FSI Endorses STP Initiative

“In addition, the advisor won’t have to try to remember which data to enter where, depending on state and insurance company involved,” Bellaire says. “That’s because the standards make all of the data entry areas uniform, so the confusion goes away.”

Also, advisors will no longer have to enter the same data repeatedly on different pages. “That means they can focus more on clearly discussing the product being purchased,” Bellaire says.

“STP standards don’t make the products uniform,” Bellaire says. “They just make the paperwork, processing and compliance uniform. The products retain their unique features and provisions.”

For B-Ds, access to increased processing speed will become very important if the NASD adopts its proposed Rule 2821, Bellaire adds. That rule would require the B-D principal to approve variable annuity transactions within 7 days of the client’s signature. “Faster electronic processing will facilitate more timely reviews,” he says.

Under the standards, the customer must first consent to doing business electronically, says Michael DeGeorge, general counsel of NAVA. If they don’t consent, business will be paper-based. If they do consent, everything from application to contract issue will be electronic.

Post-contract statements and servicing will come later, DeGeorge says.

The system should facilitate transactions between advisor and client, DeGeorge predicts. “It is not intended for direct sales.”

NAVA already has presented the standards to 16 states. Two states–Kansas and Virginia–have sent NAVA written confirmation that the standards will be viewed as being in compliance with state standards.

“Legally, we don’t need written state confirmations to implement the standards, but the confirmations are valuable because they help build the comfort level of our members as they move toward implementation,” DeGeorge says.