Procedures for Fixed Annuities

The June 2016 Notice Letter to Representatives describes the responsibility of broker-dealers regarding the sale of Fixed Annuities (FAs). Specifically, the new rule created by the National Association of Insurance Commissioners (NAIC) titled "Suitability In Annuity Transactions Model Regulation" has been approved by nearly all states.

Effective August 1st, 2016 KSI will require prior review and approval for all fixed annuity transactions. The Regulation requires a suitability review that is similar to suitability reviews required by FINRA. Accordingly, all fixed annuity transactions will require completion of the following forms which are located within our InTouch website:

• the KSI Client Profile Form
• the KSI Equity Indexed Annuity/Fixed Annuity Application
• the carrier Application
• based on the transaction, any other applicable forms such as the KSI Liquidation Form or the Florida Annuity Suitability Questionnaire

All fixed insurance commissions will be paid through KSI; commissions will no longer be paid directly to the Registered Representative by the carrier. Registered Representatives will receive a 100% payout of street level compensation on fixed annuity contracts. Additionally, all Equity Indexed Annuities/Fixed Annuities will be required to be processed through one of our approved Field Marketing Organizations (FMO). For those annuities that are available through the B/D only and not available through the FMO channel, Registered Representatives will receive commissions at their standard grid rate.

If you have any questions, then please contact Chris Yarosh at 954-847-8648 or cyarosh@kfn.com

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