add event and ask them to bring a friend, or request referrals at the event.
The seminar introduces you and the solutions you provide to new prospects, with the goal of scheduling a follow-up meeting with prospects after the seminar.
Communication Resources
How you invite people to your event depends on your audience. A compiled list of prospective attendees is always the most effective list. If you are using a CRM tool to track prospects, think about using the information in there to create a list. To help you with communications, the following resources are available:
New to Social? Our Social Media Playbook can help you get started.
Meeting Prep Resources
To download the presentation with script, click here. Note that this seminar has been pre-reviewed by National Life’s Ad Review, which significantly reduces the review time. However, you do still need to submit it for review of any customization, such as your name and disclosure. Once customized, submit it to the Advertising Review Unit – email address ADReview@nationallife.com. At the time of submission please include the Advertising Submission form which needs to be filled out, the PowerPoint presentation/script, invitation, and handouts.
Additional Resources
A client bifold is available to distribute as a follow-up to the seminar as you reach out to attendees.
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Historically, ESI Operations has leveraged the automated Wealthscape reporting delivery system to send reports on RMD’s and Annual Retirement Account Fees during Q4. Currently, we are unable to utilize this tool to push these reports automatically via email. National Financial Services has been researching the issue for a few weeks and we do not have a current ETA on a resolution.
Luckily, these reports can be ran on an ad-hoc basis via Wealthscape (Reports & Alerts -> Reports). You can search by Report name and click on the drop-down arrow to view the data. The reports are titled “RMD”, and “Retirement Account Annual Fees with Core Cash Balance”.
The “RMD” Report displays all of your client’s with an RMD requirement for a given account. The “Estimated RMD Amount Remaining” Column can be utilized to determine the population of accounts that haven’t yet satisfied their RMD. Some clients may had a Periodic Plan set up for their RMD, and these amounts that haven’t yet been distributed will show in the “Estimated Remaining Periodic Pymt Amnt” column.
The “Retirement Account Annual Fees with Core Cash Balance” report was created by ESI to assist you in identifying client accounts that are subject to the $40.00 annual IRA fee, and currently have insufficient cash to cover. These accounts may require your action to avoid ESI Home Office placing a trade in January, and charging the rep of record $25.00 per trade for the service.
These reports can be customized and filtered in any manner that will assist you in tackling these Operational items. Once you modify a report with your preferences, you can “save as” and it will be saved in your reports for future use. If you have any questions on the reports and the underlying Operational initiatives, please contact our service desk at 1-800-344-7437.
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Both the 2022 Annual Compliance Meeting (“ACM”) and the 2022-2023 Firm Element continuing education (“CE”) program are available in RegEd for all Registered Representatives (“RRs”). This field notice explains these requirements and how to access them.
Please note the due dates for completing the ACM and CE, as they are different:
2022 ANNUAL COMPLIANCE MEETING
Login to RegEd (see below for instructions). Under the “My Requirements” section, find “Equity Services Inc. 2022 Annual Compliance Meeting”.
Click on the course to open the meeting in a new window. Ensure the volume on your device is working, as you must be able to hear the audio. As a reminder: ensure you complete the acknowledgement at the end of the presentation in order to receive credit for the meeting. If you don’t complete the acknowledgement, the system will not record your session as complete.
FIRM ELEMENT CE COURSE ASSIGNMENTS
All registered persons will complete the following courses:
Diminished Capacity: Recognizing and Responding to the Signs: As the number of Boomers in retirement grows exponentially, financial services firms increasingly struggle with issues relating to the elderly, including accommodating normal aging, identifying diminished cognitive and financial capacity, and recognizing and reporting elder abuse. Documenting suitable recommendations and rationale and a strict adherence to firm and regulatory requirements will allow you to serve your aging clients both sensitively and faithfully.
Switching, Second Edition (821_2): While switching itself is not illegal, if not done in the best interest of the client, it is both unethical and illegal. This course explains and discusses switching and its impact on customer accounts, suitability, record-keeping and reporting rules, and reviews some FINRA actions demonstrating how switching violation is disciplined.
Suitability of Variable Products (930): This course discusses the nature, benefits and risks of variable universal life insurance and variable annuities and focuses on suitability concerns involving these products. It also explains the SEC’s Regulation Best Interest, which imposes a higher standard of conduct when making recommendations to retail customers.
AML Annual Update: 2022 (35AU22): AML – The Anti-Money Laundering Annual Update: 2022 reviews FinCEN’s accomplishments during 2021 relating to its requirements under the AML Act of 2020. It discusses important FINRA enforcement cases against individuals and firms, emphasizing the conduct FINRA considers to violate AML rules.
FINRA: Ethical Considerations for Registered Representatives (EL_ELC170): This course presents six common ethical principles and selected decision-making models for registered representatives to consider when facing ethical dilemmas. Scenarios demonstrate how these models can be practically applied to common ethical challenges faced by securities professionals.
