Question

 

What if I am a registered rep in the midst of changing firms when my number in the new business  rotation comes up or my drawing number gets pulled during a business lottery but I cannot show assets because they are still in transit or with my former broker dealer and have not been transferred yet?

 

Answer

 

Anytime a rep is participating in the NBE under the Asset Qualification provision and their number in the rotation comes up or their number is pulled during a business lottery that rep will need to verify they still have the minimum required assets under management with the appropriate number of NBE participating fund families before they will be allowed to write the new business being generated. If for whatever reason that rep cannot show they still have the minimum required assets they will be removed from the new business rotation an the business lottery pool an not be allowed to write ecosystem business until they re-verify the minimum required assets under management with at least one NBE participating fund family.

 

In this case once the rep completes their asset transfers to the new firm they can re-verify their assets under management with the NBE administrator an then be placed back at the top of the new business rotation and placed back in the business lottery pool. We do not feel as if a rep should be penalized for moving firms, for this reason we place those reps back at the top of the rotation once they re-verify minimum assets.

 

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Question

 

I am a rep that has placed assets with a particular fund to qualify for the new business rotation and business lottery. What happens to my qualification status if the fund is removed from the NBE due to performance issues?

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Answer

 

In situations where a fund is experiencing performance issues the NBE has a wide range of performance enhancing tools that will be at the disposal of all participating fund families. We are highly confident that the NBE performance enhancers will enable funds to perform in the upper range of their peer groups. If however a fund ultimately has to be removed from the NBE the assets reps placed in that fund will no longer count toward new business qualification. Reps that find themselves outside the NBE qualifications because they had assets with the nonperforming fund will have two choices if wish to maintain their position in the new business rotation.

 

1/ They can move existing assets to other funds in that same fund family that still remain in the NBE.

 

2/ The rep can place more assets with other mutual fund families that still remain in the NBE.

 

Any two of these options or combination there of will enable the rep to continue qualifying for the new business rotation.

 

We encourage reps however, to lobby the management of funds that are having performance issues to take the necessary steps to get assistance from the NBE when needed in order to preserve their position within the new business rotation.

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Special Note: A Mutual fund will be considered to be having performance issues and subject to NBE removal if at least one out of the following two conditions are met. Those conditions being;

 

1) A Mutual that is in the 75th percentile or higher among their peer group for two consecutive calendar quarters.

 

2) Over the last five consecutive calendar quarters a mutual fund has not been below the 55th percentile among their peer group.

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Question

 

What if my number in the new business rotation comes up or my drawing number is pulled during a business lottery and I write a case where it turns out the client is un-insurable or the case does not materialize for whatever reason?

 

Answer

 

In cases where the business derived from the rotation that rep will be re-assigned the next piece of new business generated by the ecosystem.

 

When the business is awarded through a lottery drawing that rep will be assigned the next prize case that is within the NBE lottery pool.

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Question

 

Being the case assignments are random in nature is there a mechanism in place to address any large differences in case sizes and commission amounts earned by various reps as their numbers come up in the business rotation?

 

Answer

 

No, The NBE participating investment banks will ultimately dictate which transactions get funded. Issuers and reps will be paired off randomly. There will be no way of knowing which issuer’s offering will get funded or when. As a result when an issuer is actually funded the reps that just so happen to be next up in the rotation will write the new business that is generated. Different issuers will have different needs at varying degrees, as a result the cases will vary in size and so will the commission pay offs for NBE participating agents and reps. However NBE cases will by nature be much larger than what the vast majority of reps a accustomed to writing.  

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Question

 

Can a rep/agent maintain rotation and drawing numbers based on assets with one fund family and also be part of joint rotation and drawing numbers of another fund family at the same time?

 

Answer

 

Yes. Agents/reps can maintain as many rotation and drawing numbers in any configuration by which they qualify whether those numbers are joint or held alone.

 

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Question

 

Is there a limit to the amount of rotation an or drawing numbers a registered rep can be awarded?

 

A/ There are no limits to participation. A rep will be awarded new business rotation and business lottery drawing numbers for each fund family they qualify for whether it be through assets or fund family referrals.

 

Question

 

When we as registered reps sell shares in the various ecosystem mutual funds, is the money that we bring in supposed to help the offerings of ecosystem issuers?

