Broker Dealer Financial Services Corp. Investment Advisors Corp. BDF Investments IBA Securities

Transcription

1 Transition Guide Broker Dealer Financial Services Corp. Investment Advisors Corp. BDF Investments IBA Securities Member FINRA/SIPC

2 Welcome Welcome Message from Message the President from the President Dear Financial Advisor, Thank you for choosing Broker Dealer Financial Services Corp. and Welcome to the BDFS/IAC team! Investment Advisors Corp. as your business partner. Lorem ipsum dolor sit amet, consectetur adipiscing elit. Maecenas dapibus accumsan malesuada. Nam volutpat urna ut lorem pharetra laoreet. Sed quis massa non lorem dictum ultricies. Nulla et gravida ante. Duis fermentum We are looking forward to a successful relationship and our team of augue eget pretium pellentesque. In scelerisque lectus ut diam volutpat fringilla. Aenean et rutrum quam, vitae experienced professionals is ready to provide you with the personal support maximus ligula. Nunc congue odio sed aliquam placerat. Morbi at placerat lacus. Mauris eget rutrum sem. In ornare, necessary for a smooth transition. justo mattis viverra semper, ex est sagittis ligula, eu sodales est mauris nec dolor. Cum sociis natoque penatibus et magnis dis parturient montes, nascetur ridiculus mus. Our mission is, we are committed to establishing exceptional partnership with our financial advisors, providing the support, tools and resources needed to Cras ut augue sem. Curabitur id lectus ac ligula commodo accumsan id id urna. Aenean sit amet fermentum orci. help clients achieve their financial goals. In our organization these are not just Duis quis augue viverra odio luctus laoreet. Nulla facilisi. Maecenas turpis quam, tempor in rutrum placerat, dapibus words but our commitment to you. eget augue. Vivamus in tellus nec ante cursus elementum. Nunc sodales, ante id scelerisque ullamcorper, nisl metus hendrerit nisi, sit amet tincidunt lectus ligula quis metus. Cras vehicula erat magna, sit amet blandit lacus Our pledge is to help you maximize your success by providing you with quality fringilla a. Sed nunc felis, lacinia a nisi in, semper gravida risus. Sed lobortis eros lacus. Duis vel mattis justo. Donec products and support from professionals with years of industry experience. I aliquam a nulla et tempor. Aliquam vitae nisl eu erat sollicitudin luctus. invite you to reach out to our team members with any questions you may Donec tempus fermentum sagittis. have. Nulla justo tortor, ultricies vitae malesuada eget, finibus a neque. Nullam non accumsan nunc, non tempus nulla. Donec nec porta orci. Curabitur vitae nisi ac libero tristique cursus vitae vitae If at any point you have questions about registration procedures, please do purus. Mauris varius libero ut odio faucibus semper. Praesent ut libero nunc. Sed lorem leo, posuere auctor not hesitate to contact your Relationship Manager at (800) Your imperdiet id, blandit ac dolor. Pellentesque aliquet tristique eros, id tincidunt sem hendrerit non. Suspendisse non dolor eros. Relationship Manager is here to support and answer any questions you may Nulla nulla nisi, finibus a arcu have. at, vehicula vehicula felis. Duis ut blandit felis. Nulla elementum velit a erat porta, a ultricies massa ultrices. Pellentesque ac diam sed dui tincidunt finibus quis et leo. Duis interdum nisi in semper On behalf of everyone at Broker Dealer Financial Services Corp. and volutpat. Investment Advisors Corp., we would like to thank you for joining our team To Your Success! and look forward to helping you and your clients with exceptional service and support. Sincerely, Lisa M. Smith President and CEO BDFS/IAC Lisa M. Smith President & CEO Ph: lsmith@bdfs.com BDFS/IAC Transition Transition Guide Guide 2

3 Table of Contents Transition Guide Message from the President 2 Overview 4 Broker Protocol 5 The Transition Process 6 Preparing Your Paperwork 7 Laser App 8 Termination and Appointment 9 Business Held Directly 10 To Process Accounts to First Clearing 11 Investment Advisory Accounts 12 What to Expect 13 Example of Transition Plan 14 Transition Checklist 15 Appendix - Business Cards 20 - Disclosures 21 - Sample Letter of Resignation 22 - Sample Letter of Announcement 23 - Sample Letter of Instructions 24 -Account Transfer Log 25 -Transition Team 26 3

