Many VA products are offered with a number of optional benefits and features that have different fees. Thus an individual subaccount may have many different prices corresponding to the different fees that are assessed based on the benefits selected. In Morningstar Office, we only collect one price stream per fund. That price stream corresponds to the base price of the subaccount, or the price at which the subaccount is available without the addition of any optional riders or features. If a client has elected optional benefits for an additional fee, the prices won’t match the Morningstar price.
Morningstar Office tracks performance at the base price because there are many potential subaccount fees based on benefit combinations. Office does not store multiple prices per subaccount, so it needs to select one fee level at which to track prices. Morningstar chooses the base price as it provides the easiest way to collect a consistent set of data among all of our products.
For this reason, there are two scenarios that can occur when importing to ensure correct pricing is used.
Scenario 1
There is one VA code that matches one Morningstar-tracked security.
The security will import as a Morningstar-tracked security. You will have the option to use the Morningstar price or to use the imported prices that will be stored with the Morningstar security.
Scenario 2
There are multiple VA codes that match to one Morningstar-tracked security.
During the import process, the security will come in as a user-defined security and will map to the Morningstar security with the Use as Substitute field set to No. The Price Source will be set to imported.
Note: For these cases, the Use as Substitute field should never be set to Yes. Setting the substitute to yes causes the user-defined security (with the specific prices based on the client’s elections) to be replaced with the Morningstar security which only supplies the base price. In addition, this will overwrite the imported prices stored on the Morningstar security which can alter other accounts that may have that Morningstar security.