The firm failed to evidence the review of the initial allocation of premium payments to investment portfolios or sub-accounts.
The procedure by which representatives of the firm were to effect variable life insurance transactions. Matt realizes that after investing in a mutual fund, it's important to keep track of how the fund is doing. The manner in which principals of the firm were to review, approve and otherwise supervise variable life insurance transactions. When talking about stocks, long-term is at least 10 years. The firm failed to maintain certain records recording the rationale for the exchange of variable products. Sally tells Matt and Grandpa Bert about a study showing that investors need to own at least 12 separate, carefully selected stocks to be diversified. The firm failed to evidence the review of the initial allocation of premium payments to investment portfolios or sub-accounts. They all realize that if Sally wants to invest in this many stocks, she's got a lot of work to do. Others charge commissions at a percentage of the total dollar amount of the stock transaction.
Fund of funds were popular during the 1960s but have subsequently fallen out of favor with most investors. Sally tells Matt and Grandpa Bert that investors who can't take this time are better off hiring a mutual fund company to do the work. To get Sally and Matt started, Grandpa Bert tells them that people who keep their money invested in stocks over the long-term generally earn higher returns than if they keep the money in the bank or invest in bonds.