4 Our Team Welcome to Broker Dealer Financial Services Corp. and Investment Advisors Corp! We are committed to providing resources and expertise you need and the personalized service you deserve. Now that you have decided to join us, we know your first concern is moving over your clients accounts as quickly and smoothly as possible. Guiding you efficiently through your transition period is as important to us as it is to you. At BDFS/IAC, our specialists are determined to make your transition transparent to your clients, eliminate downtime, and ensure that you and your staff become familiar and comfortable with our personnel, procedures, and resources. Every step of the way, a member of our team will be there to direct you to the key individuals within our firm, follow up on any outstanding items, and guide you in completing the various forms required to transition your business. We work with you to develop a customized timeline and transition plan that will best suit you and your practice. We assist you with the initial onboarding, licensing, and registration paperwork, including the U4. We walk you through each step in setting up your branch from business cards and letterhead to websites, s, and technology integration. We ensure that you are comfortable with BDFS/IAC s forms, policies, and procedures by providing training, reference materials, and paperwork samples to use on your terms. Finally, we work with you after your transition for additional training and support to assist you as needed to help your business continue to grow. When your transition period is complete, your license and registrations are transferred over and your business is up and running, our expectation is that you will understand: How to transfer your assets How to process new business How to service your accounts How to utilize BDFS/IAC tools and resources How to manage your branch in a compliant fashion We take pride and strive to provide superior communication and service throughout the transition process and are committed to making this the best experience possible. We look forward to working with you and your business your way. 4

5 Broker Protocol Who is covered by The Protocol? The Protocol protects registered representatives who seek to move from one signatory firm to another. The term registered representative is not defined in the agreement, but the term is defined by the Financial Industry Regulatory Authority Rules as follows: The term registered representative means an employee engaged in the solicitation or handling of accounts or orders for the purchase or sale of securities, or other similar instruments for the accounts of customers of his employer or in the solicitation or handling of business in connection with investment advisory or investment management services furnished on a fee basis by his employer. The Protocol also does not define which firms are qualified to join the Protocol and seek protection under its terms for their newly hired registered representatives. While some have argued that the Protocol was intended to cover only broker-dealers, the agreement does not say that advisory firms are excluded, or that hundreds of investment advisor firms have joined the protocol. Disclaimer: The Protocol for Broker Recruiting is a two page document that does not include definitions or explanations. All answers provided here are just the opinions of BDFS/IAC. The information contained here is not intended to create an attorney-client or business relationship between BDFS/IAC and you. If you are considering joining our firm, or have already, and have questions, you should consult with your own legal counsel. Can an individual broker or advisor join the Protocol? No. Only employer firms such as broker-dealers and registered investment advisors can join the Protocol. What information can I take with me? If your old and new firms are members of the Protocol, you are permitted to take the name, address, phone number, address, and account title for every client that you personally serviced at the firm, subject to certain limitations for partnerships and retirement agreements. You are not permitted to take any other documents or information concerning the accounts of your clients. Can I obtain account numbers or statements for my clients after I move? Yes. The new firm can request client account numbers, most recent account statements or holding information from the old firm by forwarding an authorization signed by the client. What do I have to do to claim protection under the Protocol? You should provide a written resignation letter to your branch manager and attach a copy of the list you retained that also includes account numbers for each client. Remember, the list you take with you may not include those account numbers. 5

6 Broker Protocol cont d What about the terms of my employment agreement? Many registered representatives have executed employment agreements containing terms prohibiting solicitation of customers or retention of customer lists. So long as the old and new firms are signatories to the Protocol and the registered representative substantially complies with its terms, the Protocol provides that the registered representative shall not be liable to the old firm for retaining the information identified in the Protocol or soliciting clients on behalf of the new firm. Can I use the Protocol if I am part of a team or partnership? Yes. If you have a partnership agreement, those terms apply to any client who you did not introduce to the team. Whether or not you have a team agreement, you are entitled to take information related to clients you brought to the team and solicit them after your resignation. If you do not have a partnership agreement, but have been part of the team for more than four years, you are permitted to take information related to all clients serviced by the team and solicit them after your resignation. If you have been a member of the team for less than four years and there is no partnership agreement, you are limited to those clients you introduced to the team. What if I acquired clients from a retiring broker? Like partnerships, the terms of the written agreement between you and the retiring broker, where the retiring broker gets paid in exchange for the transition of business governs the solicitation of any clients covered by that agreement. Once that agreement is completed, you will typically be free to treat the book as your own and solicit the clients pursuant to the terms of the Protocol. If my employer is a member of the Protocol, can they still sue me? Yes. While courts have routinely held member firms to the terms of the Protocol, there are a number of claims that are excepted from the Protocol, including solicitation of customers prior to resignation, retention of customer records or information beyond what is permitted under the Protocol, soliciting fellow employees to resign from the old firm, breach of a partnership agreement, and collection of sums due under promissory notes or training agreements. Are all employees of a member firm covered by the Protocol? Usually. This remains a matter of some controversy among Protocol members. Some firms have elected to limit their participation in the Protocol to employees of certain subsidiaries. The SEC s Regulation S-P was written to safeguard the privacy of consumer financial information. Consequently, we must be very careful to protect your clients and their privacy during the course of your transition. Until your client has specifically authorized the sharing of his private account information, you are limited to using only public information (that which could be accessed by the general public) to transfer accounts. By definition, this means that the only information that may populate client forms is: Client & Spouse Name, Address, Phone number, Fax number, E mail address, and general account and product Information (not including account numbers, specific holdings or values). 6

