Bason Asset Management (Bason) was formed in 2012 in Lakewood, Colorado. The principal owner is
James Osborne. We have no public or privately-owned affiliated companies. Bason provides portfolio
management and financial planning services, including investment advice to individuals and families
and ERISA retirement plans. Portfolio management services include developing an investment policy
statement, building portfolio recommendations and implementing these recommendations at a third-
party custodian (see Custody on page 8). Portfolio management services also include the ongoing
monitoring of the investment portfolio, including quarterly performance reporting, asset allocation
analysis, rebalancing and tax-loss harvesting recommendations. Investment recommendations are
primarily limited to open-end mutual funds and exchange-traded funds, but we also serve to help clients
with existing positions in individual stocks. We do not advise our clients to invest in individual stocks
and bonds.
All client portfolios are customized and built for each individual relationship, although many clients will
hold similar securities and allocations. The portfolio construction process begins with a discussion of
the client's goals and risk tolerance to determine a suitable long-term investment portfolio. We do not
participate in wrap fee programs and investment management fees are not linked to a client's portfolio
value.
Bason provides fiduciary services, including 3(21) and 3(38) fiduciary services, to ERISA retirement plans,
including profit sharing 401(k) plans and defined benefit plans. These services include investment plan
offering review and selection, model portfolio development, monitoring and management and regular
compliant reporting to plan sponsors. Reporting includes plan benchmarking and 408(b)(2) fee and
service disclosure.
Financial planning services include retirement income planning, education funding planning, stock
compensation planning, insurance needs analysis, multi-generational financial planning and
philanthropic planning.
Bason hereby acknowledges that it is a "fiduciary" when the firm’s services are subject to the provisions
of ERISA of 1974, as amended.
As of December 31, 2019, Bason had assets under management of $326,492,000 in discretionary assets
and $6,179,000 in non-discretionary assets.
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Bason Asset Management is compensated only by the quarterly retainer or fixed financial planning fees
paid by its clients. Bason and its agents are not affiliated with a broker/dealer or insurance broker, and
as such do not carry licenses necessary to receive securities or insurance commissions. Currently this
fee is $5,100 annually per client or $1,275 per quarter, not to exceed 2% of client assets under
management. Retainer fees are paid quarterly in advance, and should a client terminate the
relationship with Bason, the unearned portion of the retainer fee will be refunded. Clients terminating
their contract with Bason within the first five days are entitled to a full refund. Clients may elect to pay
this fee directly or have the fee deducted quarterly from investment accounts. Please refer to Item 15
for information regarding fees deducted from investment accounts. Our fees are not tied to the value
of the client’s investment portfolio. We feel strongly that this structure is the most equitable to
investors and helps to reduce the conflicts of the asset-gathering model. Bason's retainer fee is
negotiable under certain circumstances.
Clients may incur fees from the custodian selected to provide services related to record keeping, tax
reporting and statement production. These fees may include IRA and retirement account annual fees,
nominal trade ticket charges or banking fees. No portion of these fees is retained by or remitted to
Bason.
Clients not paying the retainer fee may choose to engage Bason for financial planning services on a per-
project basis. A typical project engagement fee is $3,00 - $4,000 and is billed in arrears not less
frequently than quarterly. Clients may terminate this agreement within 5 calendar days of signing and
receive a full refund of any unearned fees paid. Clients otherwise terminating this agreement outside
of the 5-day window will receive a pro-rated refund of unearned fees.
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Our firm works primarily with individuals and families but also serves retirement plans, foundations,
endowments and other non-profit organizations.
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Research proves that passive investing works for all investors, regardless of size or scope. Our
investment strategy begins with a general long-term acceptance of the Efficient Market Hypothesis,
which states that the primary driver of a portfolio’s risk and return characteristics is determined by asset
allocation, and not security selection. As countless studies have proven, active management as a whole,
underperforms the market portfolio, and attempting to pick investments or investment managers which
will outperform the market is more an act of luck than skill. To protect our clients from the needless
costs of active management and the inevitable underperformance that results, clients are advised to
invest in passive strategies, also known as index funds. The primary vehicles recommended to Bason
clients are mutual funds, which includes exchange-traded mutual funds.
As with any stock-based investment, mutual funds, including passively managed mutual funds, carry
the risk of losses. While we can reduce company-specific risk through diversification, eliminate
manager-risk with passive portfolios and reduce overall portfolio volatility with a broad mix of stocks,
bonds and other assets, we cannot eliminate the risk of fluctuation that comes with investing in stocks
and bonds. It is always possible in any given week, month or year that an investor’s portfolio value could
be less than the previous period. The Efficient Market Hypothesis dictates that it is this
market risk that
offers investors potential long-term rewards, so we aim to reduce other previously mentioned risks
wherever possible.
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Neither James Osborne nor any employees of Bason have ever been convicted of, pled guilty or no
contest to any felony or misdemeanor in a criminal or civil action in any foreign or domestic court.
Neither James Osborne nor any employees of Bason have ever been part of a proceeding before the
SEC or any other industry regulatory agency. Neither James Osborne nor any employees of Bason have
ever been part of a self-regulatory organization’s proceeding.
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Neither James Osborne or any employees of Bason are registered, or applying to register, as a broker-
dealer, or registered representative of a broker-dealer, or futures commissions merchant, commodity
pool operator, or commodity trading advisor.
Neither James Osborne or any employee of Bason has a relationship with a broker dealer, municipal
securities dealer, government securities dealer or broker, investment company, outside investment
adviser, banking or thrift institution, accounting firm, law firm, insurance agency, pension consultant,
real estate broker, sponsor or syndicator of limited partnerships.
Bason receives no compensation from outside investment advisers and receives no compensation other
than the fees paid by the firm’s clients.
