Item 1 – Cover Page
Sugarloaf Wealth Management, LLC
2736 MEADOW CHURCH RD SUITE 200
DULUTH, GA 30097
March 27, 2019
This Brochure provides information about the qualifications and business practices of Sugarloaf Wealth Management, LLC (“SWM”). If you have any questions about the contents of this Brochure, please contact Douglas M. Everett at 770-985-5473 or email@example.com. The information in this Brochure has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority.
Sugarloaf Wealth Management, LLC is a registered investment adviser. Registration of an Investment Adviser does not imply any level of skill or training. The oral and written communications of an Adviser provide you with information that you can use to determine whether to hire or retain an Adviser.
Additional information about Sugarloaf Wealth Management, LLC is also available on the SEC’s website at www.adviserinfo.sec.gov.
Item 2 – Material Changes
Since our last annual amendment, dated March 13, 2018 we have had the following material changes.
Added a new Investment Advisor Representative. Had a change in ownership percentages.
Our Brochure may be requested at no cost to you by contacting Douglas M. Everett, Chief Compliance Officer, at 770-985-5473 or firstname.lastname@example.org. Our Brochure is also available on our web site www.swmllc.com.
Additional information about Sugarloaf Wealth Management, LLC is also available via the SEC’s web site www.adviserinfo.sec.gov. The SEC’s web site also provides information about any persons affiliated with Sugarloaf Wealth Management, LLC who are registered, as investment adviser representatives of Sugarloaf Wealth Management, LLC.
Item 3 – Table of Contents
Item 1 – Cover Page 1
Item 2 – Material Changes 2
Item 3 – Table of Contents 3
Item 4 – Advisory Business 4
Item 5 – Fees and Compensation 7
Item 6 – Performance-Based Fees and Side-By-Side Management 12
Item 7 – Types of Clients 12
Item 8 – Methods of Analysis, Investment Strategies and Risk of Loss 12
Item 9 – Disciplinary Information 15
Item 10 – Other Financial Industry Activities and Affiliations 16
Item 11 – Code of Ethics 17
Item 12 – Brokerage Practices 18
Item 13 – Review of Accounts 19
Item 14 – Client Referrals and Other Compensation 20
Item 15 – Custody 21
Item 16 – Investment Discretion 21
Item 17 – Voting Client Securities 22
Item 18 – Financial Information 22
Item 19 – Requirements for State Registered Advisers 22
Appendix I: Wrap Fee Program Brochure………………………………………………………………………….. 23
Item 4 – Advisory Business
Sugarloaf Wealth Management (SWM) is an SEC Registered Investment Adviser located in Duluth, GA SWM is owned by several members, three of whom have ownership of more than 25% each. Additional information about the members is available in our ADV part 2B. Listed below are the firm’s principal shareholders (i.e., those individuals controlling 25% or more of this company):
¥ Jason T. Connolly, Member
¥ Adam C. Wilson, Member
¥ Taylor S. Manry, Member
As of Dec. 31st, 2018, we had $323,940,056 in assets under management. We provide you with the option to have your assets managed on a discretionary or non-discretionary basis. As of Dec. 31st, 2018 we managed
$263,361,799 on a discretionary basis, and $60,578,256 on a non-discretionary basis.
We have been providing financial planning and portfolio management services to individual clients as well as trusts, estates, charitable organizations, small business owners, retirement plan sponsors and other entities since 2000. We do not have any proprietary products or funds. We will gather information about you, your goals, risk tolerance, financial objectives and other items that may impact your investment needs. Once this information is obtained, we will provide you with a suggested investment strategy. It is important that you let us know of any changes to your situation so that we may ensure that we are providing the most appropriate advice possible.
If we are managing your assets, you may request that we place limitations on the management of those assets. For instance you may not want to have tobacco firms in your accounts. Please provide us with a written request and if possible, we will accommodate your request.
Advisory services and the sale of investment products are processed through Fidelity Brokerage Services, LLC (“Fidelity”). Fidelity is a dually registered broker/dealer and investment adviser, and is also a member of the Financial Industry Regulatory Association (“FINRA”). Fidelity is not affiliated with SWM. Through Fidelity, we offer advisory services, brokerage services and investment products to our clients. Fidelity uses National Financial Services (NFS) for custody, execution and clearing services.
We seek to avoid or at least minimize conflicts of interest that may arise between our firm and you. However, all investment firms will likely have some unavoidable conflicts of interest. Because of these conflicts we maintain policies and procedures to ensure that your best interests are our top priority. We will provide details on some of these conflicts within this document.
We offer a variety of advisory services. You may receive all, none or some combination of the services described below. Our typical client will receive a combination of the Tactical and Strategic Management Programs. Clients with taxable accounts may be placed in a Tax Efficient model in order to minimize taxable gains.
TACTICAL MANAGEMENT PROGRAM
Our tactical program is based on research provided by third parties not affiliated with SWM. The research provided to us identifies long term cyclical up or down trends in the markets. Within these long-term trends, intermediate and also short term trends are identified. An example of this would be where the market may be moving up for a period of weeks despite the longer-term trend of the market being down. During these upward trends, certain sectors and classes of the market will be exhibiting the best strength and momentum. Utilizing various investments such as Mutual Funds, ETF’s, Variable Annuity sub-accounts and Individual Equities we will allocate your portfolio to these sectors and classes. During
these up trends, you typically will be fully invested. During down trends in the markets, some or all of your portfolio will typically be moved completely out of the markets to a cash position.
In some circumstances, there may be periods where we feel it is in your best interest to manage your account without our investment decisions being driven by the research provided to us.
This program is typically offered through our Wrap Fee Program but is also used on a Non-Wrap Fee basis. Please refer to Appendix I for additional information regarding the Wrap Fee Program.
STRATEGIC MANAGEMENT PROGRAM
Our strategic program is also based on research provided by third parties not affiliated with SWM. The research provided constructs and monitors managed asset allocation models. These models are diversified across various investments styles and strategies. The portfolios will typically consist of Mutual Funds, ETFs’, variable annuity sub-accounts, Individual Equities or a combination of these. The investments in this program will periodically be rebalanced and/or replaced according to market conditions.
Together we will select a model based upon your risk tolerance, investment objectives, time horizon and overall financial situation. Your assets will be invested in the specific investments contained within the model we have selected. Changes will be made to the models periodically. This program will typically remain fully invested in the markets at all times.
In some circumstances, there may be periods where we feel it is in your best interest to manage your account without our investment decisions being driven by the research provided to us.
This program is typically offered through our Wrap Fee Program but is also used on a Non-Wrap Fee basis. Please refer to Appendix I for additional information regarding the Wrap Fee Program.
