Mark your calendars! On June 24-28, 2024, Equity Services will host our incentive conference, the ESI Elite Symposium, at the Four Seasons Hotel Nashville, in downtown, Nashville, Tennessee.

Nashville Energy, Elevated Experience Nashville, Tennessee, is one of the most sought after destinations in the U.S., world-renowned for its legendary music, southern gastronomy and culture. Recognized as the city of storytellers, Nashville is not to be missed!

The Four Seasons Hotel Nashville is a brand-new downtown experience of five-star luxury. Situated along the Cumberland River, it is a resort in the city. Close to everything from the Grand Ole Opry to amazing craft breweries and honky-tonks, don’t miss this amazing opportunity of authentic southern hospitality!

The ESI Elite Symposium – An Exceptional Opportunity

The ESI Elite Symposium is an incentive conference providing advisors with the opportunity to hear from world class speakers, share ideas and network with peers. Business sessions are conducted in the mornings and include a wide range of topics such as best practices, economic commentary, prospecting ideas, and technology. Afternoons are open, giving you time to explore the property, Nashville, and all the activities available. Evenings include a planned dinner event and the time to network with your peers.

ESI’s Strategic Partners and Technology Partners attend the event, providing the opportunity for one-on-one time to discuss product, learn about technology, or simply dive deeper into a question.

The ESI Elite Symposium is an unforgettable experience that will help you continue to build your business and stay inspired! You have 6 more months to qualify, so don’t miss this opportunity.

How to Attend
Rep Qualifications:         $425,000* of GDC
Agency Qualifications:   $4,250,000* of GDC
Qualification Period:       01/01/2023 – 12/31/2023

Visit the NL Agent Portal for full Team Qualifications!

* Credits may be adjusted if needed to comply with the Massachusetts Fiduciary Rule. All Fixed Indexed Annuity Sales are excluded from this amount.

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Click here to read the full Fidelity Viewpoints article.

Learn the basics—including the benefits and risks—of exchange-traded funds.

Once upon a time, exchange-traded products (ETPs)—which are comprised mostly of exchange-traded funds (ETFs) and a much smaller percentage of exchange-traded notes (ETNs)—were the new kid on the investment block. Not anymore.

You can choose from 2,955 different ETFs/ETPs (including leveraged and inverse), with assets just over $7 trillion as of May 31, 2022 (per Bloomberg). And while the early ETFs tracked broad market indexes like the S&P 500^® Index, now there are ETFs focused on virtually every imaginable corner of the market—from health care to solar energy, from Treasury bonds to emerging market debt, from commodities to currencies, and from Turkey to Thailand. You can also find style-based ETFs focused on growth, value, or capitalization, or theme-based ETFs, such as those aimed at green or socially responsible investors.

But like any investment vehicle, ETFs have risks along with potential rewards. So, how exactly do they work? What are their pros and cons? And how might they fit into your investment style and strategy?

Click here to read the full Fidelity Viewpoints article.

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On June 7^th, Vestwell, an advisor-centric retirement plan provider, and 3D/L Capital Management, a retirement plan investment fiduciary, shared their insights and resources for leveraging the small plan market. If you weren’t able to attend the live webinar, we have the recording for you! In addition, see below for resources to help you with the overall process.

• Recorded Webinar
  This recording is hosted by our partners, Vestwell, an advisor-centric retirement plan provider, and 3D/L Capital Management, a retirement plan investment fiduciary. You’ll learn:
  • Why and how advisors should leverage the small plan opportunityHow significant regulatory and seasonal tailwinds facilitate the growth of your business
  • How the 3 D/L and Vestwell solution may fit into your practice
• Retirement Plan Business in a 3D World
  This process overview takes you through the Propose, Engage, Execute, and Perform phases of small plan sales.
• Fact Finder for Retirement Plans
  Not sure what information to gather? 3D’s Fact Finder for Retirement Plans provides a simple fact finder to help you start the conversation with 3D’s expertise behind you.
• Pricing
  View pricing options from Vestwell.
• Sales Map
  Contact and proposal support information

If you are interested in expanding your current small plan market or are just getting started, take advantage of the expertise and resources 3D/L and Vestwell offer.

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Have you registered for the Business Development Conference yet? In addition to training, sales, and practice management opportunities, you’ll hear from world class speakers, like Mitch Anthony.

Mitch Anthony is the founder and president of Advisor Insights Inc., The Financial Life Planning Institute, ROL Advisor, and Life-Centered Planners (U.K.), and is recognized around the globe for his pioneering work in life-centered planning.

For two decades, Mitch and his team have provided training to individual advisors and major organizations throughout the world.

Mitch is a consistently top-rated presenter who has been named “one of the most meaningful speakers in financial services today” and hailed as one of the industry’s top “Movers & Shakers” for his pioneering work.

Mitch is a sought-after expert for the media and a regular columnist for Financial Advisor magazine. His columns have appeared on CBS MarketWatch and in the Journal of Financial Planning. Mitch is also host of the daily radio feature, “The Daily Dose,” heard on over 100 radio stations nationwide.