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As a Registered Investment Adviser, Bason has a fiduciary duty to its clients. In the simplest of terms
this means that our first obligation is to put the client’s needs above all other interests or conflicts.
Bason takes our fiduciary duty very seriously and has built our business model around our obligation to
minimize conflicts of interest with our clients and to truly make recommendations that our in their best
interests.
Bason’s owner and employees will adhere to all federal and state securities laws and regulations. All
Bason related persons will be held to the highest standard of conduct and shall not withhold pertinent
information from clients regarding securities recommendations, act to deceive or defraud any client or
outside party, or otherwise partake in any activity with the intent to deceive or defraud any regulatory
body, government office or client.
Bason’s owner and employees may buy or sell securities for themselves which are also recommended
to clients, which represents a conflict of interest. In an effort to avoid conflicts of interest, Bason
monitors and supervises the personal securities transactions of all employees and its owner. Monitoring
is conducted by James Osborne, President and Chief Compliance Officer of Bason. Bason retains
records of all securities transactions conducted by employees and owners. For compliance purposes
with regulations, all employees and the owner are considered “access persons” whose transactions will
be monitored.
As a matter of principle, Bason’s owner and employees are to withhold public comment regarding
advice on individual securities, as to avoid conflicts of interest when these comments may enrich the
Bason associated person.
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In general, price (cost of commissions) and trade execution are the primary drivers of a decision to
recommend broker-dealers for client transactions. We work primarily with Charles Schwab
Institutional, but can work with a variety of broker-dealer custodians at our client’s request.
Soft dollars: Bason may receive an economic benefit from external sources in the form of the support
products and services they make available to us and other independent investment advisors. The
availability to us of an external source's products and services is not based on our offering particular
investment advice, such as buying particular holdings for our clients. Bason does receive research or
products and services from Schwab in connection with client securities transactions. This includes
securities research and a trading platform. As a practice, Bason does not rely on the research provided
by Charles Schwab. The trading platform provides significant business efficiency which benefits our
clients. As well, it is very common for custodial broker-dealers to provide trading access to client
accounts. All broker-dealers that our clients work with provide investment transaction and pricing data
so that we are able to accurately track investment performance.
Bason does not receive client referrals from any broker-dealers.
Directed Brokerage: While Bason would permit clients to request directed brokerage, the majority of
our clients are individuals who generally have transactions executed at Schwab. Bason does not
encourage directed brokerage, which is more common for mutual fund or pension fund managers
regularly trading equities.
Trade Aggregation: We manage individual portfolios and not “model” portfolios. However, we will
aggregate ETF trades when possible in order to obtain best execution. If Bason decides to purchase or
sell the same security for several clients at approximately the same time, allocations are done in an
equitable fashion, typically on a pro rata basis.
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James Osborne or the assigned advisor for each client reviews each client’s portfolio no less frequently
than once per quarter. At the end of each quarter Bason generates an updated Asset Allocation analysis
and trailing period performance report for all investment management clients. The Asset Allocation
report is then compared to the client’s signed Investment Policy Statement to analyze the variance from
the target portfolio allocation. Additionally, performance is compared to broad market averages to
ensure that the client is capturing as much of the long-term return of the market as possible. Clients
will also receive quarterly statements from their custodian (i.e. Charles Schwab). Accounts are also
reviewed during an annual portfolio review meeting with the firm’s clients.
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No one outside of Bason’s owner and employees provides investment advice to Bason clients (exclusive
of outside relationships our clients may choose to have). Bason does not compensate outside parties
for client referrals. This includes existing clients or other outside professionals (such as CPAs, attorneys,
etc.). Bason does not share revenue or pay “finders fees” for client referrals.
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Bason does not take physical custody of client assets or provide custodial services apart from authorized
fee withdrawals. All clients work with a third-party custodian for handling of cash and securities, from
which clients receive monthly (or quarterly) brokerage statements, and tax reporting. Clients of Bason
are encouraged to regularly compare their portfolio values reporting on Bason quarterly portfolio
reports with the statements generated by the custodian to ensure accuracy. Clients who elect to have
fees deducted from custodial accounts recognize that this fee is $5,100 per year, billed quarterly at
$1,275 and is charged in advance. Clients will sign a management agreement to authorize this fee
deduction. Clients will receive quarterly invoices detailing this fee and its calculation, as well as
quarterly statements from the custodian showing this fee debited from their accounts.
The Firm may, at times, have constructive custody of assets to the extent is uses standing letters of
authorizations (“SLOA’s) for third-party money movement with the client’s custodian.
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As outlined in our Asset Management Agreement, Bason accepts discretionary authority over clients’
investment portfolio under our management, including the type of security and number of shares.
However, we prefer to discuss all transactions with clients before any trades are placed in client
accounts. Having discretion over mutual fund and ETF trades allows us to be more flexible for those
clients who prefer not to discuss each trade with us.
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Bason does not proxy vote for our clients’ investment positions. Clients will receive proxy solicitations
directly from the custodian. We are happy to discuss these solicitations with our clients.
Further, we will have no power, authority, responsibility, or obligation to take any action with regard to
any claim or potential claim in any bankruptcy proceeding, class action securities litigation or other
litigation or proceeding relating to securities held at any time in a client account, including without
limitation, to file proofs of claim or other documents related to such proceeding, or to investigate,
initiate, supervise, or monitor class action or other litigation involving client assets.
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Bason does not collect asset management fees for a period of greater than one quarter and is not
required to disclose a balance sheet. Bason has no outstanding liabilities or financial impairments that
would inhibit our ability to provide promised services to clients. Bason does not require or solicit
prepayment of fees of more than $1,200, six months or more, in advance.
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