SPIRE SECURITIES – ANNUITY SALES: FIXED AND VARIABLE

Instructions: The following procedures apply to new accounts and trades for fixed, fixed index and variable annuity products offered through Spire Securities and Spire Insurance Agency. You must open a Spire direct account for all annuity business.

For all annuity sales, Spire will require a valid Individual Client Profile, an Individual Account Application (Spire offers two versions of these documents; one meant for Natural Persons and one for Entities) and an Annuity Disclosure Form.  The Disclosure Form is required for new sales, exchanges/replacements and additional deposits of $10,000 or more.

It is your responsibility to confirm that the annuity is on the Approved Products list in Spire Access (from the home screen, select the NEXCOM tab and then pick Approved Products) prior to soliciting the business).

New Sales

All new annuity purchases must be submitted through Spire Securities and must include the appropriate forms:

• Spire Securities new account client disclosures
• Spire Individual Client Profile
• Spire Individual Account Application
• Spire Annuity Disclosure form
• Insurance company completed and signed application along with a check (made payable to the insurance company) or a transfer form and replacement paperwork in adherence with Spire guidelines (see below for replacement requirements), if applicable
• Change of Broker Dealer and/or Financial Professional Form (only if transferring an existing account from another Broker Dealer).

The complete documents can then be scanned into the _Items for Review folder in Laserfiche and the trade ticket must be completed in the Spire Access system.  If the application is not complete or in need of attention or there is no order entry in Spire Access, it will be NIGO’d and returned for correction.   Once corrected it must be resubmitted again in its entirety.

When the application is approved by a Spire Principal, it will be transferred to your Approved folder within Laserfiche.  Once received, choose the appropriate client file to deposit the documents. You may then deliver to the insurance company.  If mailing with a check, you must use a “traceable” means of mailing (i.e. UPS, Fedex).  It is has been our experience that reliability of timely deliveries has been a major issue with the USPS.  Consider alternatives when trying to meet deadlines.

Any checks sent must be entered on the Check Transmittal/ Blotter.   Again, checks should be sent by a “traceable” means, no later than by noon of the next business day on which they are received.

Additional Investments into an Existing Annuity

For additional deposits of $10,000 or more into an existing annuity, Spire will allow an existing Spire Client Profile & Individual Account Application to be used for subsequent investments as long as there is:

• A new Annuity Disclosure form.
• Same registration.
• Individual Client Profile is less than 12 months old.
• There are no financial or suitability changes.
• The investment is not a new product not previously purchased by the client.
• For replacements, all replacement paperwork must accompany the request for subsequent deposit and follow Spire’s guidelines (see below).

Annuity Replacements and 1035 Exchanges (new or additional over $10,000)

A replacement is defined as any transaction where an annuity is exchanged or liquidated (full or partial) to fund the purchase of another annuity, whether or not through a 1035 exchange, trustee-to-trustee transfer or a direct rollover. 

A 1035 exchange is a provision in the Internal Revenue Service (IRS) code allowing for a tax-free transfer of an existing annuity contract for another one of like kind. To qualify for a Section 1035 exchange, the contract or policy owner must hold the same registrations in both contracts.

The Spire  Annuity Disclosure Form must be completed in its entirety.  Spire will reject the replacement of any annuity contract documented in the disclosure that triggers the following red flags:

1. Contract is subject to surrender charges: A significant red flag and the transaction must receive pre-approval before client solicitation.  Significant surrender penalties will cause a transaction to be declined.  Bonus credits do not offset surrender charges.
2. Client has exchanged another annuity in the past 36 months: Per FINRA rule 2330, when submitting an annuity exchange, advisor must disclose if client has done any other annuity exchanges within the last 36 months. Therefore, you must receive pre-approval from Spire Compliance before proceeding.
3. Living benefit rider is changing for a client over 65 years old: Living benefit guarantees are designed for clients in the age 45-65 year range. The advisor must clearly document the benefits of such riders versus what is available on the existing contract.
4. The exchange is changing the death benefit rider for a client over 50 years of age: The death benefit guarantees are designed for clients over 50.  The advisor must clearly document the benefits of such riders versus what is available on the existing contract.
5. The annuity, new or replacement, exceeds 30% of the client’s liquid net worth.
6. Client is over 70 years old (not to exceed age 80) and the death benefit is greater than 10 percent of contract value: Advisors must clearly document client’s understanding of the loss of death benefit and the reason they will benefit from the exchange. 
7. Sub account allocations: New annuity’s allocations are changing and are different then the client’s stated investment objectives.

Instructions for Exception Requests

Spire understands that there may be circumstances that would warrant exceptions to the red-flag policy outlined above.  Any such request for an exception should be submitted to a Spire Principal in writing.  Any approval must be granted by Spire, in writing, in advance of your submitting the transaction to the insurance carrier for processing.