We specialize in the following types of services: Financial Planning, E Trade Advisor Services
Wealth Management Platform – Advisor Managed Portfolios, and Referrals to Third Party
Money Managers. Our assets under management are $101,310,106 as of December 31, 2018.
A. Description of our advisory firm, including how long we have been in business and our
principal owner(s)1.
We are dedicated to providing individuals and other types of clients with a wide array of
investment advisory services. Our firm is a corporation formed in the State of Colorado. Our
firm has been in business as an investment adviser since 2003 and is owned as follows: David
A Melling—100%
B. Description of the types of advisory services we offer.
(i) Financial Planning:
We provide a variety of financial planning services to individuals, families and other clients
regarding the management of their financial resources based upon an analysis of client’s
current situation, goals, and objectives. Generally, such financial planning services will
involve preparing a financial plan for clients based on the client’s financial goals and
objectives. This planning may encompass one or more of the following areas: Investment
Planning, Retirement Planning, Estate Planning, Charitable Planning, Education Planning,
Corporate and Personal Tax Planning, Cost Segregation Study, Corporate Structure, Real
Estate Analysis, Mortgage/Debt Analysis, Insurance Analysis, Lines of Credit Evaluation,
Business and Personal Financial Planning.
Our written financial plans rendered to clients usually include general recommendations
for a course of activity or specific actions to be taken by the clients. For example,
recommendations may be made that the clients begin or revise investment programs,
create or revise wills or trusts, obtain or revise insurance coverage, commence or alter
retirement savings, or establish education or charitable giving programs. It should also be
noted that we refer clients to an accountant, attorney or other specialist, as necessary for
non-advisory related services. For written financial planning engagements, we provide
our clients with a written summary of their financial situation, observations, and
recommendations. Plans are typically completed within six (6) months of the client signing
a contract with us, assuming that all the information and documents we request from the
client are provided to us promptly. Implementation of the recommendations will be at the
discretion of the client.
Please note that: (1) For purposes of this item, our principal owners include the persons we list as owning 25% or
more of our firm on Schedule A of Part 1A of Form ADV (Ownership Codes C, D or E). (2) If we are a publicly held
company without a 25% shareholder, we simply need to disclose that we are publicly held. (3) If an individual or
company owns 25% or more of our firm through subsidiaries, we must identify the individual or parent company and
intermediate subsidiaries. If we are a state-registered adviser, on Form ADV Part 2A Page 2, we must identify all
intermediate subsidiaries. If we are a State-registered adviser, we must identify intermediate subsidiaries that are
publicly held, but not other intermediate subsidiaries.
If the financial planning client wishes to have our firm implement the plan and manage their
assets, the planning fee may be reimbursed up to 50% if implemented within six months of the
delivery of the financial plan. Reimbursements will be at the discretion of the advisor.
(ii) Vision2020 Wealth Management Platform – Advisor Managed Portfolios Program
The Wealth Management Platform – Advisor Managed Portfolios Program (“Advisor Managed
Portfolios”) provides comprehensive investment management of your assets through the
application of asset allocation planning software as well as the provision of execution, clearing
and custodial services through E-Trade Financial Corporation (“Etrade”).
Advisor Managed Portfolios provides risk tolerance assessment, efficient frontier plotting,
fund profiling and performance data, and portfolio optimization and re- balancing tools.
Utilizing these tools, and based on your responses to a risk tolerance questionnaire
(“Questionnaire”) and discussions that we have together regarding, among other things,
investment objective, risk tolerance, investment time horizon, account restrictions, and overall
financial situation, we construct a portfolio of investments for you.
Portfolios may consist of mutual funds, exchange traded funds, equities, options, debt
securities, and other investments. Each portfolio is designed to meet your individual needs,
stated goals and objectives. Additionally, you have the opportunity to place reasonable
restrictions on the types of investments to be held in the portfolio.
For further Advisor Managed Portfolios details, please see the Advisor Managed Portfolios Wrap Fee Program Brochure. We provide this brochure to you prior toor concurrent with your enrollment in Advisor Managed Portfolios. Please read it thoroughly before investing.
