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Workman Securities Corporation

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Title: Workman Securities Corporation


1
Workman Securities Corporation
  • 2005 Compliance Meeting
  • 11 August 2005

2
Introduction
  • Opening Remarks
  • Logistics, bathrooms, breaks, internet people
  • Todays agenda

3
Agenda
  • 100 Opening Introduction
  • 115 Compliance Issues
  • 205 Break
  • 215 Compliance Issues
  • 305 Break
  • 315 Compliance Issues
  • 405 Break
  • 415 American Funds Presentation
  • Peter Nyhus

4
Regulatory Element of Continuing Education Program
  • NASD NTM 05-20 amended Rule 1120 to eliminate
    exemptions
  • Three Regulatory Element programs
  • Failure to complete places representative into
    inactive status. Representative prohibited from
    performing any duties and functioning in any
    capacity requiring registration
  • Attached is listing as of 2/18/05

5
Firm Element of Continuing Education Program
  • Each year firm must conduct a Needs Analysis and
    prepare a Plan Document
  • Complete required courses at www.financialcampus.c
    om by December 15
  • NASD mandated requirement
  • WSP section 1550 for review

6
Outside Business Activities
  • Form update required yearly
  • Registered Representative Fined and Suspended for
    Engaging in a Business Activity for Compensation
    Away from His Firm - NASD settled a matter
    involving a registered representative who, while
    associated with an NASD member, also was employed
    at a casino.  The representative failed to
    provide prompt written notice of this outside
    employment to his member firm.  NASD held that
    the representative's actions violated Conduct
    Rules 2110 and 3030, suspended the representative
    in all capacities for three months, and fined him
    5,000.
  • WSP section 415 for review

7
Selling Away
  • Indexed Annuities
  • Fixed Insurance products in general
  • Registered Representative Barred for Selling
    AwayNASD Regulation settled a matter that
    involved selling away to 10 public customers. A
    registered representative sold promissory notes
    involving two different issuers away from the
    member firm with which he was associated. For the
    sales, he earned commissions of approximately
    45,000. NASD Regulation concluded that the
    registered representative sold away from his firm
    and barred the representative from further
    securities industry employment.
  • Registered Representative Suspended and Ordered
    to Pay Monetary Sanctions for Selling AwayNASD
    Regulation settled a matter involving three
    instances of selling away during a one-month
    period. Under the terms of the settlement, NASD
    Regulation found that the transactions were "for
    compensation," imposed a fine of more than
    2,500, and required the registered
    representative to pay restitution in excess of
    7,000. NASD Regulation also suspended the
    registered representative in all capacities for a
    period of one month.

8
Financial Independence CorpWorkman Securities
Insurance Division
  • Dana Vietor brings 26 years of annuity, life and
    LTC experience to you to increase your business
    and is glad to help you with any marketing
    questions or run any quotes you need for your
    clients.
  • Linda Kokjohn, our licensing and new business
    coordinator, processes all rep fixed business
    licensing applications and your new business
    applications. She reviews all of your new
    business and processes your applications on the
    day of receipt, if all information supplied is
    complete.
  • Chris Greiner, our pending business coordinator,
    tracks all of your fixed business client
    applications to policy completion once your
    application has left our office to go to the
    carrier. She keeps you informed as to the status
    of your client application.

9
Preferred Carriers
  • American General
  • Banner
  • First Colony
  • Jefferson Pilot Financial
  • John Hancock (Manulife)
  • Lafayette Life
  • Met Life Investors SPIA
  • Mutual of Omaha/United of Omaha
  • West Coast Life

10
Linda Kokjohn New Business Contracting Manager
11
Licensing/Contracting
  • Request and submit agent contracting to Linda
    Kokjohn
  • Agent contracting must be dated prior to
    application date
  • Current resident non-resident insurance
    licenses
  • Agent contracting will not be completed or
    approved until business has been submitted
  • If you have a fixed carrier that we are not
    currently appointed with and you want to write
    their product through us Let Us Know !!!

12
New Business
  • Complete applications
  • Illustrations
  • Current resident non-resident insurance
    licenses
  • Agent contracting will not be completed or
    approved until business has been submitted
  • If you have a fixed carrier that we are not
    currently appointed with and you want to write
    their product through us Let Us Know !!!

13
Chris Greiner Pending Business Coordinator
14
Pending Business
  • Complete applications cannot be stressed enough
  • Prompt return of information from the
    representative requested by the carrier through
    the pending business department will speed the
    acceptance of the application by the carrier
  • The best form of up-to-date communication today
    is through email

15
All of your fixed production dollars go toward
your total annual production. . . retroactive
to day one!
  • 50,000 base contract payout is 80
  • Plus 25,000 fixed insurance GDCs
  • 75,000 total equals 85 payout
  • 2,500 retroactive increase on the base 50,000
    plus 1,250 increase on the fixed business or
    3,750 increase in the commission to you

16
Thank you! Workman Securities representatives
for the life, annuity and long term care
business you have placed with us!
17
  • We would like to reintroduce you to
  • Benefit Retirement Services, LLC.