SINGLE SIGN-ON (SSO) WITH REGED
Use your NLG login credentials to access your agent portal. From the home page, click on “Training”. Under “Continuing Education”, find and click “RegEd Courses”.
This will bring you to your RegEd dashboard. From there you can launch your Firm Element courses.
If, for some reason, you have a problem with SSO, you can still access your courses directly through RegEd’s website:
Provide your NLG email address and click “Submit”. You will receive an email with your username.
TECHNICAL SUPPORT
RegEd customer support is available Monday-Friday, 8:00am to 8:00pm EST. Technical questions with the RegEd website can be directed to RegEd Customer Service at 800-334.8322 or info@reged.com. RegEd’s Web Chat feature is available at www.reged.com/contactus.
FREQUENTLY ASKED QUESTIONS
How long do I have to complete the Annual Compliance Meeting?
The Annual Compliance Meeting must be completed by 12/31/2022.
How long do I have to complete the Firm Element courses?
The Firm Element courses must be completed by 2/28/2023.
What if I miss the due date?
A RR who has not completed the Annual Compliance Meeting by 12/31/2022 or the Firm Element courses by 2/28/2023 may be subject to disciplinary action.
How do I pay for my courses through RegEd?
The cost of the Firm Element courses is covered in the ESI affiliation fee. You will not have to pay separately for your Firm Element courses.
Am I required to complete the Firm Element courses?
Covered Persons, as defined under FINRA Rule 1240(b)(1), are subject to the Firm Element CE program. At ESI, Covered Persons include all RRs in the field, and home office personnel working within ESI (registered and non-registered), and certain National Life employees registered as Operations Professionals.
Do I have to complete the Firm Element courses if I join ESI mid-year?
RRs whose ESI affiliation is active prior to 7/1/2022 must complete the program. Those whose ESI affiliation is active on or after 7/1/2022 are exempt from the current year’s Firm Element CE program
What if I recently completed FINRA’s Regulatory CE Session?
Regulatory Element training is an online exam administered by FINRA and must be completed on an annual basis. Firm Element training is an annual requirement administered by the broker-dealer and must be completed in addition to the Regulatory Element. Both are required elements of FINRA’s overall CE requirement.
Can I obtain insurance CE credit through RegEd?
Yes, your access to RegEd gives you the ability to order additional courses from their catalog of insurance CE courses, as well. You will be responsible for the cost of courses purchased to fulfill insurance CE requirements, and RegEd will bill you directly. Additional fees for CE credits may vary depending on the state(s) requested.
What if I am having system issues?
For technical assistance with the RegEd website or questions on insurance CE credit, RegEd customer support is available Monday-Friday, 8:00am to 8:00pm EST. Technical questions with the RegEd website can be directed to RegEd Customer Service at 800-334.8322 or info@reged.com. RegEd’s Web Chat feature is available at www.reged.com/contactus.
Will my courses through RegEd fulfill certain National Life requirements?
No, National Life maintains a separate AML requirement, apart from ESI’s Firm Element curriculum. Your National Life Annual E&O update and AML renewal can be easily updated in one system. Please contact National Life’s Compliance group for information on taking the 2-year AML renewal for National Life.
Additional Questions? Please feel free to contact Christine Embling at cembling@nationallife.com.
CLICK HERE TO VIEW FIELD NOTICE 2022-26 IN FULL
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Equity Services Inc. (“ESI”) may not retain custody of client assets, including security/stock certificates and funds, or serve in any capacity that gives ESI and/or its representatives legal ownership, control of, or access to client funds or securities.
Custody Defined
RRs/IARs who have custody or possession of client securities or funds are subject to extensive regulation pursuant to SEA Rule 240.15c3-3(k)(2)(ii) for broker dealers and Rule 206(4)-2 under the Investment Advisers Act of 1940 for investment advisers. These rules define custody as “holding, directly or indirectly, client funds or securities, or having any authority to obtain possession of them.”
ESI is exempt from these rules as long as ESI does not maintain custody of client funds or securities. This requires that ESI clear all transactions with and for customers with a clearing firm and promptly transmit all customer funds and securities.
Examples
Examples of what constitutes custody include:
Prompt Processing
Checks and transaction paperwork must be processed according to prompt processing requirements which means:
To help ensure business is processed promptly:
Handling inadvertent receipt of assets:
In the event that you inadvertently receive funds or security certificates from a client or have to return funds or securities to a client:
What to do if a check or security is accidently held?
If for any reason, a check or security is held beyond noon the next business day, please notify your supervisor, who will then advise ESI Compliance. We are required to report these instances annually to the SEC.
Questions:
If you have any questions, please feel free to contact ESI Compliance at 800-344-7437.
CLICK HERE TO VIEW FIELD NOTICE 2022-28 IN FULL
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[1] Exceptions may be granted in situations involving family members (“family member” is a defined term in section 2.5.5 of the ESI Written Supervisory Procedures) but must be reviewed and approved by Compliance prior to establishing the relationship.
[2] Same exception as noted in footnote 1.
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