Reminder - Consolidated Account Statement Attestation and 529 Guidance
Just a reminder that your Consolidated Account Statement Attestation (see page 3 of PDF) needs to be completed and returned by this Friday to compliance@investment-planners.com for all advisors, see attached. If you have questions, please let me know. Procedures are effective 10/1/16.
Regarding 529s, I was able to glean some information from the auditors on this issue. Here are some bullet points:
** Advisors should use the FINRA Fund Analyzer when discussing current/establishing 529s with clients. If a client is adament that they want A or C shares in the 529 plan, regardless of the beneficiaries' age, then your best protection is to print out the analyzer with the A and C shares compared and have the client sign and date the comparison for your file. This will show proof that you had the discussion with the client and he/she accepted the share class chosen. http://apps.finra.org/fundanalyzer/1/fa.aspx
** General suitability guidance - Beneficiaries that are age birth to 14 years old (birth to 8th grade) should be in A shares due to the costs involved and the time horizon for use of the funds.
** General suitability guidance - Beneficiaries that are 14+ and older (high schoolers) should have new purchases be placed in C shares due to the time horizon and costs attributed for the new funds.
This FINRA review comes down to appropriateness of share classes which is a theme for the regulators. They are going back 5 years on purchases to 2011 in their review of 529s. Please know that this is a national review that FINRA is doing with firm examinations and it is not specific to IPI. I have discussed this issue with several other firms who are going through the same review with their FINRA audits. I expect to receive additional requests over the next month or so from the auditors on this issue and will let you know if I need your assistance. I would recommend that you take a look at your 529s for your clients and if applicable, meet with your clients and if applicable make suggested recommendations utilizing the FINRA Fund Analyzer, documenting the discussion and making changes with client approval to the plan. Any questions, feel free to reach out. Thanks, Renee
Consolidated Statement Procedures and Attestation