THIRD PARTY ADVISORY SERVICES
We offer our clients access to various third party investment advisors through certain programs such as mutual fund wrap programs and separately managed account programs. Any third party investment advisor recommended to our clients will be a manager that is on an approved list compiled and maintained by Fidelity. Fidelity is responsible for initial and ongoing due diligence on any third party investment advisors.
We provide assistance to clients in the selection and ongoing monitoring of a particular third party investment advisor. Factors that we consider in the selection of a particular third-party advisor include but are not limited to:
– A review of their historical performance and risk measurements
– Your risk tolerance, goals, objectives and restrictions, as well as investment experience
– The assets you have available for investment.
If our services to you include the use of these managers, you will typically sign an agreement with them in addition to the advisory agreement you will sign with us. If you were to go to these third party managers directly, the fees they charge you could be more or less than going through us. However, when using their services directly, you will not receive our expertise in developing an investments strategy, selecting the managers to use, monitoring the performance of your account and changing managers if needed. Additional information about any of the Third Party Advisory Services, including a complete description of the programs, services, fees, payment structure and termination features, is available via the applicable third party investment advisor’s disclosure brochures, investment advisory contracts and/or account opening documents.
FINANCIAL PLANNING SERVICES
Sugarloaf Wealth Management offers Financial Planning Services to our clients. Financial Planning Services involve preparing a written Financial Plan based on the client’s specific financial circumstances and objectives. Financial Plans may address some or all of the following areas:
– Present assets and liabilities
– Insurance needs
– Savings needs
– Anticipated retirement resources and needs
– Social Security
– Other employee benefits
We will gather information through in-depth discussions with you. Information gathered would include your current financial status, future goals and attitudes towards risk. Related documents supplied by you are carefully reviewed and the plan we develop for you would likely include general and specific recommendation for courses of action. For example we may recommend that you obtain insurance or revise existing coverage, establish an individual retirement account, increase or decrease funds held in savings accounts or invest funds in securities. We may refer you to an accountant or attorney for tax or estate plans.
RETIREMENT PLAN CONSULTING SERVICES
We offer retirement plan consulting services to employee benefit plans and their fiduciaries. The services are designed to assist the plan sponsor (the “Company”) in meeting their management and fiduciary obligations to the plan under ERISA. Retirement consulting services will consist of general or specific advice, and may include any or all of the following:
¥ Strategic Planning and Investment Policy Development/Review
¥ Plan Review
¥ Plan Fee and Cost Review
¥ Acting as Third Party Service Provider Liaison
¥ Assessment of Plan Investments and Investment Options
¥ Plan Participant Education and Communication
¥ Investment Advice to Participants
¥ Plan Benchmarking
¥ Plan Conversion to a New Vendor Platform
¥ Assistance in Plan Merger
¥ Legislative and Regulatory Updates; Plan Corrections
The Company may also engage us to provide the following additional services, for separate compensation:
¥ Review of Executive Benefits
¥ Assist with Plan Conversion
¥ Merger and Acquisition Assistance
¥ Assist with Corrective Actions to Comply With Applicable Regulations
¥ Coordination with Other Advisers
We will determine in advance the scope of services to be performed and the fees for all requested services. The Company will be required to enter into a written agreement with us setting forth the terms and conditions of the engagement, describing the scope of the services to be provided, and the relevant fees and fee-paying arrangements.
When we perform our agreed upon services, we will rely on information provided to us by the Company. We will not be required to verify the accuracy or consistency of any information received from the Company.
We will serve in a fiduciary capacity with respect to some of the services that we provide which will be further explained in the written agreement we sign with the Company. The Company is always free to seek independent advice about the
appropriateness of any recommendations made by us.
WRAP FEE PROGRAMS
A description of our Wrap Fee Program’s terms and conditions are contained at the end of this document in Appendix I.
Item 5 – Fees and Compensation
In this section we will explain how we are compensated for the various advisory services we provide. We believe that our fees are competitive with firms offering similar services. However, lower fees for comparable services may be available to you from other sources. You could invest in mutual funds and other investments directly without our assistance. In that case, you would not receive our assistance in determining which investments are most appropriate to your financial situation and objectives. We also would not be available to help you maintain a disciplined approach to portfolio reallocation and to help minimize emotional reactions to market events. Also, some investments may not be available to you without the services of an investment advisor.
While it is our policy to charge investment management fees to you in accordance with the fee schedules in effect at the time of executing the investment management agreement, we may negotiate fees with you on a case-by-case basis. We will take into account the nature and complexity of the service provided to you, our relationship with you, the value of the assets being managed, the potential for additional business or clients, the amount of work, the attention needed to manage your accounts and if you are in our Wrap Fee program or not. Examples of this may include: waiving or deeply discounting fees for family members or friends. Or for instance fees on a $1,000,000 account being less than a $250,000 account.
To the extent that you grant us the authority to debit advisory fees directly from your account, you will receive an account statement from the account custodian, usually monthly but no less than quarterly, showing all account holdings and transactions in your account. We urge you to review the information on the statement for accuracy and compare the information to any reports received directly from us. Please refer to Item 15 of this document for additional disclosures relating to Custody.
Each client agreement may be canceled at any time, by either party, for any reason. Upon termination of any account, any prepaid, unearned fees will be promptly refunded on a pro-rata basis, and any earned, unpaid fees will be due and payable.
All fees paid to us for investment advisory services are separate and distinct from the fees and expenses charged by mutual funds or in conjunction with internal expenses associated with exchange-traded funds or variable annuity
sub-accounts. You will be solely responsible, directly or indirectly, for these additional expenses.
To the extent that we provide advisory services to variable annuity policyholders, variable annuity companies impose internal fees and expenses on the investments, including contingent deferred sales charges and early redemption fees. Because it is an insurance product, variable annuity companies also impose mortality charges, which are typically in a range of 1.30% – 1.70% annually. These fees are in addition to the investment advisory fees paid to us. Complete details of the internal expenses associated with the purchase of a variable annuity product are disclosed in the prospectus.
Also, please be aware for those annuity contracts that are maintained directly at the annuity company we typically receive a trailer commission from the annuity company in addition to our management fee on that contract. This creates a conflict of interest as it provide us with a financial incentive to keep you in that contract so that we can continue to receive the trail commission from the annuity company, instead of moving you to an account managed on the Fidelity platform where we would no longer receive the trail commission.
To the extent that any client utilizes margin, margin strategies entail additional fees and expenses, as the client must pay interest on any amounts borrowed against the account. When using margin, investment advisory fees are calculated on the net account balance (rather than the total market exposure) in order to avoid any incentive for us to use margin to potentially increase the fee paid by the client. The sale of certain options may have the affect of temporarily increasing the net value of the account and thus, increase the amount of the client’s advisory fee.