7 The Transition Process One of the most important factors for the successful transition of your business is the planning and preparation. The more time that you dedicate to the transition process, the smoother the transition will be. This will include making sure that your files and CRM are complete with up-to-date information. Our transition team will be working with you throughout this entire process to ensure that your transition is seamless for you, your staff, and your clients. Your transition team will also help coordinate with other home office resources that you may require. Pre-Transition As you plan the transition of your business, it is a great time to evaluate and take a closer look at your practice and book of business. There are several things that you might want to take into consideration in preparation for your transition. o Does your current broker-dealer have any restrictions that would have an effect on you leaving? o How many client accounts and households do you have? What clients are most important to you? How many are inactive? Are there some you would like to part with? o Identify any clients that need to be prioritized to prevent any disruption in your revenue. o In what states do you need to be licensed? What lines of business are required in each state? Pay special attention to variable life or annuity business. o Do you currently use any technology or different software programs that are vital to your practice? If so, how will those be transitioned? o What time and/or staff can be allocated to this important process? o We provide Laser App to auto fill forms so the more electronically stored information you have, the easier the form filling process will be. o Do you work with any products or vendors that might be new to BDFS/IAC? If so, verify with your transition team that we have a selling agreement with them. o Do you have current statements (dated within 90 days) of the accounts that you are planning to transfer? Getting Started o Submit BDFS/IAC Registration Kit (including the U-4 Form) and Electronic Fingerprint Card. o Set a timeline with target dates and objectives including a transition date. o Determine your communication strategy. What is the best way to communicate with your clients? Who do you need to meet with in person, who should you reach via mail, , etc.? o Draft an announcement letter to notify your clients of the change you are making to BDFS/IAC. Submit to BDFS/IAC Relationship Manager for preliminary compliance review. BDFS/IAC Transition Guide 7

8 Preparing Your Paperwork Before you begin work on client communications and account transfers you should review your current firm s Privacy Policy with the BDFS/IAC transition team to determine how it may impact your transition. Before your transition date, you should begin to prepare the documentation necessary to move your clients and their accounts to BDFS/IAC. Some forms will be necessary for every client while others will vary depending on the type of product and/or custody arrangement. To ensure a smooth transition, it is vital that the correct paperwork is filled out for each account. Your transition team will help guide you through this process. To begin this process: o Create a file for each of your clients. o Check each client s file to assure that all required forms are included. o Begin to create households. o Sort your households and create mailing/delivery envelopes for each household. o Make sure that you have current statements for the accounts to ensure a smooth transition. o Record PIPs, RMDs, bank distribution information, beneficiaries, signators and third parties for statements. Make things as easy as possible for your clients. The less they have to think about this process, the sooner they will return their paperwork to you. We strongly recommend that you also: o Include a letter explaining your change of broker-dealer and a letter of instruction for each household (example in Appendix). o Highlight signature requirements. o Insert a self-addressed, stamped envelope for the return forms. o Make phone call to client. BDFS/IAC Transition Guide 8

9 Laser App At BDFS/IAC we have the ability to use the Laser App Transition Tool to help you electronically prepopulate many of your transition forms prior to your termination date. This can be very helpful in organizing and simplifying your client paperwork but requires that you be able to provide the necessary data in a workable format. The Laser App Transition Tool will be downloaded on your computer and be available to you for 30 days. The Laser App Transition Tool will allow you to compile the information that you need for your clients without sharing any of the information with BDFS/IAC until you have been officially brought on board to BDFS/IAC via FINRA CRD. The Laser App Transition Tool does have the ability to upload client data to be used for the fillable forms. Once you are on board with BDFS/IAC you will have access to our web based version of Laser App called Laser App Anywhere going forward. If you are not using the Laser App Transition Tool you should create a database containing the client public information that will be used during your transition. The file should be a Microsoft Excel file (or compatible) with each column of the spreadsheet representing a field of client data. Spreadsheet fields should include (at minimum): o Account Type (direct, brokerage, advisory) o Client Last Name o Client First Name o Client Middle Initial o Street Address o City o State o Zip Code o Phone Number o Fax Number o Address Additional spousal and contact information can also be helpful if it is available. o An example of what this would look like is: BDFS/IAC Transition Guide 9

