As part of ESI’s ongoing commitment to helping you deliver value to your clients, we have been working to ensure our Flagship Select, Directions and Compass Programs utilize the lowest-cost mutual fund share classes available through our selling agreements. This initiative has been underway for more than 18 months and is an important step toward improving the client experience while simplifying portfolio management.
Identifying the lowest-cost eligible share class isn’t always straightforward. Each mutual fund company has its own eligibility rules, which means the lowest-cost option can vary depending on the fund family, account type, and registration. As a result, maintaining an accurate and up-to-date list requires ongoing review and refinement.
Following our transition to FMAX and the elimination of transaction charges, we completed a large share-class conversion across our APM platform. More recently, we implemented a new Investment List designed to help you identify eligible lower-cost share classes and provide alerts when an account or model held a fund that might not represent the lowest-cost option available through ESI.
Shortly after implementation, some advisors experienced unexpected “Unauthorized Position” alerts. While some alerts correctly identified positions that required attention, others were generated in error. In some cases, this also temporarily restricted trading activity. We recognize the frustration this caused and sincerely apologize for the disruption.
Our team acted quickly to address the issue. Changes made last week resolved the majority of the unauthorized-position alerts, and we continue to refine the Investment List to improve its accuracy.
What’s Next
In mid-August, we will:
- Complete the conversion of remaining eligible positions in our APM programs to lower-cost share classes.
- Continue refining the Investment List logic to reduce unnecessary alerts.
- Share additional information about how the Investment List was developed, how it will be used, and what advisors and financial professionals can expect moving forward.
While last week’s experience was not the outcome we intended, we remain confident in the long-term value of this initiative. Ensuring clients have access to the lowest-cost eligible share classes is an important enhancement to our advisory platform, and we appreciate your patience and partnership as we continue to improve the process.
Thank you for your understanding and continued support.
Abram Nunes
AVP, Brokerage & Advisory Operations
TC9035838(0726)1