We also receive commissions or other compensation as registered representatives and insurance agents. This compensation is separate and distinct from our advisory compensation and is discussed in greater detail below.
Advisory clients may also maintain non-advisory brokerage accounts. Representatives of SWM that provide investment advice to you are also separately licensed as registered representatives and/or investment adviser representatives of Triad Advisors (“Triad”). Triad is a dually registered broker/dealer and investment adviser, and is also a member of the Financial Industry Regulatory Association (“FINRA”). Representatives of SWM are compensated through commissions assessed on the transactions executed in non-advisory brokerage accounts. This creates an incentive for the representative to recommend investment products based on the compensation received rather than on your needs. While representatives of SWM receive commissions on non-advisory accounts, they are not permitted to receive commissions on advisory accounts. In addition, advisory fees are not charged on commission based brokerage accounts.
Item 12 further describes the factors that SWM considers in selecting or recommending broker-dealers for client transactions and determining the reasonableness of their commissions.
ASSET BASED COMPENSATION
We provide asset management services on an annual fee basis. The fee is based on a percentage of the assets that we manage. This is a very common form of compensation for registered investment advisory firms and avoids the conflict of interest associated with commission-based compensation (being paid for what is sold to you). The management fee is charged on a quarterly basis. We determine the dollar amount of the fee by multiplying the aggregate value of your assets under management on the last day of the quarter by ¼ of the annual fee.
The type of account you are in will determine whether you are billed in arrears or in advance. Typically those account invested in variable annuity sub-accounts will be billed in arrears, while accounts held at Fidelity will typically be billed in advance.
We carefully calculate the fees and review them on a regular basis. However, the custodian holding your assets will not determine whether the fees are properly calculated. You are also responsible for confirming that the fee we submit to the custodian is accurate. The fees deducted are reported to you on your account statement, please review it for accuracy. Typically the management fee is deducted directly from your account, but you do have the option to be invoiced should you prefer that.
Annual fees will vary between 0.00% and 1.50%. This is due to several factors including:
– The value of the assets being managed (a larger account will typically receive a discounted rate)
– The type of investment advisory services being provided
– The advisor you work with
– Your relationship to the advisor (family and friends may not be charged or may receive a large discount)
– If you are in our Wrap Fee Program or not
Each advisor sets their asset management fees as long as it does not exceed 1.50% per year. The fees are disclosed to you in the client agreement that is signed prior to us managing the assets.
If you are billed in advance and you terminate your agreement with us before the end of a billing period, any unearned fees will be returned to you in a timely manner.
Each advisor also has the option to either include or exclude cash when assessing the management fee. This decision typically depends upon the level of cash being held and the amount of time the assets have been or will remain in cash. Additionally each advisor has the option to either include or exclude individual securities and/or accounts when
assessing the management fee. This decision typically depends upon whether the client wants to have the securities
actively managed and monitored or is simply having the position or the account being held as a matter of convenience or for aggregation purposes in order to reach a breakpoint on the fee schedule.
Fee based compensation aligns our interest with yours. This is because our compensation increases when the assets we manage for you increase. However, this link between the value of your account and our compensation creates potential conflicts of interest. If your account value decreases, so does our compensation. This gives us an incentive to discourage you from taking money from your account even if it may be in your best interest to do so. Examples of this might include using money in your managed account to:
– Pay down debt
– Make gifts to charities or individuals
– Purchase a home or car, etc.
– Establish a non-managed savings account
We strive to maintain a high degree of objectivity and to ensure that our advice is not based on these incentives. However, the potential for conflict of interest exists and you must be aware of this when you consider our recommendations. Our goal is that our advice to you remains at all times in your best interest and that we will disregard any financial impact these decisions may have on our firm.
THIRD PARTY ADVISORY SERVICES
We may recommend that you use a third party money manager. In these situations, our advisory fee compensates us for the ongoing monitoring and review of the manager’s performance. Unless the third party manager bundles our fee with theirs, all fees are separate from and in addition to our advisory fee. If the third party manager will bundle our advisory fee into their management fee, we will receive our fee directly from the third party manager. Our fee is paid solely from the third party manager’s fee or wrap program fee and does not result in any additional charge to you. The fees charged for the third party management program may be more than if our services and those of the third party manager were charged separately. However, by engaging the services of the third party manager directly, you would not receive our expertise in developing an investment strategy, selecting a third party manager, monitoring the performance of the portfolio and making changes to the third party manager when appropriate.
For further details, please be sure to carefully review the third party manager’s disclosure brochure and investment agreements. Fees will vary based on the manager chosen.
TACTICAL MANAGEMENT PROGRAM
We charge an advisory fee not to exceed 1.50% annually, based on the aggregate value of the assets under our management. Fees are payable either in arrears or in advance based on the agreement you have signed with us. For accounts billed in arrears, the fee is based on the aggregate value of the assets under management on the last day of the current quarter. For accounts billed in advance the fee is based on the aggregate value of the assets under management based on the last day of the previous quarter.
This program is typically offered through our Wrap Fee Program but can be used on a Non-Wrap Fee basis. Please refer to Appendix I for additional information regarding the Wrap Fee Program.
STRATEGIC MANAGEMENT PROGRAM
We charge an advisory fee not to exceed 1.50% annually, based on the aggregate value of the assets under our management. Fees are payable either in arrears or in advance based on the agreement you have signed with us. For accounts billed in arrears, the fee is based on the aggregate value of the assets under management on the last day of
the current quarter. For accounts billed in advance the fee is based on the aggregate value of the assets under
management based on the last day of the previous quarter. This program is typically offered through our Wrap Fee Program but can be used on a Non-Wrap Fee basis.
Please refer to Appendix I for additional information regarding the Wrap Fee Program.
FINANCIAL PLANNING SERVICES
Financial Planning Services are charged at an hourly rate of $200 per hour. An estimate of the total hours, based upon the nature and complexity of the services provided, is determined at the start of the advisory relationship. Typically, financial planning fees range from $600 – $5,000. These services may also be charged on a flat fee basis agreed upon in advance. We may waive or reduce the financial planning fee if we are also managing your assets. This option is at our discretion and is handled on a case-by-case basis. Financial planning fees are due and payable at the time the client receives the written Financial Plan. The Financial Plan will be presented to the client within 90 days of the contract date, provided that the client has promptly provided all information requested.
We may recommend that you purchase securities or insurance products based on the financial plan. Please refer to “Additional Compensation – Reps and Agents” for important additional information.