10 Termination and Appointment We recommend that you meet with your BDFS/IAC transition team to confirm that both you and BDFS/IAC are prepared for your transition. Double check any outstanding issues that may still require resolution and reconfirm your termination date. Confirm that your appointment with BDFS/IAC will be effective upon termination with your prior broker-dealer. On your termination day you will need to complete the following: o Confirm with your BDFS transition team that you are making your transition prior to sending out your resignation letter. o Confirm your time for a transition call. o Submit a letter of resignation to your current broker-dealer. o Make sure you date the letter and record the specific time and date that the letter is received at your current broker-dealer). o Forward a copy of your resignation letter to your BDFS transition team. o On your Transition Call to BDFS/IAC we will cover the following items: o Forward your termination letter to the transition team. o Confirm your E & O Insurance has been paid and is activated on transition day. -You do not want lapse of coverage. o Register your (s) with SMARSH so they can be activated. o Go to to change your address for insurance appointments. o Print off your insurance licenses for all states and submit them to BDFS/IAC. o Review SureLC, Brokers Clearing House (BCH), Personalized Brokerage Services (PBS), and Western Marketing Association (WMA) for your insurance appointments -Appointments can take several days depending on the carrier. Once you have terminated from your prior broker-dealer and been appointed by BDFS/IAC you may begin contacting your client s and informing them of your move. You might want to create a log to keep track of forms that have been returned (example in Appendix). o o o o o o Once your client returns the forms packet: Check over forms to make sure all information is filled out correctly. Sign any forms that require your signature. Record them in your follow up log. Make a copy of each form and file accordingly. Send the original forms to BDFS/IAC and we will immediately process and forward them to the vendors. BDFS/IAC Transition Guide 10

11 Business Held Directly (MFs, Annuities, Insurance and Alternatives) These forms will be required to transfer any account to BDFS/IAC. These forms can be found on Laser App. They address basic suitability and privacy issues that are pertinent to all clients and accounts. o FA/BD Change Request (You will need one copy for every product your client owns) o Account Form Direct Business (you will need one per registration, i.e. Individual, IRA, Joint, etc.) After on boarding with BDFS/IAC the financial advisor will receive an from us on how to register with SureLC. Through SureLC we will be able to request the appointments from the insurance companies that you need to be appointed with. Please remember that you cannot have clients sign any paperwork until you are re-appointed with the insurance companies. Some of the companies BDFS has a direct relationship with, and others we use an Insurance Marketing Organization (IMO) like Brokers Clearing House, Western Marketing, Wealthvest Marketing or Personalized Brokerage Services. For this reason, it is very important that you have a conversation with your transition team to ensure the most efficient manor to get your business processed. Once these requests are made the appointments are usually processed in a matter of days. Fixed Indexed Annuity and Fixed Annuity business must be submitted to BDFS for review and approval. This business is not considered an Outside Business Activity and may not be submitted directly to the carriers. NOTE: Variable Life contracts are handled differently than annuities. Due to the contractual nature of the initial sales process, you may find that some accounts will not transfer to another firm. Ultimately you may be able to service some policies but they may not always transfer renewal commission to BDFS/IAC. TRANSFER OF ACCOUNTS TO FIRST CLEARING When you open a brokerage or advisory account with BDFS or IAC, our clearing firm and one of our custodians, First Clearing, an affiliate of Wells Fargo & Company, maintains custody of your investment assets. Consequently, there are a series of documents that First Clearing requires to transfer your client s accounts. Your transition team will help you identify which forms you will need to complete the transfers. New Account Information Customer Account Transfer Form (ACAT) Client Account Statement Dated no more than 90 days before transfer date. Additional Forms will be needed depending on the account type and services needed IRA, Roth, ACH, check writing, margin etc. If you have a Series 7 or Series 6 license and have brokerage accounts, you must take special care to make certain that you are using the proper forms. The transition team will assist you in making sure that you have the correct paperwork. Remember, all brokerage accounts must be transferred via the First Clearing Account Transfer Form (ACAT) and Account Form (even if accounts are presently held at First Clearing). These forms can be found on Laser App. BDFS/IAC Transition Guide 11

