ESI Illuminations is ESI’s largest advisory platform and has grown in total assets under management to a record $1.6B[1]. To help continue this growth, ESI strives to make the Illuminations platform easy to use with tools to build efficiencies and help you grow your business. As part of this effort, ESI is implementing some system enhancements designed to make doing business on the platform even easier:
- Investment policy violation e-mail notifications to the Advisor; and
- Model Building within Concentration limits.
These enhancements will be effective Monday, September 13, 2021.
INVESTMENT POLICY VIOLATION E-MAIL NOTIFICATIONS
ESI’s Advisor as Portfolio Manager (APM) programs, branded “Flagship Select” and “ESI Directions”, implement six Investment Policies which help advisors stay within the prescribed guidelines of the APM programs, adhere to Firm policies, and manage accounts according to the client’s investment mandate. The Investment Policies address:
- Position Count Limit
- Risk Variance
- Single Security Concentration
- Sustained Cash
- Trade Count Limit
- Unauthorized Positions
Investment Policies are like the guard rails that keep you on the road. They are there to help Advisors, acting as the portfolio manager, manage their accounts in accordance with the client’s instructions, as determined by the Statement of Investment Selection.
Currently, advisors can see Investment Policy violation notifications when they log into the Illuminations website. To better assist Advisors with proactively monitoring their accounts, ESI is implementing Envestnet’s automated e-mail notification system. Effective September 13, 2021, Advisors who have accounts that have triggered a Policy violation will receive notification via e-mail directly from the Illuminations platform and will be able to review the status of the account(s) by clicking a link in the notification. Going forward, the system will send notifications on a monthly basis.
Monthly notifications will list the account(s) and the consecutive number of days since the account(s) triggered a violation. This notification will make it even easier for Advisors to be aware of any such accounts so they can take action to correct violations BEFORE the home office becomes involved. Please note that all advisors with accounts in Flagship Select or ESI Directions will automatically receive the monthly notification e-mail. If no accounts are listed, no further action is needed. Of course, if the notification reflects any accounts in violation of a policy, the Advisor is responsible for addressing the violation.
MODEL BUILDING WITHIN CONCENTRATION LIMITS
ESI’s APM programs implement technology which helps Advisors who act as Portfolio Manager build models on the platform. To assist with building models, ESI’s investment policies limit models to no more than 40% of the invested assets in a single security. However, experience has shown that some advisors, whose initial allocations are at or near the maximum level, have had accounts almost immediately trigger a violation of the concentration policy simply as a result of fluctuating market conditions. As such, ESI is lowering the maximum holding allocation for model building from 40% to 30% in an effort to allow for subsequent drift in the allocation. By lowering the maximum allocation to 30% while building the model, the account could actually experience up to +10% drift without triggering a policy violation for concentration limits. This change should alleviate the challenges posed by account allocations that experience drift from the original target as a result of market movement.
QUESTIONS
Questions on any of these enhancements can be directed to Sandy Colvin at 800-344-7437 x3016 or SColvin@nationallife.com.
[1] Total AUM as of July 1st, 2021.
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