(iii) Referrals to Third Party Money Managers:
We provide clients with a list of investment advisory services of third party professional
portfolio management firms for the individual management of client accounts. As part of this
process, we assist clients in identifying an appropriate third party money manager. We provide
initial due diligence on third party money managers and ongoing reviews of their management
of your account.
In order to assist clients in the selection of a third party money manager, we typically gather
information from the client about their financial situation, investment objectives, and
reasonable restrictions they can impose on the management of the account, which are often
very limited. It is important to note that we do not offer advice on any specific securities or
other investments in connection with this service. Investment advice and trading of
securities is only offered by or through the third party money managers to clients.
We periodically review third party money managers’ reports provided to the client, but no
less often than on an annual basis. Our associates contact the clients from time to time, as
agreed to with the client, in order to review their financial situation and objectives;
communicate information to third party money managers as warranted; and, assist the client
in understanding and evaluating the services provided by the third party money manager.
The client will be expected to notify us of any changes in his/her financial situation,
investment objectives, or account restrictions that could affect their account. The client
may also directly contact the third party money manager managing the account or
sponsoring the program.
C. Explanation of whether (and, if so, how) we tailor our advisory services to the individual needs
of clients, whether clients may impose restrictions on investing in certain securities or types of
securities.
(i) Individual Tailoring of Advice to Clients:
We offer individualized investment advice to clients utilizing the following services offered
by our firm: RASA Account and Vision 2020 Wealth Management Platform. Additionally,
we offer general investment advice to clients utilizing the following services offered by
our firm: Financial Planning and Referrals to Third Party Money Managers.
(ii) Ability of Clients to Impose Restrictions on Investing in Certain Securities or Types of
Securities:
We usually do not allow clients to impose restrictions on investing in certain securities or
types of securities due to the level of difficulty this would entail in managing their account.
In the rare instance that we would allow restrictions, it would be limited to the following
services: E Trade Advisor Services Wealth Management Platform. We do not manage
assets through our other services.
D. Participation in wrap fee programs.
We offer wrap fee programs as further described in Part 2A, Appendix 1 (the “Wrap Fee
Program Brochure”) of our Brochure. Our wrap fee and non-wrap fee accounts are managed
on an individualized basis according to the client’s investment objectives, financial goals, risk
tolerance, etc. We do not manage wrap fee accounts in a different fashion than non-wrap fee
accounts. As further described in our Wrap Fee Program Brochure, we receive a portion of the
wrap fee for our services.
E. Disclosure of the amount of client assets we manage on a discretionary basis and the amount
of client assets we manage on a non-discretionary basis.
We manage2 $101,310,106 on a discretionary basis and $0 on a non-discretionary basis as of
December 31, 2018.
2 Please note that our method for computing the amount of “client assets we manage” can be different from the method
for computing “assets under management” required for Item 5.F in Part 1A of Form ADV. However, we have chosen
to follow the method outlined for Item 5.F in Part 1A of Form ADV. If we decide to use a different method at a later
date to compute “client assets we manage,” we must keep documentation describing the method we use and inform
you of the change. The amount of assets we manage may be disclosed by rounding to the nearest
$100,000. Our “as of” date must not be more than three months before the date we last updated our Brochure in
response to Item 4.E of Form ADV Part 2A.
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We are required to describe our brokerage, custody, fees and fund expenses so you will know how
much you are charged and by whom for our advisory services provided to you. Our fees are
generally not negotiable.
A. Description of how we are compensated for our advisory services provided to you.
(i) Financial Planning:
We charge on an hourly or flat fee basis for financial planning and consulting services. The
total estimated fee, as well as the ultimate fee that we charge you, is based on the scope and
complexity of our engagement with you. Our hourly fee is $230 for financial advisors. Flat fees
generally range from $100 to $1,000.