12 To Process Accounts to First Clearing (Non-Qualified Brokerage Accounts) 1) Identify all non-qualified brokerage accounts and create a brokerage transfer log. 2) Gather all necessary First Clearing forms including: (First Clearing ) New Account Information Form (First Clearing) Customer Account Transfer Form (ACAT*) Other applicable forms based on how you have the account set up now, such as, Advantage Agreement, ACH, transfer on death, etc. For trust accounts, a copy of key trust document pages and a Trust Certification Form. For business accounts, a copy of the appropriate agreements (LLC, partnership etc.) Most recent brokerage account statement (dated no more than 90 days before transfer date). 3) Send or deliver forms package to your client. 4) When the package is returned to you, mark it in your log. 5) Forward to BDFS/IAC along with a Brokerage Account Statement. QUALIFIED BROKERAGE ACCOUNTS 1) Identify all qualified accounts by specific plan (IRA, SEP, Money Purchase etc.) 2) Contact the BDFS transition team for the appropriate forms. 3) Follow the same steps as outlined above. TIMING As a rule of thumb, transfers to First Clearing from other clearing firms usually take no more than 10 business days. Transfers from First Clearing to First Clearing can typically be executed within a couple days. CAUTION Until the ACAT is processed by First Clearing, account instructions (trades etc.) can only be requested by the account holder via the prior clearing firm. *An ACAT is a transfer of all assets, in kind, from another brokerage firm. (Note: In general, Money Market funds will be liquidated when effecting an ACAT transfer. Proprietary Funds should be liquidated prior to submitting the form.) Non ACAT transfers apply to partial transfers of assets from a non brokerage firm (i.e. Bank, Credit Union, Mutual Fund Company) into a brokerage account. BDFS/IAC Transition Guide 12

13 Investment Advisory Accounts To operate as an Investment Advisor Representative, you must have additional registration. 1. Must pass the Series 65 examination (after January 1, 2000) for solicitation of client assets to third-party managed accounts or for fee-based Financial Planning/Consulting clients only. 2. Must pass both the Series 7 and 66 examinations for advisor-directed accounts. To be granted investment discretion, advisor must receive approval from IAC by completing the Application for Discretionary Authority. 3. Pass the Series 7 or 6, 63 & 65 examinations for advisor-directed advisory accounts. To be granted investment discretion, advisor must receive approval from IAC by completing the Application for Discretionary Authority. 4. The following certifications and/or designations may replace a series 65 in some states; CFP, ChFC, PFS, CFA or CIC. Whether or not you use a third party manager, your accounts must all be repapered to IAC. Prior to your transition, you should arrange to meet with your transition team and BDFS/IAC licensing department to generate a list of specific actions you need to take. Account transfer paperwork varies according to the type of investment account. Your relationship manager can clarify exactly what forms you will need. As a rule of thumb, you can expect that you will need to gather the following forms below: CUSTODIANS IAC offers several advisory programs through First Clearing, Envestnet (assets with the custodians at TD Ameritrade Institutional, Charles Schwab Institutional or Fidelity Institutional Wealth Management), SEI and Assetmark. FOR THIRD PARTY MANAGERS Investment Advisory Referral Agreement Third Party Manager Documents FOR SELF MANAGED ACCOUNTS Investment Advisory Agreement Clearing Platform Account Transfer Documents FINANCIAL PLANNING A new Financial Planning Agreement and Financial Planning Cover Sheet will be required at the time you produce your first plan with Investment Advisors Corporation. BDFS/IAC Transition Guide 13

14 14 What to Expect We understand that there is considerable work that needs to go into a successful transition but rest assured that you have made a great decision for you and your clients to join BDFS/IAC. We will be here with you throughout this process and long after your transition period is over. Here are a few things that you might expect: WORK LOAD In instances where we are able to offer some electronic form population, you can expect to spend an average of work hours per 100 clients on paperwork, mailing and account transfer items. Certainly you can expect to spend some time following up as well, but that tends to vary depending on your book of business. TIMING The transition process relies heavily on the quality of your preparation. However, most of the feedback we have received suggests that in a well-orchestrated transition, you can expect to have roughly 80% of your book of business moved to BDFS/IAC within 3 weeks with all but your last few stragglers onboard within 6 weeks. LOSS OF INCOME A well planned and executed transition should minimize distractions and have negligible impact on your bottom line. In fact, it is not unusual for BDFS/IAC representatives to report that they have actually experienced significant increases in business as a result of their move. When you think about it, it does make some sense. Clients may view the move as a proactive measure on your part to insure that they receive the products and services they require. Many financial advisors even report that more importantly, the transition offers a reason to connect with all of your clients. From those meetings, opportunities can arise. BDFS/IAC Transition Guide 14