RETIREMENT PLAN CONSULTING SERVICES
Retirement Plan Consulting Services fees are billed based on the terms and conditions agreed-upon by us and the client, which could result in an hourly rate, fixed fee or asset-based fee. The exact fee and any and all terms and conditions are negotiated in advance of services rendered and are disclosed in the written advisory agreement.
Either party may terminate the written advisory agreement at any time upon 60 days’ prior written notice. Upon termination, we will deliver a final billing statement for unbilled work performed prior to termination, and the client will have a period of 30 days within which to deliver any payment, if due.
The fee schedule for Retirement Plan Consulting Services is based on the particular program selected by the client. The maximum advisory fee that may be charged under this program is 1.50%. Investment Advisory fees will be disclosed to the client in the investment advisory agreement.
WRAP FEE PROGRAM COMPENSATION
A complete description of our Wrap Fee Program’s terms and conditions can be found at the end of this document in Appendix I.
ADDITIONAL COMPENSATION – REPS AND AGENTS
When providing financial planning or consulting services, we may recommend that you purchase certain securities or insurance products. If this occurs, we are doing so as registered representative (“reps”) of Triad Advisors when purchasing securities and as agents of various insurance firms when purchasing insurance products. Additional compensation in the form of commissions is received by us if you act on these recommendations.
As a result, we have an incentive to make recommendations to you in order to receive this additional compensation. This does not mean that the products that we may recommend are not suitable to meet your
We may also recommend that we manage your investments for you. This would provide additional compensation to us in the form of management fees. As a result, we have an incentive to make these recommendations in order to receive the additional compensation. This does not mean that the recommendation is not suitable for you.
We work with Triad, our broker/dealer, in several ways to prevent potential conflicts. We review trades and flag certain transactions for further review to ensure that they were suitable. In the event that it is determined that an unsuitable recommendation has been made, we will work with our broker/dealer to determine the corrective steps to be taken.
In order to sell insurance products, all of our agents are required to complete annual continuing education requirements that include ethics courses in order to maintain their licenses. For variable annuity insurance products, a member of our management team along with our broker/dealer will review the recommendation for suitability. For all insurance products, should it be determined that insurance products are being sold based on compensation received instead of suitability, we will work within our organization, our broker/dealer and/or the appropriate insurance commission to determine the corrective steps to be taken.
You are never under any obligation to purchase products or services recommended by us. You always have the option of purchasing them through other brokers or agents who are not affiliated with us.
It is important that you be aware of these potential conflicts. We encourage you to discuss them with your advisor.
The following are not sources of compensation to us but are costs that may be imposed by the financial institutions and/or other third parties associated with your accounts. These charges and fees are not part of but are in addition to our advisory fee.
– Custodial fees
– Account termination fees. These are fees that may be charged when you close or transfer an account from one brokerage firm (custodian) to another. These fees tend to range from $0 to $200 but at times might be much higher. You should contact your existing custodian (brokerage firm, bank or trust company, etc.) to determine if any account termination fees will be charged and deducted from your account if you decide to transfer the account to us.
– Charges imposed directly by mutual or exchange traded funds in the account. These fees are disclosed in the fund’s prospectus and may include:
– Fund management fees
– Early redemption fees
– Other fund expenses such as 12b-1
– Confirmation fees (disclosed on confirmation statements)
– Deferred sales charges
– Odd-lot differentials
– Transfer taxes
– Wire transfer and electronic fund fees
– Other fees and taxes on brokerage accounts and securities transactions. For example, some custodians may charge an additional fee on both Wrap and Non-Wrap Accounts for each trade confirmation that you do not elect to receive electronically. These fees may vary between custodians but tend to average about $1.50 per confirmation. You may also be subject to an additional per-trade transaction charge on the selling of certain
securities as disclosed on your trade confirmation. These fees are not shared with us but are transaction charges paid to the broker/dealer and/or custodian.
Transaction charges; commonly called ticket charges, to purchase and sell investments, are not passed through to clients who participate in our Wrap Fee Program; we pay the ticket charges. Clients who do not participate in our Wrap Fee Program will pay these ticket charges.
Typically, the agreements you sign with us (and the financial institution holding your assets) authorizes us to debit your account for our advisory fee. It also authorizes the financial institution to send the fee directly to us without violating any custody rules. We only work with financial institutions that will send you a statement at least quarterly. Those statements will show all transactions in the account including any advisory fee taken for that period.
See Item 12: Brokerage Practices for additional information.
Item 6 – Performance-Based Fees and Side-By-Side Management Sugarloaf Wealth Management does not charge any performance-based fees. Item 7 – Types of Clients
We provide portfolio management services to High Net Worth Individuals, Individuals, Trusts, Estates, Charitable Organizations, Small Business Owners and other persons or entities.
The minimum account size for each of the advisory services offered follows. We have discretion to waive the minimum on all of our programs. Third party investment advisors may each respectively agree to waive their minimums at our request.
Tactical Management Program $250,000
Strategic Management Program $250,000
Third Party Advisory Services Varies by third party manager
Retirement Plan Consulting Services No stated minimum The minimum fee for Financial Planning Services is $600.
Item 8 – Methods of Analysis, Investment Strategies and Risk of Loss
We provide advice and recommendations relating to mutual funds, exchange-traded funds (“ETF”), variable annuities, fixed income securities and equities. We will assist the client in constructing their initial asset allocation and subsequent maintenance. When analyzing investments that may be appropriate, we utilize purchased research that uses both Fundamental and Technical Analysis depending on the investment objective and strategy selected by the client.
¥ Fundamental analysis is security analysis grounded in basic factors such as company earnings, balance sheet variables and management quality, which are used to predict the future value of an investment. Information such as interest rates, GDP, inflation and unemployment may be used to predict the direction of the economy and therefore the stock market.
¥ Technical analysis is the practice of using statistics to determine trends in security prices and make or recommend investment decisions based on those trends. Technical analysis focuses on matters such as trade volume, price action, demand, and volatility to help determine the market forces at work on a certain security or on the securities market as a whole.
We use third party providers to identify and communicate signals indicating the timing and direction of allocation changes to our models and strategies. At our sole discretion, we can choose to act or not act on the information we receive from these providers.
Investing in securities involves risk of loss that clients should be prepared to bear. We use our best judgment and good faith efforts in providing advisory services to clients. We cannot warrant or guarantee any particular level of account performance, or that an account will be profitable over time. Not every investment decision or recommendation made by us will be profitable. Investments in securities are subject to various market, currency, inflation, economic, political and business risks. We attempt to minimize these risks by constructing diversified portfolios appropriate for your level of risk tolerance.