Mitch is the author of many groundbreaking books for advisors and consumers, including perennial bestseller StorySelling for Financial Advisors, cited by Financial Advisor magazine as the number one “must-read” book for financial professionals. In addition to The New Retirementality (now in its 5th edition) and Your Clients for Life, Mitch is the author of many groundbreaking books for advisors and consumers, including Defining Conversations, The Financial Professional’s StoryBook, Your Client’s Story (now in its 2nd edition), Selling with Emotional Intelligence, The Financial Lit-Kit (The Cash in the Hat, The Bean is not Green, and Where did the Money Go?), and Life-Centered Financial Planning.

Mitch Anthony will be speaking at the ESI Business Development Conference. For more information, including registration:

ESI Business Development Conference
August 27-29, 2023

Register Now
Learn More

Questions? Please contact ESIBusinessDevelopment@NationalLife.com.

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Scheduled for July 10th at 2 pm EST, we will do a deep dive into the potential of Nitrogen and how its innovative features can enhance your strategies and elevate your client relationships.

Nitrogen’s powerful capabilities, such as its risk number system, portfolio modeling, and robust analytics, have enabled advisors to assess and communicate investment risk effectively. By attending this webinar, you will learn how to employ these tools to better align your clients’ investments with their risk tolerance, leading to greater client satisfaction and retention. You will also gain insights into how Nitrogen’s comprehensive reporting can streamline your portfolio review, saving valuable time that can be invested back into client services.

This webinar promises to be a valuable experience for those interested in leveraging Nitrogen’s capabilities to bolster their advisory skills and services. Whether you are already a Nitrogen user or considering Nitrogen for the first time, this session is sure to provide valuable insights and practical strategies to help you meet your clients’ needs more effectively. Don’t miss this opportunity to learn from the experts, ask questions, and elevate your practice with Nitrogen. We look forward to seeing you on July 10th at 2pm! Click here to register.

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Equity Services, Inc. (“ESI”) has always believed that mutual fund “switches,” which result in the client paying an additional sales load that could be avoided, must be in a customer’s best interest.  For that reason, ESI has enhanced its process to review mutual fund switches.  Specifically:

• The Mutual Fund Purchase and Disclosure (“MFPD”) form has been modified to include a new section requiring an explanation for the switch and a client acknowledgment when a switch occurs;
• If Registered Representatives (“RRs”) do not obtain this disclosure within specified time periods, communications will be sent directly to the customer by ESI and administrative charges will be assessed to the RR;
• Defining when an MFPD is required and when an MFPD is not required (Source of Funds form would be sufficient). 
• Enhanced surveillance reports with information about RRs engaging in switching will periodically be sent to Branch Office Supervisors, to enhance their supervision of these transactions.

What is a Switch?
Switching is recommending the sale of one mutual fund where a front-end or back-end load was paid, to buy another mutual fund with a sales load that could be avoided through the selection of a different fund. A switch can occur in brokerage as well as direct accounts. ESI previously discussed the concerns presented when switching occurs in Field Notice 2015-04. The adoption of Regulation Best Interest, and its focus on the cost of investments, only serves to highlight these concerns.

What is not considered a switch:

• An advisory account on either side of the transaction;
• Liquidating assets inherited by a customer regardless of load paid by original investor or load paid for new mutual fund;
• Selling a C-share to buy a C-share, with no CDSC on the sell side of the transaction.

Changes to the MFPD
Page two of the MFPD has been updated to require the following additional information, if there is a switch:

1. Check ‘Yes’ or ‘No’ to indicate whether a switch is occurring.
2. Explain the recommendation to exchange one fund family for another, and why the existing fund company could not meet the client’s needs. The explanation should be separate and distinct from the transaction rationale on page one of the MFPD and the Best Interest Worksheet.
3. Client’s initials, acknowledging they understand that a switch is occurring and the potential consequences for the switch. (Note: this is not new language, but the client acknowledgment is new.)

NOTE: The updated MFPD is currently available in the Agent Portal, under the Forms & Materials search, and will be available in Docupace no later than June 30, 2023. Please use the new form and destroy all older versions of the form. Mutual fund switch transactions without the new form will be considered not in good order.

When MFPD is Required
The MFPD contains important information the Firm often uses to satisfy its obligations under Regulation Best Interest. This includes information such as differences between share classes and breakpoints. For that reason, the Firm requires the MFPD:

• When a direct mutual fund account is first opened,
• When a subsequent deposit is made to a direct mutual fund account that is a mutual fund switch, and
• When mutual fund transactions in brokerage accounts occur which exceed $20,000.

When MFPD is NOT Required
A Source of Funds form would be sufficient when:

1. The money used for the MF purchase is from a client’s personal/business account or savings account.
2. The redemption of another long-term financial product, such as variable or fixed annuity, surrender of life insurance, qualified plan proceeds, etc.    
3. Assets in an existing account are retitled.
4. Intra-fund family transfers of the same share class.
5. No-load/no-transactions fee transactions within a wrap or managed account. However, a MFPD may be required for new assets coming into such accounts, a described above.
6. Stock, bond, or CDs are liquidated to purchase a MF.
7. At the discretion of the Suitability Principal based on their review of the transaction.