15 Personalized Transition Plan Example Wells Fargo Accounts (127 Accounts + 15 PIM Account) 1) Complete the FCC NAO Information Spreadsheet a. Fill out the Account Attribute Default form 1 time. This will be used as the default on each of your accounts b. Fill out a Household Coversheet for each household (Multiple accounts can be put on this sheet from the same household) c. Fill out the managed money form for your PIM Accounts d. See Process Summary and Contacts on where to submit the business e. In Laser App we will use the Customer Account Transfer Form # for each account that is transferring into BDFS SEI Accounts (150 Accounts) 1) Call SEI to let them know you are changing broker-dealers and ask for a spreadsheet with all of your accounts on it. It should include: 1) Investor name, 2) SS Number, 3) Account Title and 4) Account Number 2) Complete the SEI Advisor and broker-dealer Change Form for each client that is found on Laser App. 3) Complete the IAC Investment Advisory referral Agreement 4) Submit spreadsheet and SEI forms to BDFS only AFTER you are officially on board with us VA Business with Jackson National, Hartford, and Securian/Minnesota Life 1) Collect statements for accounts. 2) We will transfer these accounts after you have officially on boarded with BDFS. We will have to get you reappointed with each of these carriers. 3) Complete a BDFS change of broker-dealer form; include the client statement with the form. 4) Complete a BDFS account form for each type of registration. Important Reminders: 1) 3-4 days check with your transition team to see if you can submit your E&O insurance application (this will depend on the date of your transition). If you cannot submit this early you must do this the day that you resign so you do not have a lapse in coverage. 2) Transition Day a. We will have a scheduled call to cover the following: i. E & O Insurance ii. Termination Letter (Copy to BDFS) iii. NIPR Website Update address iv. Print Licenses v. Smarsh Registration BDFS/IAC Transition Guide 15

16 Transaction Checklist PREPARATION (30-45 days before your transition date) Complete Licensing and Registration Paperwork Establish a target start date/timeline of events BDFS/IAC will schedule a time for you to have your fingerprints taken and electronically submitted Submit BDFS/IAC onboarding, registration, appointment paperwork, and fees for compliance review Review your contract with your current broker-dealer (check for any restrictions) Review your current Broker-Dealer Privacy Policy Complete a new U-4 (if you have yes answers, consult with BDFS/IAC recruiting to satisfy any additional requirements) Complete the BDFS/IAC Registration Kit (incl. rep. agreement, Advantage Direct Deposit Form etc.) Fill out form for all outside business activities and obtain approval through compliance Identify all states in which you do business (direct, brokerage, advisory, insurance, and alternatives) Identify which insurance carriers you use by state (you will need to be re-appointed with each vendor and cannot sign any paperwork until you have been re-appointed) BDFS/IAC uses SureLC for you to complete this process Complete Form ADV 2B Rep Survey & provide a copy of your current ADV 2B to compliance Determine office and technology configurations Go over compliance review procedures Website, social media, and disclosures BDFS/IAC Transition Guide 16

17 Transaction Checklist cont d PRODUCT INVENTORY, PROCEDURES & CLEARING Establish a target start date/timeline of events Develop a list of vendors by Assets Under Management (direct, brokerage, advisory, insurance, and alternatives) Check with your BDFS/IAC transition team to confirm current selling agreements to assure that the products you are using are approved through BDFS/IAC Consult with your BDFS/IAC transition team to identify which selling agreements are through BDFS/IAC and which ones are through our approved Insurance Marketing Organizations (IMOs) Check payment dates for 12b-1 fees for each vendor (this will help reduce any loss of trails due to your transition) Identify all client accounts with special requirements (margin, check writing, debit cards, electronic funds transfer, trusts, distributions, PIPs etc.) Discuss trading procedures and methods with trading department, if applicable MARKETING Review guidelines and consult with BDFS compliance for business cards, signage, letterhead, DBA s, websites, LinkedIn, disclosures, etc. Notify compliance of all advertising and marketing materials and send copies in for review Draft client announcement/instruction letter, submit to BDFS/IAC compliance for approval BDFS/IAC Transition Guide 17

18 Transaction Checklist cont d ORGANIZE AND REVIEW CLIENTS AND ACCOUNT FILES (15-30 days before your transition date) Inventory all client accounts (brokerage, direct, etc.) and check files for completeness Verify that you have recent statements (dated within 90 days) on all accounts Verify if account termination or transfer fees exist Verify and update your client database to ensure that information is correct and current Plan client communication strategy (meetings, direct mail, , etc ) Note: clients cannot be formally contacted until your transfer to BDFS has been approved Rank Clients by AUM and/or prioritize clients into groups (A, B, C, etc.) for communications ELECTRONIC DATA TRANSFER Check with software vendors for any necessary changes or updates (this includes your CRM) If changing software applications, back up and export any relevant data files PREPARING CLIENT KITS FOR MAILING Obtain your BDFS Rep Number Prepare client announcement/instruction letter Create a file folder for every client Identify what accounts must transfer for each client and fill the client folder with the required forms Highlight signatures required on all forms Combine client folders into households for delivery Prepare a mailing/delivery envelope for each household Insert a self-addressed stamped envelope into each packet to be mailed BDFS/IAC Transition Guide 18