18
Jim Halpin Account Administrator
19
Plans Administered
  • 401(k)
  • Profit Sharing
  • Money Purchase
  • Group 403(b)

20
  • Since November, 2004 we have grown from 0 to
    22 million dollars in assets under
    administration.

21
Plan Expenses
  • Plan Installation
  • Plan Setup Consultation 300.00
  • Per Employee Installation 6.50
  • Plan Document 400.00
  • Annual Plan Services
  • Base Annual Fee 900.00
  • Per Participant 22.50
  • Per Event Services
  • Loan Processing Establishment 75.00
  • Annual Loan Processing 25.00
  • Qualified Domestic Relations Order 50.00
  • Brokerage Accounts 50.00
  • Life Insurance Policies Processing 50.00
  • Document Mainteince Fee 75.00

22
  • For being a Workman Security Representative we
    only offer you special pricing on all new plans
    and new monies coming into Workman Securities.
  • Effective August 1, 2005 we offer our new 50/50
    Plan.
  • If you have a potential client that would like
    to save money on their administration expenses
    you can offer him FREE services and give him a
    reason to make a change. How can you do this?
    Heres how
  • If you have a client with a million dollar
    investment and his annual administration costs
    are 2000.00 a year you, the representative,
    would pay Benefit Retirement Services 1000.00
    and we would waive the other half of the
    administrative costs.
  • The million dollars goes to Workman Securities
    as new monies with an average GDC of 2 or
    approximately 20,000 with a payout of 85 which
    equals 17,000 the administration cost of
    1000.00, you are still making 16,000 plus
    receiving on going fees for each deposit.
  • This waiver of fees is good for the first plan
    year only.

23
Takeover Checklist
  • Service Agreements associated with Funding
    Sources and current TPAs' if any
  • Adoption Agreement
  • Basic Plan Document associated with the Adoption
    Agreement
  • Summary Plan Description
  • All amendments to the plan
  • Loan policy if the plan provides for loans
  • Most recent valuation
  • Prior years annual report including compliance
    testing
  • Last three years IRS Form 5500 reports and
    related schedules
  • Employee Census which includes
  • Social Security Number
  • Name
  • Sex
  • Date of Birth
  • Date of Hire
  • Compensation mode frequency

24
  • Thank you!!

25
  • Benefit Retirement Services, LLC
  • 119 3rd Ave NE
  • PO Box 757
  • Independence, IA 50644
  • Toll free 1-800-899-8371 or (319) 334-2479
  • cmenken_at_indytel.com or jhalpin_at_indytel.com

26
U-4/U-5 Updates
  • NASD continues to emphasize timely updates
  • Representatives have a continuing obligation to
    keep the information disclosed in their
    respective Form U-4s current by reporting, in
    writing, any updates or changes to the
    information previously reported. Amendments to
    the Form U-4 must be filed with the NASD within
    30 days of the event that triggers the reporting
    requirement.
  • If in doubt check with Compliance

27
Personal Brokerage Account Disclosure Form
  • Brokerage and investment accounts
  • Disclosure is required
  • WSP section 445 for review

28
Private Securities Disclosure Form
  • Permission required/Disclosure required
  • NASD Rule 3040 states
  • Prior to participating in any private securities
    transaction, an associated person shall provide
    written notice to the member with which he is
    associated describing in detail the proposed
    transaction and the person's proposed role
    therein and stating whether he has received or
    may receive selling compensation in connection
    with the transaction provided however that, in
    the case of a series of related transactions in
    which no selling compensation has been or will be
    received, an associated person may provide a
    single written notice.
  • WSP section 1200

29
Business Cards and Stationary
  • Recent NASD audit tasked us to improve
  • Workman Securities Corporation name and address
    must be on cards and letterhead.
  • Submit samples to Home Office for review and
    approval

30
Do Not Call List
  • Becoming increasingly important from compliance
    viewpoint
  • WSC is member of Do Not Call Registry
  • Representative is not to conduct cold calling
    without prior permission
  • Review WSP section 1555

31
529 Plans/Municipal Securities
  • 529 Plans are classified as municipal fund
    securities and are governed by the rules of the
    Municipal Securities Rulemaking Board (MSRB)
  • Must be Series 7 or 52 qualified or if
    representatives municipal securities activity is
    limited to only transactions in 529 Plans then
    Series 6 qualified
  • Expect more oversight to be forthcoming in the
    529 arena
  • Expect more information in the whole municipal
    securities world as well

32
Anti-Money Laundering/Clients With Cash
  • Regulatory importance cannot be emphasized enough
  • Incorporated throughout our WSPs review
    sections 1510 and 2700. Special review given to
    Money Laundering Red Flags and Know Your
    Customer Rules
  • Much is happening at the Broker Dealer level
    ie, FinCEN requests made direct to Broker Dealer,
    new account information checked against U.S.
    Treasurys Office of Foreign Asset Controls
    (OFAC) Specially Designated Nationals and
    Blocked Persons (SDN) list, etc.