As disclosed above, if the financial planning client wishes to have our firm implement the plan
and manage their assets, the planning fee may be reimbursed up to 50% if implemented within
six months of the delivery of the financial plan. Reimbursements will be at the discretion of
the advisor.
(ii) E Trade Advisor Services Wealth Management Platform – Advisor Managed Portfolio
Program
We offer Advisor Managed Portfolios as an account where no separate transactions charges
apply and a single fee is paid for all advisory services and transactions ("Wrap Account").
We also offer Advisor Managed Portfolios with separate advisory fees and transaction charges
(“Non-Wrap Account”). As such, in addition to the quarterly account fee described below for
advisory services, you will also pay separate per-trade transaction charges.
You will pay a quarterly account fee, in advance, based upon the market value of the assets
held in your account as of the last business day of the preceding calendar quarter. Your account
fees are negotiable and will be debited from your account by our custodian. If you terminate
your account, the account fee will be credited back to you on a pro-rata basis for the unused
portion of the quarter.
Additional, ancillary fees may apply. Please see the Advisor Managed Portfolios Wrap Fee
Program Brochure for further details.
Our Advisor Managed Portfolios account fee schedule is as follows:
All discretionary assets for Wrap and Non-Wrap accounts will be calculated according to the
fee schedule below:
E Trade Advisor Services Wealth Management Wrap Fee
Asset Level Client Fee %
From $0 to $750,000 Up to 1.95%
$750,001 to $1,250,000 Up to 1.75%
$1,250,001 to $2,000,000 Up to 1.50%
$2,000,001 to $25,000,000 Up to 1.25%
$25,000,001 + Up to 0.80%
E Trade Wealth Management Non-Wrap Fee Platform: Asset
Level Client Fee %
From $0 to $750,000 Up to 1.75%
$750,001 to $1,250,000 Up to 1.55%
$1,250,001 to $2,000,000 Up to 1.30%
$2,000,001 to $25,000,000 Up to 1.00%
$25,000,001 + Up to 0.05%
For all non-discretionary accounts, our firm will charge a flat fee of up to 1.8% of assets
under management.
(iii) E Trade Wealth Management Platform Models - Portfolio Program
We offer the Model Program as an account where no separate transactions charges apply and
a single fee is paid for all advisory services and transactions ("Wrap Account").
You will pay a quarterly account fee, in advance, based upon the market value of the assets
held in your account as of the last business day of the preceding calendar quarter. Your account
fees are negotiable and will be debited from your account by our custodian. If you terminate
your account, the account fee will be credited back to you on a pro-rata basis for the unused
portion of the quarter.
Additional, ancillary fees may apply. Please see the Model Program Wrap Fee Program
Brochure for further details.
Our Model Program account fee schedule is as follows: Asset
Level Client Fee %
From $0 to $750,000 Up to 1.95%
$750,001 to $1,250,000 Up to 1.75%
$1,250,001 to $2,000,000 Up to 1.50%
$2,000,001 to $25,000,000 Up to 1.25%
$25,000,001 + Up to 0.80%
(iv) Referrals to Third Party Money Managers:
We are paid by third party money managers when we refer you to them and you decide to open
a managed account. Third party money managers pay us a portion of the investment advisory
fee that they charge you for managing your account. Fees paid to us by third party money
manager are generally ongoing. All fees we receive from third party money managers and the
written separate disclosures made to you regarding these fees comply with applicable state
statutes and rules. The separate written disclosures you need to be provided with include a copy
of the third party money manager’s Form ADV Part 2, all relevant Brochures, a Solicitation
Disclosure Statement detailing the exact fees we are paid and a copy of the third party money
manager’s privacy policy. The third party money managers we recommend will not directly
charge you a higher fee than they would have charged without us introducing you to them.
Our firm uses Genworth Financial Trust Company (“GFWM”) as a third party money manager.
GFWM platform fee schedule is as follows: 0.00% to 0.65% for Mutual Funds, ETFs &
Variable Annuity Accounts, 0.20% to 0.90% for Privately Managed Accounts, and 0.70% to
1.45% for Unified Managed Accounts. No additional fees are charged by our firm in addition
to the third party money manager fees. Advisory fees received from third party money managers
vary from 0.5% to 1.5%.