19 Transaction Checklist cont d RESIGNATION DAY Set a scheduled call with your transition team on your resignation day to cover the following: o E & O Insurance to avoid a lapse in coverage o Termination letter (Copy to BDFS/IAC) o NIPR Website Update address o SMARSH Registration o Print insurance licenses Send resignation letter to current broker-dealer (confirm receipt if possible) Obtain a copy of your U5. Change voice mail, , website, Linked In disclosure to reflect BDFS/IAC Send out client announcements and all forms to be signed TRANSFER ACCOUNTS Begin calling clients to notify them of the packet they are about to receive Prior to transferring VA and Annuity business prepare and complete variable life insurance and annuity appointments through SureLC. You must be re-appointed before clients sign any paperwork Order compliance approved stationary, business cards, and signage Gather the signed packets and double check them for accuracy Forward the forms to BDFS/IAC (keep a copy for your files) SUBMITTING PAPERWORK Obtain your BDFS Rep Number To submit paperwork through please it to operations@bdfs.com Mailing Address: Overnight paperwork: P.O. Box South 68 th Street Clive, Iowa West Des Moines, Iowa Insert a self-addressed stamped envelope into each packet to be mailed BDFS/IAC Transition Guide 19

20 Transaction Checklist cont d FOLLOW-UP Keep a log of transferred accounts, updating and checking it regularly Implement a telephone follow up procedure to expedite transfers Send follow-up letters to clients slow in returning paperwork Check to assure that Brokerage Account requests are established (systematic withdrawals, direct deposits, IRA distributions, etc.) BDFS/IAC Transition Guide 20

21 Appendix Your Company Logo/Company Name Sample Business Cards Address Phone Fax Website Your Name Your Title Place Disclosure Block Here Depending on your branch structure, use your appropriate disclosures for communication with the public. BDFS Securities offered through Broker Dealer Financial Services Corp. (BDFS), Member SIPC. (If applicable) [DBA Name] is not affiliated with BDFS. BDFS & IAC Securities offered through Broker Dealer Financial Services Corp. (BDFS), Member SIPC. Investment advisory services offered through Investment Advisors Corp. (IAC), an SEC Registered Investment Advisor. (If applicable) [DBA Name] is not affiliated with BDFS. BDFS & Outside RIA Securities offered through Broker Dealer Financial Services Corp. (BDFS), Member SIPC. Investment advisory services offered through [Outside RIA Name], a/an [SEC or State of XX] Registered Investment Advisor. [Outside RIA Name] is not affiliated with BDFS. Bank Representatives under IBA Securities offered through IBA Securities, a division of Broker Dealer Financial Services Corp. (BDFS), Member SIPC. NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE [DBA & Bank Name (if both listed)] is not affiliated with BDFS. Bank Representatives under IBA & IAC Securities offered through IBA Securities, a division of Broker Dealer Financial Services Corp. (BDFS), Member SIPC. Investment advisory services offered through Investment Advisors Corp., an SEC Registered Investment Advisor. NOT FDIC INSURED NO BANK GUARANTEE MAY LOSE VALUE [DBA & Bank Name (if both listed)] is not affiliated with BDFS. CU Representatives under BDFS Securities offered through Broker Dealer Financial Services Corp. (BDFS), Member SIPC. NOT NCUA INSURED NO CREDIT UNION GUARANTEE MAY LOSE VALUE [DBA & Credit Union Name (if both listed)] is not affiliated with BDFS. CU Representatives under BDFS & IAC Securities offered through Broker Dealer Financial Services Corp. (BDFS), Member SIPC. Investment advisory services offered through Investment Advisors Corp., an SEC Registered Investment Advisor. NOT NCUA INSURED NO CREDIT UNION GUARANTEE MAY LOSE VALUE [DBA & Credit Union Name (if both listed)] is not affiliated with BDFS. BDFS/IAC Transition Guide 21 BDFS Transition Guide 21

22 Disclosures Sample Disclosure on Voice Mail You have reached the voice mail of at. Please leave me a message with your name and a phone number, so that I may promptly return your call. Securities offered through Broker Dealer Financial Services Corp. Member SIPC. Advisory services offered through Investment Advisors Corp, an SEC registered investment advisor. Please do not leave orders via voice mail because there is no assurance of receipt and they are not legally binding. Disclosures and Disclaimers You don t need to include disclosures and disclaimers to your s. Smarsh automatically includes them at the end of s. Our vendor, BDFS/IAC Transition Guide 22

23 Sample Letter of Resignation Sample Letter of Resignation Note: Make sure you document the date and time the letter is received at your prior broker-dealer. <Date> <Old Broker-Dealer Name> <Old Broker-Dealer Address> Dear Sirs; Please accept this letter as notification of my resignation from <prior firm> effective immediately. I would appreciate your forwarding a copy of my U5 form at your earliest convenience. Please the form to <financial advisor s address> or mail it directly to <financial adisor s address>. Thank you for your cooperation. Sincerely <Financial Advisor Name> BDFS/IAC Transition Guide 23