ASSET ALLOCATION STRATEGY
Our investment approach is firmly rooted in the belief that markets are fairly efficient (although not always rational) and that returns are determined principally by asset allocation decisions. Proper asset allocation has also been shown to reduce the volatility of returns over long periods of time. This is the reason that we include several different asset classes in our portfolios.
We offer portfolios that vary in the amount allocated to equities (stocks, stock mutual funds, etc.), fixed income investments (notes, bonds, bond funds, etc.), and alternative investments (real estate, commodities, etc.). Your Advisor will recommend a portfolio best suited to your investment needs and desires, communicated risk tolerance and the need to assume various risks, and the investment time horizon. We will evaluate your existing investments and, if appropriate, develop a transition plan to one of our strategies. These portfolios are then monitored and take into account any cash flow needs you may have. We are also very careful in gauging the level of risk appropriate for each individual client. We do our best to make sure our clients understand the potential loss of capital and purchasing power associated with their investments.
The custodian holding your assets typically maintains cash in one of the money market mutual funds offered. Your Advisor will discuss your current and future cash flow needs. They can also help you create a plan to meet those needs. While it is not our practice to encourage clients to maintain a large amount of cash in their accounts, we will try to accommodate such requests.
If you want to maintain a substantial cash reserve account, we may exclude these reserves when calculating the advisory fee. Additionally, we may recommend that you maintain a certain level of cash in your managed accounts to: facilitate fee taking and; provide liquidity for your cash flow needs or planned purchases.
This is to prevent us from having to sell a security at an inappropriate time in order to cover the fees due. This may reduce your portfolio’s returns when your portfolio returns are higher than the interest rate being paid on your cash balances.
We are very careful in gauging the level of risk appropriate for each individual client. We do our best to make sure our clients understand the potential loss of capital and purchasing power associated with their investments. The following are general risks a client may encounter when investing in the market:
Fundamental Analysis – The data we review when using Fundamental Analysis is generally considered reliable but we can’t guarantee its accuracy and we don’t verify its accuracy. In addition, the data that we review is sometimes subjective in nature and open to interpretation. Even if our data and interpretation of the data is correct, there may be other factors that determine the value of securities other than those considered in Fundamental Analysis.
Technical Analysis – The utilization of Technical Analysis may only be able to forecast how an investment will perform over the short-term. In addition, this analysis does not take into account the more fundamental properties of what an investment may be worth as a result of company performance and balance sheet variables that may play a part in determining the value of an investment.
Long-Term Strategies – The Long-Term assumption is that financial market values will increase over time and this may not happen. There is also the risk that the segment of the market you are invested in (or perhaps just your particular investment) will decrease over time even if overall stock market values increase. In addition, purchasing investments long-term may create an opportunity cost, locking-up assets that you may be better off using elsewhere.
– Financial Risk: the risk that the companies you are invested in may perform poorly affecting the value of your investment.
– Market Risk: the risk that the stock market will decline, decreasing the value of your investment.
– Inflation Risk: the risk that prices will increase in the economy and deteriorate a stock’s real return.
– Political and Governmental Risk: the risk that the value of your investment may be negatively affected by new regulations, changes in leadership, political unrest, etc.
– Certain securities recommended, such as U.S. small cap value and mid cap value stock mutual funds, and micro cap mutual funds, possess higher levels of volatility (as individual asset classes within a portfolio). When we use these securities as part of an overall strategic asset allocation, it is because we believe that over the long-term, the potential return will be greater than the additional risk that may be experienced over the
– Interest Rate Risk: the risk that the value of bond investments will fall if interest rates rise.
– Call Risk: the risk that your bond investment will be called or purchased back from you when conditions are favorable to the bond issuer but not favorable to you.
– Default Risk: the risk that the bond issuer may be unable to pay you the contractual interest or principal on the bond in a timely manner or that they may not be able to pay you at all.
– Inflation Risk: the risk that price increases in the economy will deteriorate a bond’s real return.
– Market Risk: the risk that the value of certain alternative investments will fall, including but not limited to commodities, currencies and real estate investments.
– Manager Risk: although selected for lower volatility returns, certain alternative investment strategies may not perform as expected, and may lose value and/or increase portfolio volatility.
Since mutual funds and ETF’s may hold bonds and/or stocks, please refer to the risk under both of those sections.
– Manager Risk: the risk that an actively managed fund’s investment adviser will fail to execute the fund’s stated investment strategy.
– Market Risk: the risk that the stock market will decline, decreasing the value of the securities being held by the fund.
– Industry Risk: the risk that a group of stocks in a single industry will decline in price due to adverse developments in that industry. This would decrease the value of funds that have a large amount invested in that industry.
– Inflation Risk: the risk that price increases in the economy will deteriorate a fund’s real return.
While all investments involve some level of risk, including capital and purchasing power loss, we emphasize diversification in order to minimize and manage it. We look to diversify not only asset classes and sectors, but philosophies and strategies as well. Our models each generally include technical, fundamental, quantitative, and qualitative input. Each of these inputs has weaknesses and risks associated with them, to say nothing of the risk associated with an asset class or sector in general. By focusing on diversification of assets and multi-faceted models we hope to reduce risk in a manner that still produces profits over the long term.
From time to time, we will take positions that are inconsistent with the research that we receive and also with a portfolio’s main investment strategy. This would be done in an attempt to minimize capital gains in taxable accounts, or to respond to adverse market, economic, political, or other conditions. This will impact the portfolio’s ability to achieve its investment objective.
Where possible the use of leveraged products will be avoided. However, (typically in annuity contracts) in order to more closely match a model we may occasionally use leveraged products. Leveraged products will likely increase the percentage movement of the investment both up and down making the product more volatile and therefore riskier. In order to try and decrease the volatility we will adjust the weighting of the investment to offset the use of leverage.
If you send us a redemption request, we may have difficulty liquidating certain positions you hold to honor that request. There might be a limited market for the resale of one or more securities in your account. This can negatively affect the value of those securities if we try to sell all or a portion of a position to fill your request.
Please do not hesitate to discuss these and other risks in more detail with your Advisor. If your Advisor recommends that you use a third party manager, please be sure to refer to their ADV brochure and associated disclosure documents for details on their investment strategies, methods of analysis, and associated risks.
Investing in securities involves risk of loss that you should be prepared to bear. Item 9 – Disciplinary Information
Registered investment advisers are required to disclose all material facts regarding any legal or disciplinary events that would be material to your evaluation of Sugarloaf Wealth Management or its management. We have no disciplinary actions to disclose.
