The Newport Group, Inc., Newport Retirement Services, Inc. and Newport Group Securities, Inc. (hereinafter collectively referred to as 'Newport') are engaged in the businesses of designing, implementing, communicating, funding, and administering executive benefit plans and qualified retirement plans. Newport Group Securities functions as a broker-dealer for the sale and administration of securities products including variable insurance products, mutual funds and other securities and as a registered investment advisor. Newport Retirement Services functions as an administrator and recordkeeper for qualified defined benefit and defined contribution plans. The Newport Group provides administrative and record keeping services for non-qualified plan clients, including those of Newport Group Securities.
Business Continuity Plan
Newport maintains an active business continuity plan which is designed to respond to any possible future business disruption. Newport's business continuity strategy addresses the issues associated with both short-term and long-term disruptions including business processes and systems, data and technology, personnel, facilities, as well as internal and external communications. In the event of a short-term or long-term disruption, alternative recovery and physical operations site arrangements exist in order to provide uninterrupted processing of client business activities. In addition, alternative technology recovery sites have been established for all proprietary applications required to process Newport business activities. Each alternative site is of significant distance from any affected location and each technology recovery site utilizes separate utility services. Newport's technology recovery strategies include redundant technology and communications systems in order to maintain uninterrupted contact with employees, clients and vendors.
Newport's plan is designed to quickly recover and resume normal business operations after a significant business disruption and respond by safeguarding our employees and property, making a financial and operational assessment, protecting the firm's books and records, and allowing our customers to transact business.
Compensation and General Business Arrangements
Newport receives compensation for providing its services in a variety of ways, in accordance with industry rules and regulations which may vary depending on which Newport affiliate is involved. For example, Newport may receive fees from clients for consulting, administrative services, recordkeeping services, qualified plan investment consulting services, expense reimbursements, and/or compensation from financial institutions such as insurance companies, mutual funds and fund management companies for placement of insurance or other financial products. Newport may also enter into agreements with certain mutual funds or investment advisors to receive fees for providing various administrative and recordkeeping services.
Newport has selling agreements with leading financial services firms, which allow us to conduct business with a broad range of product providers within our marketplace. Our goal is to help our clients select suitable investments and products that help them towards their financial goals. These product companies have been chosen based on their ability to offer products and services that the meet the needs of our clients. The following describes important information relating to the availability of products through or in connection with Newport and other factors that may influence our choice or recommendation, as applicable, of such firm or product.
Newport is paid directly by financial institutions in various ways when it offers their products for sale, as well as for servicing their products in the future. A detailed explanation of all charges associated with these financial products as well as the costs associated with the distribution of these products is contained in the individual product offering materials.
When offering or placing variable life insurance products, Newport Group Securities acts solely in its broker-dealer capacity. The amount and method of compensation received depends on the product and the insurance carrier. While the exact amount of compensation may not be known until the transaction is finalized, an estimate of such compensation may be provided to a client upon request. In the case of registered products such as mutual funds and variable life insurance, disclosure of compensation is made through a prospectus and a statement of additional information. The prospectus or offering memorandum is provided at the time of purchase. The statement of additional information is available to the customer upon request to the mutual fund or insurance company.
Newport regularly performs a thorough analysis of the corporate insurance marketplace which evaluates a variety of factors including, but not limited to, product performance, investment breadth and quality, carrier financial strength, commitment to the marketplace and other administrative considerations. Accordingly, in the course of its business, Newport is appropriately selective regarding the insurance carriers and products it may offer for a client's consideration and selection.
When Newport Group Securities, Inc. offers variable insurance products, it acts as a non-exclusive agent representing certain product companies and products. Newport may be compensated in various ways depending on the specific insurance company, the particular product, the nature, size and complexity of the transaction, and the services rendered to a client.
The Newport Group may also enter into supplemental arrangements related to certain insurance products which may provide additional revenue. These arrangements include, but are not limited to, technology development and support, policy administration or service-related compensation related to the amount of in-force policies. Payment through any such arrangement comes from the general revenues of an insurance carrier and is not attributable to any client or policy. This type of payment generally is not shared with any registered representative and does not increase the cost to a purchaser of any product. Payments from such arrangements are expected to be less than 1% of revenue of The Newport Group companies.
Marketing and Educational Expenses/Potential Conflicts of Interest
Additionally, certain third party institutions provide financial support on a voluntary basis for marketing, educational, and sales meetings of Newport. No such support is based upon any sales or distribution quotas or other metrics. Currently, the following institutions provide such support: AEGON, AIM, Alliance Bernstein, Allianz Global Investors, American Century, AST, Columbia Management, Fidelity, Franklin Templeton Investments, Great West Life, Hartford Life, Janus Investments, Jennison Dryden, John Hancock, JP Morgan, Mellon Asset Management, MetLife, Morley Financial Services, Inc., Munder Capital Management, Nationwide Financial Services, Natixis Global Asset Management, Pacific Life, Prudential Life Insurance, Putnam, Reliance Trust, Russell Investments, Schwab, State Street Bank & Trust, SunLife Financial, Thornburg, and Wilmington Trust Company. Collectively, payments from these types of arrangements are expected to be approximately 1% of the revenue of The Newport Group companies.
Newport may make payments to selected persons for a variety of purposes which may include paying for Newport's attendance at educational seminars or paying such persons for marketing related or administrative activities. This type of payment does not affect the product cost to clients.
As with any financial intermediary, certain aspects of our relationships with the firms with whom we do business may have the potential to create incentives for Newport to promote or to recommend one product over another product.
Additional detailed information regarding any of these arrangements is available upon request. This information is subject to change.