Our clients may terminate an account at any time without penalty under their agreement with
GFWM, but will be subject to any charges imposed under the separate agreement between the
Client and Custodian. In the event an account is terminated for any reason during a calendar
quarter, refunds to the client shall be returned within 30 days of the effective date of termination,
a pro-rated portion of the quarterly fee paid by the client at the beginning of the quarter with
respect to such account.
With respect to the Genworth Financial Wealth Management Program, our firm is entitled to
receive a quarterly reimbursement from Genworth Financial Wealth Management, Inc, for
qualified marketing and/or business development expenses incurred by Applicant. The amount
of such reimbursement is based on the total assets investment at the end of each calendar quarter
in the Genworth Financial Wealth Management Program, as follows:
Asset Level Quarterly Reimbursement
$25mm $1,250
$35mm $1,750
$50mm $2,500
$75mm $3,750
$100mm $6,250
$125mm $8,750
$150mm $11,250
$175mm $13,750
$200mm $16,250
$225mm $18,750
$250mm $21,250
$275mm $23,750
$300mm $26,250
B. Description of whether we deduct fees from clients’ assets or bill clients for fees incurred.
(i) Financial Planning and Consulting:
We require a retainer of fifty-percent (50%) of the ultimate financial planning or consulting
fee with the remainder of the fee directly billed to you and due to us within thirty (30) days
of your financial plan being delivered or consultation rendered to you. In all cases, we will
not require a retainer exceeding $500 when services cannot be rendered within 6 (six)
months.
(ii) Referrals to Third Party Money Managers:
Third party money managers establish and maintain their own separate billing processes
which we have no control over. In general, they will directly bill you and describe how this
works in their separate written disclosure documents.
C. Description of any other types of fees or expenses clients may pay in connection with our
advisory services, such as custodian fees or mutual fund expenses.
Non-Wrap fee Clients will incur transaction charges for trades executed in their accounts. These
transaction fees are separate from our fees and will be disclosed by the firm that the trades are
executed through. Also, clients will pay the following separately incurred expenses, which we
do not receive any part of: charges imposed directly by a mutual fund, index fund, or exchange
traded fund which shall be disclosed in the fund’s prospectus (i.e., fund management fees and
other fund expenses).
Please refer to Item 12 of this brochure for more information about our firm’s brokerage
practices.
D. We must disclose if client’s advisory fees are due quarterly in advance. Explain how a client
may obtain a refund of a pre-paid fee if the advisory contract is terminated before the end of
the billing period. Explain how you will determine the amount of the refund.
We charge our advisory fees quarterly in advance for the following services: E Trade Wealth
Management Platform. In the event that you wish to terminate our services, we will refund the
unearned portion of our advisory fee to you. You need to contact us in writing and state that
you wish to terminate our services. Upon receipt of your letter of termination, we will proceed
to close out your account and process a pro-rata refund of unearned advisory fees.
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We have the following types of clients:
• Individuals and High Net Worth Individuals;
• Trusts, Estates or Charitable Organizations;
• Pension and Profit-Sharing Plans;
Our requirements for opening and maintaining accounts or otherwise engaging us:
• We require a minimum aggregate account balance of $50,000 for our RASA account
service. Generally, this minimum account balance requirement is not negotiable and would
be required throughout the course of the client’s relationship with our firm.
• We generally charge a minimum fee of $100 for written financial plans.
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A. Description of the methods of analysis and investment strategies we use in formulating
investment advice or managing assets.
Methods of Analysis:
Our advisory representatives may use any of the following methods of analysis: financial
websites and magazines; corporate rating services such as Morningstar; annual reports,
prospectuses and press releases.
Risks involved with our methods may include illegitimate or unreliable information. In order
to mitigate these risks we verify sources by testing information as well as using multiple sources
to ensure accuracy.