Item 10 – Other Financial Industry Activities and Affiliations
In addition to providing investment advisory services, we offer estate settlement services to our clients. We may work with individual or clients’ attorneys and accountants to develop and implement a plan to effectively allocate the assets retained in an estate. Estate settlement services will not involve any recommendations with regard to securities. Clients who are provided this service will be charged a flat fee or a fee based upon a percentage of the assets maintained in the estate. The minimum fee for estate settlement services will be $1,500 per project. This fee is separate and distinct from any fees charged by us for advisory services.
A Member of our firm is also a Partner and CPA of the accounting firm Rhodes, Young, Black & Duncan, CPA (RYBD). This partner is entitled to receive distributions relative to his respective ownership interest in our firm. RYBD may recommend us to accounting clients in need of advisory services. Likewise, we may recommend RYBD to advisory clients in need of accounting services. Accounting services provided by RYBD are separate and distinct from our advisory services and are provided for separate and typical compensation. There is no referral fee arrangement between RYBD and us. Advisory clients are not obligated to use RYBD for any accounting services. However, we may offer you
bundled advisory and accounting/tax services in our agreement with you, should you choose this bundled arrangement, you would be required to sign a separate agreement with RYBD for those accounting and/or tax services and a portion of the fee you pay to us would be passed on to RYBD as compensation for their services. You may be able to obtain these same bundled services cheaper at other firms.
Thank you for taking the time to read this far into what we feel is an important document. We know it is not the most entertaining piece and it may read as if everything we do is a possible conflict of interest (we feel that way at times also). However, is important to us that you are aware of these actual and potential conflicts. As a way of saying thank you we would like to offer you a gift card. Next time you contact our office, please mention that you would like to take advantage of the “ADV gift card offer” and we’ll be sure to get it to you. Don’t stop now though, just eight more pages to go and in addition to receiving the gift card, you can proudly say that you read the whole document and we are sure that will put you in a very select group of clients!
Our advisors that provide investment advice to you on non-advisory brokerage accounts do so as separately licensed registered representatives and/or investment adviser representatives of Triad. Triad is a diversified financial services company engaged in the sale of investment products and is not affiliated with SWM. Your advisor may recommend securities or insurance products offered by Triad to advisory clients. They will receive commissions in addition to the customary advisory fee if products are purchased through them. As such, your advisor has an incentive to sell commissionable products in addition to advisory services because of the additional financial benefit.
Sugarloaf Wealth Management is also a licensed insurance agency, and Members of Sugarloaf Wealth Management are licensed insurance agents. As part of the financial planning services provided to clients, we may recommend the purchase of insurance products. We would receive commissions as insurance agents in connection with such products. Thus, there is an incentive to recommend specific courses of actions through the financial planning process that would result in additional compensation for us.
The advisory services offered by us are entirely separate and distinct from (though complimentary to) the advisory services of Triad. Associated persons of SWM do not provide investment advice on Triad’s behalf. Triad does not warrant the sources of information, investment strategies, or the contents of any information provided by SWM. The brokerage services offered by these individuals through Triad are offered pursuant to the business name of Sugarloaf Wealth Management, LLC. SWM is considered an Office of Supervisory Jurisdiction (OSJ) of Triad by FINRA.
Item 11 – Code of Ethics
We have adopted a Code of Ethics for all of our employees. This Code expresses our commitment to ethical conduct and is used to guide the personal conduct of our various team members. The Code describes the firm’s fiduciary duties and responsibilities to clients and sets forth our practices of supervising the personal securities transactions of employees who have access to client trade information. The key concept of the Code is that we shall always:
– Place your interests first
– Act with integrity and dignity when dealing with clients, prospects, team members, and others
-Strive to maintain and continually enhance a high degree of professional education
-Seek to preserve our firm’s independence and to maintain our complete objectivity with respect to our advisory services and each recommendation made to our clients
-Keep your securities holdings and financial circumstances confidential
PARTICIPATION OR INTEREST IN CLIENT TRANSACTIONS AND PERSONAL TRADING
Sugarloaf Wealth Management does not participate in securities in which we have a material financial interest. As a matter of policy, we would never recommend to clients, or buy or sell for client accounts, securities in which our firm or its related persons has a material financial interest.
Our employees are allowed to buy and sell individual securities for their personal accounts that you may also invest in. This will create a conflict of interest if they receive a better price than you do on that trade. To manage this conflict, we direct that our advisors delay trading of the same securities in their personal accounts until the next day unless they are assured that you the client will receive a better execution price if the orders are placed the same day. To supervise this issue, we require employees who possess access to advisory recommendations to provide personal annual securities holding reports and quarterly transaction reports to our compliance department. We also require access persons to receive advance approval prior to investing in any initial public offerings, private placements, and certain restricted individual securities.
Any third party managers we use are not affiliated with us and will be governed by their own policies and procedures. You should refer to their ADV brochure documents for information on their Code of Ethics.
NON-PUBLIC INFORMATION AND PRIVACY
Our Code of Ethics prohibits the use of material non-public information. It also establishes procedures aimed at protecting your confidential information.
GIFTS MADE TO AND GIVEN BY OUR ADVISORS
Investment managers are allowed to occasionally give nominal gifts to advisors subject to a limit of $100 per employee per calendar year. We do not permit any gifts or entertainment conditioned on the achievement of a sales target. No gifts received relate to any particular transactions or investments made by our clients.
Advisors are also limited in gifts that they may receive from or give to clients. This limit is up to $100 per client per calendar year and is in place to prevent client favoritism.
Our Code of Ethics requires that all employees act in accordance with all applicable Federal and State regulations governing registered investment advisory practices. Any individual not in observance of the above may be subject to discipline.
We will be glad to provide you with a complete copy of our Code of Ethics upon request.
Item 12 – Brokerage Practices
We do not have any soft-dollar arrangements and do not receive any soft-dollar benefits.
As our firm does not have the discretionary authority to determine the broker-dealer to be used or the commission rates to be paid, clients must direct us as to the broker-dealer to be used.
With rare exceptions, we require that advisory clients, including our wrap fee program clients, direct us to place trades through Fidelity Brokerage Services, LLC (“Fidelity”), an unaffiliated FINRA-member broker dealer and the clearing firm and custodian that we use for advisory accounts. Our firm has evaluated Fidelity and believes that it will provide our clients with a blend of execution services, commission costs and professionalism that will assist our firm to meet our fiduciary obligations to clients.
In evaluating such an arrangement, clients should understand that we do not negotiate brokerage commissions for the execution of transactions in their accounts on a trade-by-trade basis, and best execution may not be achieved. In addition, in a wrap fee program, transactions in client accounts are affected “net” (without separate commission charge to the client) and a portion of the wrap fee is generally considered as being in lieu of commissions. Not all advisors require clients to direct it to use a particular broker dealer, though the sponsors of wrap fee programs typically do.
