In the 3rd quarter of 2021, National Financial Services, LLC. (NFS) will begin assessing a quarterly surcharge for the physical delivery of client trade confirmation and account statements. The new fee was originally communicated in FN 2020-30 in August of 2020.
The fee will be passed along to customers who continue to receive paper documents via regular mail. The total quarterly fee will be $5.00 per account, per quarter ($20.00 per year) and will be assessed to NFS brokerage accounts.
Clients can avoid these fees and speed up delivery of documents by subscribing to eDelivery on the Wealthscape Investor website.
FAQs
Q: When will the fee be assessed?
A: The paper surcharge fee goes into effect in the third quarter. The first fee will be reflected on the September 30th account statement. Clients will need to sign up for electronic delivery by approximately September 15th to avoid the fee.
Q: Can I absorb this fee for my client?
A: NFS has not developed a solution to accommodate subsidies of the paper statement fee. With no automated solution available to process the fee reversals and subsequent charges, ESI will not offer the ability for representatives to absorb the fee for certain client accounts. NFS is working on an automated solution for possible rollout in 2022.
Q: Are there exceptions to the fee, for example elderly clients?
A: Due to the high costs of paper delivery, there will be no exceptions to the paper statement surcharge for various populations of clients by age, account value, etc. Customers can receive paper account documents if they do not feel comfortable accessing their account online, but the $5.00 quarterly fee will be applied to their account.
Q: What happens if my client accounts do not have enough cash to cover these charges?
A: For non-retirement accounts, the fee will be applied and if there is insufficient cash, the account will be placed into a debit balance. Periodically, ESI operations reviews these accounts and places trades to clear debit balances. If ESI home office must place a trade for one of your client accounts, the $25.00 rep-assisted fee may apply.
A: For retirement accounts, NFS cannot place IRA’s into debit balances. During our annual IRA fee cycle, we will trade accounts with no cash to make funds available for recurring fees. See question below for additional information.
Q: So, you are going to place a trade every quarter to clear the charges?
A: In an effort to reduce the ongoing transaction charge exposure in placing a trade every quarter to cover the fee, we are in the process of modifying our customer agreement. Once the changes take place, if we are required to trade an account to cover a debit balance, we will raise no less than $200.00. We reserve the right to close any account that has a balance of less than $200.00.
Q: How is this being communicated to my clients?
A: Clients received an updated Brokerage Account Fee Schedule with their March account statement. This communication was outlined in FN 2021-10. The schedule incorporated the new $5.00 quarterly fee. Additionally, account statements from May-October will contain a statement message communicating the new charge and instructions for enrolling for eDelivery to avoid it.
Q: How can I review my accounts that are not currently enrolled?
A: A Wealthscape Report titled “ESI E-Delivery Enrollment Report” was created to assist in you in identifying accounts that are not currently enrolled. Additionally, the report has a column that displays the current core cash balance for each client account. Accounts that have little, or no cash available should be identified and those customers should be contacted to raise cash in advance of the 9/30 assessment date.
Q: Are other Broker-Dealers passing these fees to customers?
A: Yes. The majority of NFS correspondents are handling the paper statement fee similarly. Other large clearing firms in the industry have offered this capability for a number of years.
Q: What resources are available for my client to enroll in eDelivery?
A: Our public website contains the link to myOnline Brokerage Central. This NFS page contains numerous resources to assist your clients will logging in, enrolling, and managing document delivery preferences. The site also contains other resources such as guided tours, info on the Wealthscape Investor Mobile app, and more. You can also generate a “Click-to-Agree” email so that your client can enroll with the click of a button. To generate the email, please see the Document Delivery Instructions page under the service tab in Wealthscape.
There are 3 months before the fee is assessed for Q3. Please be proactive in reaching out to your clients to promote the benefits of eDelivery and discussing the need to maintain cash in their accounts to pay the fees. Please contact the Brokerage or Advisory service desk at 1-800-344-7437 with any questions on the upcoming fee cycle.
TC122048(0721)1