 

Answer

 

No not necessarily, when a participating investment bank funds an NBE issuer transaction it will be based on merit and suitability standards only. No offering will have any precedence over another. If an when a participating investment bank presents an offering to a participating fund family it will be because it is suitable to do so.  

 

The participating investment banks will determine which of their clients should be presented with any offerings in the NBE pipeline based on the KYC rules only. There may be many instances these offerings are not appropriate for certain NBE participating funds or fund families, in those cases the investment banks will seek other suitable clients in their book to solicit participation in the offering as they would normally.

 

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Question

 

What if we see a dip in the market an now I no longer qualify based on assets for  ecosystem participation, what happens to may status in the rotation?

 

Answer

 

A rep will not be removed from the rotation if their assets dip below minimum due to market decline, however they will need to bring their assets under management back up to the minimum requirement before their number in the rotation comes up or their number gets pulled in a business lottery. If the reps number in the rotation comes up or their number is pulled in a lottery but they cannot show they have the required assets under management with participating fund families they will not be able to write the new business. When an if the rep gets their assets up to the minimum or more they will need to fill out an Asset Re-qualification Form. At that time the NBE administrator will re insert that rep back in the new business rotation and lottery pool in the same position they were in when their number first came up.

 

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Question

 

I am a rep who used my assets with XYX Fund Family to qualify for ecosystem participation. Now XYX Family is no longer a part of the New Business Ecosystem, what happens to my participation in the new business rotation?

 

A/ That rep would need to either start to support another NBE participating fund family or somehow convince the exiting fund family to stay inside the NBE. Reps that were using a fund family to qualify that has left the NBE will no longer be qualified and not be allowed to participate in the new business rotation until they can show they have the minimum assets with another participating fund families.  

 

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Question

 

If I bring in a new fund family to the ecosystem and I also have the minimum assets required with that Fund Family as well does that mean I get awarded two rotation numbers and two lottery drawing numbers?

 

Answer

 

Yes. In that case the rep would have earned two rotation numbers, one number for the referral and one number for the assets. The same would apply to the business lottery drawing numbers, one drawing number would be awarded for the referral and another drawing number for the assets.

 

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Question

 

Is there a time or usage limitations placed on a new business participation numbers?

 

Answer

 

No. The ecosystem is designed to be perpetual.  As long as a rep meets the requirements they will be entitled to continue to write new business being generated by the ecosystem as their number in rotation continues to come up and any time their number is pulled in a business lottery.  

 

 

Question

 

If I am only a joint participant in the NBE do I still need to have my own pass word an user name on the NBE website?

 

Answer

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Yes. Joint participants will still need to verify assets with NBE administrator.

 

Under the Joint Asset Participation arrangement the NBE administrator must verify the collective assets among joint rep participants to make sure they meet the required minimums.  This way those joint rep participants can be properly counted thereby allowing them to maintain an active position in the new business rotation.

 

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Question

 

What if I qualify for participation in the NBE but my firm does not want me to provide documentation that shows assets I am managing? What do I do in that case?

 

Answer

 

This is a situation where you as a strong rep must sell your company superiors on the benefits and the size of the cases to be written when participating in the NBE. In this situation the rep must show their superiors how the NBE is within compliance and no personal client or firm proprietary information ever needs to be disclosed in order to participate. If a rep successfully illustrates those points just mentioned and their firm superiors can’t understand,  won’t respond, and or is still in dis agreement with NBE participation then that rep will need to decide what is most important; being in a position to regularly write very large cases through the NBE with very little if any extra effort, or continuing to do business the same way, getting the same results, at the same firm. At a time like that in a rep’s career they will need to consider making a change because it will then be very clear they are not getting nor will they start to get the support needed from their present company in order for their book of business to truly grow.   

 

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Question

 

Do I need permission from my firm to participate in the NBE?

 

Answer

 

While it is always helpful to get the firm behind the NBE, there is no regulatory requirement for firm approval. Any funds a rep presents to a client that same fund family will need to have a sales agreement in place with the firm. If so, that rep would be free to sell that fund to any of their clients when appropriate and suitable. The fact that the fund family is a NBE participant or the rep encouraged the fund to become a NBE participant will have no bearing on the situation. So long as there is a valid an active sales agreement between the firm and the fund family then the rep should be able to sell the funds with out an issue so long as the fund is suitable an appropriate for the client. If there is any insurance to be written so long as the rep is or gets properly insurance licensed in the customer’s state of residence that rep can sell insurance to a NBE customer that has a need for the insurance, and there will not be any compliance issues.  