24 Sample Announcement Letter PLEASE NOTE: This letter MAY NOT be used until you are formally licensed with BDFS/IAC. It must be printed on pre-approved Letterhead. Sample Announcement Letter Date: Client Name Address City, State ZIP Dear Client, We are very excited to announce an important operation change we will be making on Date_. We will be changing our current broker-dealer from, to Broker Dealer Financial Services Corp. (BDFS) (and their affiliated RIA, Investment Advisors Corp.(IAC)), an independent group based in West Des Moines, Iowa. As our valued client, we want to assure you that this new relationship will not adversely affect your account(s), nor are there any costs to you to make this change. The primary reason for this conversion to Broker Dealer Financial Services Corp. is in our overriding goal to provide our clients with superior investment services and product selection you need and deserve. This decision was not easy or hastily made; in fact, we contemplated it for several months. We selected BDFS (and IAC) after our due diligence and research, to find services that will better enable us to offer customized solutions to serve our clients. Making the right choice is often what drives success in business, and we feel their business philosophies and practices synergize with ours, and the new clearing custodian, First Clearing, a subsidiary of Wells Fargo Clearing Services, LLC. We are enclosing various forms that require your signature to make this transfer. Please fill in any missing information, sign where indicated, and return the forms to us in the envelope provided, or you may call to schedule an appointment and bring in these documents, if you need assistance or have any questions. We wish to thank you again for your business as we continue to appreciate and value your confidence and support. Sincerely, Your Name Financial Advisor Business Name Contact information BDFS/IAC Transition Guide 24

25 Sample Client Letter of Instruction As I explained, in order for me to continue servicing your accounts, we will need for you to authorize the transfer of the accounts. At present, you needn t complete the enclosed forms in their entirety. In fact, until you authorize the sharing of your account information, it could be considered a violation of your privacy. Simply sign the forms and return them in the enclosed self-addressed return envelope. Also, if you hold joint accounts, please make sure that both owners sign the documents. Once we receive the signed documents we will complete the forms and I will contact you should we require anything else. For your reference, at the bottom of this page, I have included a brief description of each of the types of forms you will find in your packet. Should you have any questions, please do not hesitate to call. Thanks, <Financial Advisor Name> INCLUDED FORMS: NEW ACCOUNT FORM This is the document that helps the broker-dealer understand your financial position and investment objectives. Once you have returned this along with the Permission to Share Information form, I will complete the document to the best of my knowledge. If your financial situation has changed measurably from the last time we met, please let me know and I will update your file accordingly. CHANGE OF BROKER-DEALER FORM This form specifically requests the transfer of an account to the new broker-dealer. As this form is sent to every financial institution that you have investments with, you may find several identical forms attached (one for each investment account). Again, once you authorize the sharing of your information, we will fill in account information and forward to the investment company. BROKERAGE ACCOUNT TRANSFER FORMS These are the forms required to transfer your brokerage account to First Clearing. Depending on the services you require in your account (margin, checking etc ) you may find that a few additional forms are included. BDFS/IAC Transition Guide 25

26 Transition Follow-Up log ACCOUNT TRANSFER PACKETS SENT/RECEIVED Last Name First Name Phone Number Notes Sent Date Received BDFS/IAC Transition Guide 26

27 BDFS/IAC Transition Team Departments Key Contact Phone Advisor Resource Center (800) Clearing & Ops Sue Knoll -- Training & Onboarding Rob Stephenson Amber Bergin -- Banks / Credit Unions Cody Phelps (515) cphelps@bdfs.com -- Independents Todd Garrington (515) tgarrington@bdfs.com -- Proprietary Ryan Brooks (515) rbrooks@bdfs.com -- Advisory Alec Nielsen (515) anielsen@bdfs.com Product Managers -- Fixed Income -- Insurance & Annuities -- Investment Advisory -- Mutual Funds Rob Hill Cody Phelps Cody Phelps (800) (515) (515) (515) bonddept@bdfs.com rhill@bdfs.com cphelps@bdfs.com cphelps@bdfs.com Commissions (800) accounting@bdfs.com Compliance Barbara Bennett (800) compliance@bdfs.com Information Technology Mike Harken Brian Schwartz (515) (515) mharken@bdfs.com bschwartz@bdfs.com Licensing Deb Smith (515) licensing@bdfs.com Operations Sue Knoll (515) operations@bdfs.com -- Designated Principal Review Mike Skoglund (515) mskoglund@bdfs.com Recruiting James Young (515) jyoung@bdfs.com President & CEO Lisa Smith (515) lsmith@bdfs.com

28 140 South 68 th Street West Des Moines, IA bdfs.com Member FINRA & SIPC Revised: BDFS/IAC Transition Guide 27