As described previously, advisory representatives of our firm are also registered representatives of Triad, a FINRA member broker dealer. In order to meet its supervisory obligations, Triad requires that all of our non-investment advisory activities be processed through Triad, and ultimately National Financial Services (NFS) as the clearing firm. As such, in their separate capacity as registered representatives, these individuals may receive separate, yet customary commission compensation. We will not affect any transactions through Triad for our advisory clients. Typically all of our advisory client trades will be placed through Fidelity.
AGGREGATING/ BATCHING CLIENT TRANSACTIONS
Whenever possible, we will aggregate your trade orders with those of other clients in what we call a block trade order. This is done to obtain volume discounts on execution costs. For each account that we include in the block trade, we
must reasonably believe that the order is consistent with our duty to seek best execution for all clients participating in the aggregated order. The average price per share of a block trade is allocated to each account that participates. Accounts that participate in the same block trade are charged transaction costs, if applicable, in accordance with their client agreement.
The aggregation and allocation practices of mutual funds and third party managers that we recommend to you are disclosed in their mutual fund prospectuses and third party manager disclosure documents.
We will not receive any additional compensation or remuneration as a result of the aggregation.
OTHER ECONOMIC BENEFITS
Fidelity, Triad and NFS may provide us with certain brokerage and research products and services that qualify as “brokerage or research services” under Section 28(e) of the Securities Exchange Act of 1934 (“Exchange Act”).
We may also receive additional benefits (also known as non-cash compensation) as a result of our relationships with some of the financial institutions listed above. These resources are also referred to as Other Economic Benefits.
– Receipt of duplicate client confirmations
– Receipt of electronic duplicate account statements
– Access to trading desks that exclusively service investment adviser firm participants (these trading desks may also provide research, pricing information, and other market data)
– Access to block trading that provides the ability to aggregate securities transactions and then allocate the appropriate shares to client accounts
– Access to electronic communication networks for client order entry and account information
– Access to the investment advisor portion of their web sites (this may include practice management articles, compliance updates, and other financial planning related information and research materials)
– Access to other vendors on a discounted fee basis through discounts arranged by the custodians
– Computer software and related systems support to assist us in monitoring client accounts, place trades, do research
– Telephone conferences with managers, analysts, etc.
– Financial assistance for client events and advisor meetings
– Invitations to due diligence, educational or reward meetings related to our business
Additionally, Fidelity and/or Triad have provided us with economic assistance in the form of cash, reimbursements or forgivable notes to cover the costs of such items as account closing fees, the purchase of software and other technology, new signage, stationary, etc. and to generally assist with other transition cost incurred during our transition from Royal Alliance and also to subsequently assist with bringing any new representatives into our firm.
Item 13 – Review of Accounts
It is important that you discuss any changes in your financial situation, goals and objectives with your Advisor. We will contact you at least once a year to offer to review our previous services and/or recommendations. This is the time for you and your Advisor to discuss the impact resulting from any changes in your financial situation and/or investment objectives.
Trades in your account are monitored for suitability by an appointed supervisor. Unless otherwise agreed upon, you will receive a written confirmation for each trade placed. Custodians typically send account statements on a monthly basis, but no less than quarterly, which will show all activity in your accounts during that period. Clients may request additional reports prepared by us, which may contain portfolio holdings, market value, and/or cost basis. Clients using the services of a third party manager may receive additional reports prepared by that manager.
The portfolio management services provided by us are conducted on a continuous basis. External events, economic or market related, are also analyzed on an ongoing basis to determine if more frequent reviews are necessary.
Financial Planning Services
At the onset of a financial planning engagement, SWM’s account representative conducts a thorough review of the client’s personal financial condition and assesses their goals and objectives.
Financial planning clients are initially provided a written report containing an analysis of their current and projected financial condition. The report may also include recommendations with respect to security selection, investment products and/or insurance products. At the client’s request, the financial plan can be updated at any time for a separate fee.
Item 14 – Client Referrals and Other Compensation
All of our Advisory Representatives are also Registered Representatives of Triad. This arrangement allows us to offer advisory services and programs sponsored or approved by Triad. Triad sets limits on how much we can charge for these advisory services. Some advisory programs have higher fee limits than others. As such, there is an incentive for us to recommend advisory services or programs with higher limits. In addition, Triad may charge us certain usage fees and expenses to use their advisory programs, which may decrease the amount of money we make when offering investment advice. Therefore, there is an incentive to provide advisory programs and services that may be cheaper for us to use even if another advisory program is more suitable to the client’s needs.
In addition, Triad offers our Advisory Representatives educational, training and incentive programs for those Advisory Representatives that meet certain sales production goals. There is an incentive for us to manage accounts in ways that assist us in meeting these production goals even if such strategies may not be the most suitable for the account.
Certain Third Party Advisory Service programs, custodians, and/or our broker/dealer may provide us with the opportunity to attend training or education conferences. Such conferences include the payment or reimbursement of travel, meals and lodging expenses for attendees. Payment/reimbursement of expenses is not contingent upon the sale of any specific product. However, we have an incentive to recommend those firms that provide us with these benefits over those that do not.
When we offer a Wrap Account, the fees for transactions executed in the account are included in the quarterly account fee. However, Fidelity will still assess the transaction fees to us. This may influence us to charge a higher quarterly account fee than we would otherwise charge you in an effort to recoup the transaction fees Fidelity charges us. We also have an incentive to trade your accounts less often to reduce our transaction fees and also to use certain ETFs’, Mutual Funds or other products where Fidelity reduces or eliminates the transaction fees (these could include Fidelity’s own products) even though these products are not the most suitable for your account because their use will result in higher costs to you due to their higher internal expenses..
Our advisors may participate in programs offered by Fidelity and Triad. In these programs, transaction charges for purchasing certain securities that participate in these programs may be reduced or waived. This provides us with an incentive to invest client accounts in these securities over securities that do not participate in these
programs to reduce our transaction costs even if such investments are not the most suitable for your account
because their use will result in higher costs to you due to their higher internal expenses.
As discussed previously, Triad and Fidelity have provided us with funding in the form of cash, fee reimbursements, forgivable loans, fee waivers and technology to assists us in our transition from Royal Alliance and also to subsequently assist with bringing any new representatives into our firm.
We may pay referral fees to affiliated and unaffiliated third parties (Solicitors) equal to a percentage of the advisory fees collected from the clients the Solicitor referred to us.
For example, John Smith refers you to us. John Smith has signed a solicitor agreement with us to receive 50% of the fees we charge to you for the first 12 months. We are charging you 1.50% a year on the $100,000 of assets being managed by Advisor Brown. When we receive the first quarter’s fees of $375 (($100,000 x .015)/4=$375), we will pay 50% of that $375 to John Smith as a referral fee.