 

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Question

 

I am a sales manager at a firm that has extensive relationships with several mutual fund families. If I am able to get various mutual fund families to participate in the NBE can I allocate the rotation and lottery drawing numbers to certain reps in my sales force as rewards an incentives?

 

Answer

 

Yes. Up to three reps can share in the business generated by a rotation number. Sales managers are encouraged to use the benefits of the NBE to motivate their down line. When a mutual fund family begins NBE participation an the sales manager is filling out the online qualification form  there is section for them to assign reps the rotation and drawing numbers being awarded their firm.  When that rotation number comes up in the NBE funding line or their drawing number is pulled during a lottery the reps that were assigned under those numbers by firm management will be allowed to write the business that is generated.

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Question

 

I am a NBE participating broker dealer with an existing mutual fund client that is asking me to go on to my dashboard an fill out a Money Manager Voucher form so they can qualify for the NBE, however they are not a very active client and or they do not have the required amount of assets on my books as prescribed by NBE guidelines. What are my options in this situation?

 

Answer

 

In this situation we at the NBE could not stop a broker dealer from submitting the voucher form, however keep in mind the members of the NBE are largely accountable to the other participating members. So you will have flexibility in whether you submit the voucher or not.  So this would be your opportunity to get the client asking for the voucher to transfer more assets to your firm in order to meet the NBE minimum, become more active, or offer some other value added element to the relationship that makes submitting the voucher worth while. In any event your firm would be in a strong position and this would be your opportunity as a broker dealer to increase production at one level or another. As long as your firm and the mutual fund client would somehow be better off as a result of these type interactions then the NBE is serving it’s purpose.

 

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Question

 

What happens if a reps number comes up in the rotation or pulled in the lottery in they are not licensed to business in the client’s state of residence?

 

Answer

 

In that situation the rep will be given the opportunity to get properly licensed in the client’s resident state. Once the rep is properly licensed they will then be allowed to write the business.

 

If the rep chooses not to get licensed in the client’s resident state the following would apply;

 

In instances where the business in deriving from the issuer funding rotation the case will be awarded to the next agent up the rotation. That agent will be given the same option as the first agent. This process will continue until an agent comes up in the NBE rotation that is properly licensed or one of the agents in the rotation elects to get properly licensed.

 

In instances where the business is deriving from the lottery the NBE administrator will conduct a special lottery drawing to select another NBE agent that will be given the same option to get licensed in the client’s state of residence. This process will be continued until a lottery selected agent elects to get licensed in the client’s resident state or a properly licensed agent is randomly selected through the lottery drawing process.

 

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Question

 

What if a money manager would like to join the NBE and they already have an existing relationship with a participating NBE broker dealer? What would be the procedures?

 

Answer

 

In this instance it is quite simple for a money manager to join the NBE. The money manager would first establish a user name and log in. Then they would just fill out the Manager Qualification form. On that form it will be a section for them to identify any NBE broker dealers they have relationships with.

 

Once at least one identified broker dealer fills out a corresponding Money Manager Voucher form that fund family will now be listed among other NBE participating fund families an be entitled to full NBE business benefits.

 

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Question

 

What if a NBE participating rep has a customer who is also a part of the NBE as well, will that rep be allowed to write the new business when an if the customer obtains funding from NBE investment banks.

 

Answer

 

In this situation the rep would be able to write 100% of the new business generated by this client if three conditions are met.

 

1) The client fills out an Agent Appointment Request form referencing the agent they already have a relationship with. This form will also have a client consent for the agent to provide the NBE administrator proof of the date business was first conducted with the client.

 

2) The rep must show they had business on the books with the client or one their direct family members before the client obtained their log in credentials for the NBE website. (Direct family members are spouse, parents, or legal age offspring)

 

3) The rep would need to be a qualified NBE participant prior to the client obtaining their log in credentials for the NBE web site.

 

If all three conditions are met the client will be placed in a designated issuer section of the new business rotation. Any new business generated will be written by the agent that has the existing relationship with the client.