33
New Account Forms
  • Time spent here is time well spent
  • One of the most important documents NASD auditors
    look to for information
  • Directly connected to AML issues, suitability,
    etc.
  • Representative must sign and date
  • Frequency of updates should be addressed

34
Medallion Guarantees
  • Know as Signature Guarantees
  • No Signature Guarantee will be performed without
    a fully completed Request for Signature Guarantee
    form approved by Home Office
  • Signature Guarantee is not a notary
  • The Guarantor stands behind the transfer and is
    liable and responsible if the transfer of
    ownership is challenged based upon the signature
    guarantee

35
Recent RIA Regulatory Developments
  • New SEC head Christopher Cox
  • SEC is looking at updating Form ADV through the
    IARD system, debate continues regarding
    differences with States will probably wait for
    new SEC head
  • Email recent action taken against Banc of
    America Investment Services for failure to
    preserve email information interesting aspect
    of this case was that Banc of America utilized a
    software vendor to help automate the firms email
    compliance program. Unfortunately the system did
    not work and the SEC was not sympathetic to this
    fact
  • Disposal of Consumer Report Information as of
    July 1 the disposal rule requires investment
    advisers that maintain or possess consumer
    report information for a business purpose to
    take reasonable measures to protect against the
    unauthorized access to or use of the information
    in connection with its disposal.

36
Creative Wealth Strategies
  • R. Brook Hanson, CLU, ChFC, AEP
  • President Creative Wealth Strategies
  • Modern Portfolio Theory
  • Reasonable Cost
  • Breakpoints based on total assets per rep

37
Email/Communication With The Public
  • E-Mail Retention
  • Rule 17a-4(b)(4) requires broker-dealers to
    preserve originals of all communications
    received and copies of all communications sent
    (and any approvals thereof) by the member, broker
    or dealer (including interoffice...) relating to
    its business as such, including all
    communications which are subject to rules of a
    self-regulatory organization of which the member,
    broker or dealer is a member regarding
    communications with the public

38
Email/Communication With The Public
  • How Long/How E-mails Need to be Retained
  • General Requirement 3 years
  • Opening or Maintenance of Account 6 years
  • RIAs 5 years (2 years in the office)
  • Rule 17a-4(f) states that
  • Electronic storage media must preserve the
    records in a non-writable, non-erasable format

39
Email/Communication With The Public
  • Penalties
  • Banc of America - 1.5million 6/15/05
  • Deutsche, Goldman Sachs, et. al. 8.25 million
  • Edward Jones - 75 million (part)
  • Jefferson Pilot - 625,000 and censure
  • Raymond James failure to supervise
  • Schield Management - 175,000 (destroyed)

40
Advertising/Sales Literature
  • NASD allows some filings via Web-based
    application
  • All communications must be fair, balanced and not
    misleading
  • If in doubt call Compliance
  • Provide for sufficient lead time

41
Annual Compliance Meeting
  • NASD Rule 3010(a)(7) requires each registered
    representative participate annually in Compliance
    Meeting
  • Recently completed NASD audit tasked us to
    improve
  • NASD Rule provides Member Firms with flexibility
    in implementing Compliance Meeting expect to
    see continued changes

42
Compliance Audits of Non-Registered Detached Site
Locations
  • Recent NASD audit tasked us to improve
  • Important audit checklist items
  • Safeguarding of customer funds and securities
  • Maintaining books and records
  • Transmittal of funds between customers and
    registered representatives and between customers
    and third parties
  • Validation of customer address changes
  • Validation of changes in customer account
    information

43
Variable Annuity Sales
  • NASD concerns regarding unsuitable
    recommendations continues to be a priority
  • Over 80 NASD disciplinary actions in last 2 years
    against Member Firms
  • Recent NASD audit tasked us to look for
  • Excessive switching
  • Misleading marketing
  • Failure to disclose material facts
  • Unsuitable sales
  • Inadequate training and supervision
  • Inadequate written supervisory procedures
  • Importance of Switch Letter where appropriate
  • Review WSP sections 610 and 615

44
Mutual Funds Sales
  • NASD priorities continue to be unsuitable
    recommendations, breakpoints and B share sales
  • NASD NTM 04-30 concerned with sales practice
    obligations related to sale of bonds and bond
    mutual funds
  • Importance of Switch Letter where appropriate
  • Review WSP section 620

45
Conclusion
  • Closing Remarks
  • Final Questions
  • Thank You

46
Keynote Speaker
  • Peter Nyhus, Senior Vice President, American
    Funds Service Company
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