Failure to Provide MFPD or Client Acknowledgment of a Switch
Suitability Principals will continue to reach out to RRs when 1) the MFPD is missing, or 2) the switch language is missing, not complete or not acknowledged by the customer, as required.

If the required information is not received within 30 days of reaching out, ESI will send a letter directly to the client. The letter will discuss what the customer needs to understand when deciding to engage in a switch, specifically, that the new sales charge could have been avoided had they remained in the fund they just sold or exchanged the investment for a new fund in the same fund family. Additionally, an administrative fee of $250 will be assessed to the RR for failing to provide the required information within the required time period. RRs who repeatedly omit or provide incomplete MFPDs may be subject to additional disciplinary action.

Switching Surveillance
Compliance regularly reviews a report which includes the switching activity of ESI RRs. You may be contacted by Compliance to clarify information around your mutual fund activity. Additionally, to help them better understand and supervise switching activity within their FOSJ, Compliance will periodically provide Branch Office Supervisors and their designees with information about switching activity.

QUESTIONS
If you have any questions regarding the switching, please contact ESI Suitability at 800-344-7437.

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Requesting or accepting a signed blank or partially blank form is prohibited. Signing or initialing on behalf of a customer is also prohibited. These requirements apply to both registered persons and non-registered fingerprinted persons, (i.e., administrative assistants). All forms must be fully completed before a customer signs. Any changes after the customer signs requires the customer to initial acknowledging the change.

What is a signed, blank or partially-completed form?

• Having a client sign a blank or partially completed form and you or your administrative assistant complete later.
• Having the client leave certain fields blank and you or your administrative assistant complete later.
• Emailing only part of a form to a client (i.e., sending only the signature page).
• The email with only part of the form confirms that the client did not review the information or receive required disclosures about their transaction.

• Having clients pre-sign forms in case you may need them now or in the future.
• Changing/altering the information on the form after the client signs without their initials to evidence their review (including date change or error corrections).

Clients need to sign completed forms to validate the information for accuracy, ensure all disclosures have been provided, and to help ensure they are fully informed about what they are signing.

Do not use white out. If a change needs to be made to a form, cross it out. If the change is made after the client signed, ensure that the client initials next to the change.

Additional Examples
In addition to the definitions listed above, the following are detailed examples of prohibited practices around having clients sign blank or partially completed forms:

• Leaving date blank: Having the client leave the date blank and you or your administrative assistant add it later. If there is a delay in dating the paperwork, the Firm will not know when the client actually signed the paperwork. Do not instruct the client to leave the date blank.
• Checking boxes after client signs: Updating check boxes on paperwork after the client signs could change the intention from the client on the paperwork.
• Not completing Personally Identifiable Information (“PII”) on forms: This includes having the client not include the social security number, date or birth, etc. on a form for security purposes and you or your administrative assistant add later.
  • If these items are included, type “[PRIVATE]” in the subject line to enable encryption.
  • Don’t to try to avoid triggering encryption on an email by not completing this information.
  • Using Docusign through Docupace will avoid this issue.

Consequences
There are frequent regulatory actions related to signed blank/partially completed forms. The following are real examples from FINRA disciplinary actions. In each of these instances by falsifying documents, the RRs caused their firm’s books and records to be inaccurate.

• RR was fined $25,000 and suspended for 2 years for forging the signature and initials of a customer relating to annuity surrenders. The RR also changed the date on a form so that it appears to have been signed one month prior to when it was actually signed.
• RR was fined $10,000 and suspended for 2 years for forging a customer’s initials on annuity documents. The RR added the customer’s initials without permission and added a date on the documents that was later than the date that the customer signed.
• RR was fined $5,000 and suspended for 2 months for changing information on several forms without the customers’ consent. For two customers, changes were needed to submit forms and the RR made the changes and forged the client’s initials. For another, an IRA transfer form was returned because it should have been marked as a normal IRA distribution. The RR altered the form to mark it as a normal distribution and submitted it without the customer’s initials.
• RR was fined $5,000 and suspended for 20 business days for using a pre-signed letter of authorization to effect periodic distributions from a customer’s retirement account. On at least 8 occasions, the RR added the date to the form and submitted it to her firm.

While having clients sign blank or partially completed forms or signing/initialing on their behalf may seem like a way to expedite requirements or accommodate a client, it is not ethically sound and doing so provides no defense in a complaint that alleges the client did not sign/initial the forms, that they weren’t made aware of product features, or that important disclosures were not provided to them.

Please remember that you are responsible for the work of those non-registered fingerprinted persons who act on your behalf. Please share this field notice with all office personnel who interact with clients, so they are aware of these prohibitions as well.

ESI takes these matters seriously. If alteration of forms is suspected, an internal review is initiated and, if confirmed, may result in disciplinary action.

QUESTIONS
If you have any questions, please contact your supervisor or ESI Compliance at 800-344-7437.

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