As you can see from the example above, referral fees paid out do not result in any additional charge to you. Our Code of Ethics prohibits us from favoring referred clients over others.
Item 15 – Custody
We do not act as a qualified custodian for our client assets. All transactions in your advisory accounts clear through a qualified and unaffiliated broker-dealer or custodian. However, in certain instances a member of our firm may act as a trustee on a client’s account. In this instance we are deemed to have custody of the account and as such that account would be subject to an annual surprise audit by an independent party.
While we do not maintain actual possession or custody of client assets in the manner of qualified custodians, we may be deemed to have custody of client funds or securities under applicable SEC guidance for clients who have authorized us to deduct our advisory fees from the clients’ account or who have granted us the limited power to transmit funds to one or more third parties as specifically designated by the client through a Standing Letter of Authorization. In such situations the custodian maintains actual possession of the clients’ assets.
You will receive account statements and trade confirmations directly from the custodian who holds your assets. The custodians we utilize will typically send you a statement every month, but no less than quarterly. You should carefully review these statements to make sure they are accurate.
Clients may request that their Advisor provide them with additional written reports that might include a list of account holdings, account values and/or account performance. The frequency of these reports is determined on a case-by-case basis and upon the discretion of your Advisor. We urge you to compare any reports that you may receive from us with the statements you receive from your custodian to make sure they are accurate.
Differences in market value may occur due to various factors, including but not limited to: (1) unsettled trades; (2) accrued income; (3) pricing of securities; and, (4) dividends earned but not received.
Item 16 – Investment Discretion
We manage your accounts on either a discretionary or non-discretionary basis. We will only manage your account on a discretionary basis with your written authorization. This consent is granted and evidenced in the client agreement that you sign with us.
Discretion: gives us the authority to make the following decisions without getting your consent first:
– Which securities to be bought or sold
– The amount of securities to be bought or sold
– The timing of the transaction
Restrictions: You may request that we place limitations on this discretionary authority at any time. This might include a request to refrain from investing in certain investments or specific securities. Just provide your Advisor with the written request and we will accommodate you if at all possible.
Non-Discretion: You may also request we use non-discretion on your accounts with us. Under a non-discretionary agreement, we refrain from initiating transactions in your account(s) until we receive authorization from you, except when we deduct advisory fees from your account(s).
Third Party Managers: We may use third party managers (or wrap fee program sponsors) for some or all of your assets. Their terms and conditions are described in their disclosure documents and/or Agreement. We will continue to provide you with services relative to the selection of these managers. We will also continue to monitor and review the account’s performance against your investment objectives. Please reference Item 5: Fees and Compensation for
information about the potential costs involved when using third party managers.
Item 17 – Voting Client Securities
We do not take action or render any advice with respect to voting of proxies for the securities in client accounts. We will have no obligation to render advice or take any action with respect to any securities subject to any legal proceedings, such as class action lawsuits or bankruptcy. Typically, custodians will have proxies sent directly to you. Some custodian agreements allow you to mark a box that will result in the custodian mailing proxies to us. It is important that you realize that if you elect to have your proxies sent directly to us, we will not vote them but will shred them upon receipt.
Item 18 – Financial Information
We are well capitalized and do not foresee any financial conditions that might prevent us from meeting our commitments to you.
Item 19 – Requirements for State Registered Advisers
This item is required for those firms who register through particular states to conduct business. Because of our registration with the SEC, this item does not applyAppendix I: Wrap Fee Program Brochure
Item I-1 to Item I-3: Please reference Item 1: Cover Page, Item 2: Material Changes and Item: 3 Table of Contents in the
ADV Part 2A: Firm Brochure above.
Item I-4: Service, Fees and Compensation – Sugarloaf Wealth Management (SWM) offers a Wrap Fee Program for clients who do not want to pay for each transaction that occurs in their account. Under this program, you receive both investment advisory services and trade execution for a single, combined annualized program fee. This means that you will not see transaction fees on your custodian statements. The program fee you pay each quarter covers those fees.
Transaction charges are assessed to your Advisor. Your Advisor may charge you a higher annual account fee to cover these transaction costs. This type of fee arrangement will create an incentive to:
– Trade your account less often to reduce transaction fees
– Use securities that have a reduced or no transaction charge connected to them even if these securities will be more expensive for you due to their higher iternal expenses.
The program fee may or may not be more than the total cost of services if they were provided separately. Listed are some factors that may impact this:
– The level of the wrap fee charges
– The amount of portfolio activity
– The value of services provided
Generally, Wrap Fee Programs are relatively less expensive for actively traded accounts. However, they may result in higher overall costs when there is little trading activity in the account. The fee that we receive will be greater in our own Wrap Fee Program than what we would receive should we recommend a Third Party Money Mangers Wrap Fee Program to you. This creates a conflict of interest. We strive to maintain a high degree of objectivity and to ensure that our advice is not based on these incentives. However, the potential for conflict of interest exists and you must be aware of this when you consider our recommendations.
We provide the same level of commitment and service to our clients no matter if they participate in the wrap fee program or not. See
Item 5: Fees and Compensation listed above in the ADV Part 2A: Firm Brochure for further discussion on this topic.
Item I-5: Account Requirements and Types of Clients – There are minimum account sizes required to open or maintain a Wrap Fee Program account. See Item 7: Types of Clients listed above in the ADV Part 2A: Firm Brochure for information on the types of clients who may use our Wrap Fee Program.
Item I-6: Portfolio Manager Selection and Evaluation – Your Advisor will either manage your Wrap account themselves or utilize one of our in-house portfolios or some combination of both. This decision depends upon your goals, the amount of assets managed, the tax status of your account and the amount of customization needed. We do not hire third party managers to provide services under our Wrap Fee Program. Please refer to Item 4: Advisory Business, Item 5: Fees and Compensation, and Item 8: Methods of Analysis, Investment Strategies and Risk of Loss listed above in the ADV Part 2A: Firm Brochure for additional information.
Item I-7: Client Information Provided to Portfolio Managers – This section does not apply, as we do not hire third party managers for our wrap fee program.
Item I-8: Client Contact with Portfolio Managers – This section does not apply, as we do not hire third party managers for our wrap fee program.
Item I-9: Additional Information – Please see Item 9: Disciplinary Information, Item 10: Other Financial Industry Activities and Affiliation, Item 11: Code of Ethics, Participation or Interest in Client Transactions and Personal Trading, Item 13: Review of
Accounts, Item 14 Client Referrals and Other Compensation and Item 18 Financial Information in the ADV Part 2A Brochure.