COMPENSATION PAID TO NEWPORT GROUP, INC. AND AFFILIATES
Newport Group, Inc. and its affiliates (collectively, “Newport Group”) provide institutional life insurance brokerage and policy administration, services to sponsors of non-qualified retirement plans, banks, insurance companies, sponsors of funded welfare benefit trusts and sponsors of split-dollar and other life insurance programs.
Newport Group’s insurance services are provided through Newport Group, Inc. (“NGI”) and Newport Group Securities, Inc. (“NGS”). General account policies are sold and serviced through NGI and variable policies (policies investing the cash value in separate accounts) are sold and serviced through NGS. Policy administration services for variable policies may be performed by NGI.
Newport Group’s compensation for insurance services includes:
- commissions on premiums
- asset-based trailing commissions based on the cash value of a policy
- servicing fees received from the carriers apart from policy sales to pay for policy administration performed on behalf of the carriers
- fees paid directly from the client for policy administration
Please refer to the section of the private placement memorandum and/or prospectus regarding charges and expenses for a detailed explanation of the fees received in connection with a particular policy.
Newport Group may enter into supplemental arrangements with certain insurance companies related to certain insurance products which may provide additional revenue to Newport Group based on the premium or cash value of policies placed during a given time period or in exchange for the performance of administrative and client support services provided by Newport Group. These arrangements may include compensation related to technology development and support as well as the number of in-force plans and policies for a particular carrier. Payment through any such arrangement comes from the general revenues of the insurance carrier and is not attributable to any client.
Insurance services provided by Newport Group are performed primarily in connection with the informal financing of the liabilities of nonqualified deferred compensation plans that are record kept by NGI. Some sponsors of nonqualified plans choose to informally finance the plan with investment company products rather than insurance. In such cases, NGS may act as broker for the purchase of mutual funds held by the trust vehicle used to informally finance the plan. Compensation to NGS from such purchases may consist of 12b-1 distribution fees as described in the fund prospectus. NGI may collect sub-transfer agency fees for plan administration and/or recordkeeping services provided to the plan. Detailed information for each mutual fund’s fees and expenses can be found in the fund prospectus.
Conflicts of Interest
With the exception of its banking and insurance company clients, insurance services are typically provided in the context of an employer who offers one or more nonqualified deferred compensation plans to a select group of management or highly compensated employees of the sponsor. These plans typically require additional services such as record keeping, administration, trust, custodial, financial reporting and investment services.
NGI provides record keeping, administrative, financial accounting support and design consulting services.
Newport Trust Company (“NTC”), a wholly-owned subsidiary of NGI provides trust and custodial services to sponsors of plans covered by the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) as well as grantor trust services to nonqualified deferred compensation plans which are largely exempt from ERISA. In addition to the trust services mentioned above, NTC provides America’s leading corporations and institutions with institutional trustee and independent fiduciary services for retirement and other employee benefit plans. NTC receives asset-based compensation and fixed fees for recordkeeping and administrative services. Please refer NTC’s Fee Schedules(s) for a complete list of fees.
Newport Group Consulting, LLC, (“NGC”), a wholly-owned subsidiary of NGI, is an SEC-registered investment adviser that provides institutional investment and fiduciary consulting services primarily to retirement plans, their sponsors, and their participants. NGC receives fees and compensation as a fixed fee or a percentage of assets under advisement or management pursuant to the terms of a written agreement between the sponsor and NGC. Please review NGC’s Form ADV Part II for a detailed explanation of fees and compensation.
Clients may engage in multiple services and pay fees and compensation to Newport Group and its affiliates. When multiple services are used, Newport Group maintains policies to protect against conflicts of interest. For example, compensation received by Newport Group in connection with a nonqualified plan are separated from fees received from tax-qualified plans which are subject to the rules governing fiduciaries, including the prohibited transaction rules under ERISA. Under no circumstance do the fees received from an ERISA-covered plan result in a discount on service fees related to a nonqualified deferred compensation plan, insurance program or other corporate obligations.
NGC may provide recommendations to sponsors of nonqualified plans as a fiduciary advisor under the Investment Advisers Act of 1940 with respect to the notional menu of investment options offered to participants in the plans. To the extent these recommendations result in compensation paid to NGC, NGC will engage in an agreement with the plan sponsor to provide these services. Conflicts in this arrangement are disclosed to the sponsor as required under the Investment Advisers Act of 1940. For a further description of conflicts of interests related to NGC services please review NGC’s Form ADV Part II which is available on www.newportgroup.com and the SEC’s website.
Newport Group facilitates educational meetings and conferences for financial advisors and institutional clients. Certain insurance companies and/or investment management companies and/or their affiliates may help sponsor these conferences. Sponsorship may be used toward but not limited to expenses related to the meeting and conference expenses such as lodging, food, travel, marketing materials and promotional items. Additionally, registered representatives associated with NGS and investment adviser representatives associated with NGC may attend educational conferences and/or due-diligence meetings sponsored by insurance and investment management companies. Expenses associated with these meetings such as travel, food and lodging may be reimbursed by these companies. Employees are required to request approval to attend these meetings/conferences. NGC and/or NGS may or may not recommend investment strategies of investment companies that sponsor or provide sponsorship to Newport Group and/or its employees. For a further description of conflicts of interests related to NGC services please review NGC’s Form ADV Part II which is available on www.newportgroup.com and the SEC’s website.
As of July 1, 2019
Newport Group, Inc. 2019. All rights reserved.
Newport Group Securities, Inc. 300 Primera Blvd, Suite 200, Lake Mary, FL 32746