Investment Strategies we use:
• Long term purchases (securities held at least a year);
• Short term purchases (securities sold within a year);
• Trading (securities sold within 30 days);
• Margin transactions;
• Option writing, including covered options, uncovered options or spreading
strategies;
Please note: Investing in securities involves risk of loss that clients should be prepared to bear. While the
stock market may increase and your account(s) could enjoy a gain, it is also possible that the
stock market may decrease and your account(s) could suffer a loss. It is important that you
understand the risks associated with investing in the stock market, are appropriately diversified
in your investments, and ask us any questions you may have.
B. Our practices regarding cash balances in client accounts, including whether we invest cash
balances for temporary purposes and, if so, how.
We generally invest client’s cash balances in money market funds, FDIC Insured Certificates
of Deposit, high-grade commercial paper and/or government backed debt instruments.
Ultimately, we try to achieve the highest return on our client’s cash balances through relatively
low-risk conservative investments. In most cases, at least a partial cash balance
will be maintained in a money market account so that our firm may debit advisory fees for
our services related to our RASA Account service, as applicable.
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We are required to disclose whether there are legal or disciplinary events that are material to a
client’s or prospective client’s evaluation of our advisory business or the integrity of our
management. There are a number of specific legal and disciplinary events that we must presume
are material for this Item. If our advisory firm or a management person has been involved in one
of these events, we must disclose it under this Item for ten years following the date of the event,
unless (1) the event was resolved in our or the management person’s favor, or was reversed,
suspended or vacated, or (2) the event is not material. For purposes of calculating this ten-year
period, the “date” of an event is the date that the final order, judgment, or decree was entered, or
the date that any rights of appeal from preliminary orders, judgments or decrees lapsed.
The SEC and/or State Regulators have not provided us with an exclusive list of material disciplinary
events, which need to be disclosed. If our advisory firm or a management person has been involved
in a legal or disciplinary event that is not specifically required to be disclosed, but nonetheless is
material to a client's or prospective client's evaluation of our advisory business or the integrity of
our management, we must disclose the event. Similarly, even if more than ten years has passed
since the date of the event, we must disclose the event if it is so serious that it remains currently
material to a client’s or prospective client’s evaluation of our firm or management.
A. Our firm or part of our management was involved in a criminal or civil action in a domestic,
foreign or military court of competent jurisdiction in which our firm or a management person:
We have nothing to disclose in this regard.
B. Our firm or a management member was involved in an administrative proceeding before the
SEC, any other federal regulatory agency, any state regulatory agency, or any foreign financial
regulatory authority in which our firm or a management person:
On 8/15/2006, it was alleged that Personal Benefit Services of Colorado, Inc., (“PBS”) was in
violation of section 11-401 of the act by conducting advisory business in the State of Maryland
prior to filing a notice with the division and provided financial planning services to clients prior
to being registered as an Investment Adviser Representative in Maryland.
Personal Benefit Services of Colorado, Inc did not timely submit to the State of Maryland for
an Investment Adviser Representative of PBS. PBS was sanctioned a fine of $500 which was
paid on 12/27/2006.
C. A self-regulatory organization (SRO) proceeding in which our firm or a management person:
We have nothing to disclose in this regard.
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A. Our firm or our management persons are registered, or have an application pending to register,
as a broker-dealer or a registered representative of a broker-dealer. The details are as follows:
We do not have any broker-dealer relationships to disclose at this time.
B. Description of any relationship or arrangement that is material to our advisory business or to
our clients, that we or any of our management persons have with any related person3 listed
below. We are required to identify the related person and if the relationship or arrangement
creates a material conflict of interest with clients, describe the nature of the conflict and how
we address it.
In addition, our firm’s Advisory Representatives may also be licensed as insurance agents with
various insurance companies, and in such capacity, may recommend, on a fully disclosed basis,
the purchase of insurance- related products. Our firm and our Advisory Representatives
currently devote 30% of our time to securities and life insurance commission business. In
December 2017, Personal Benefit purchased Agile Capital Management (CRD #133345).
Our firms Advisory Representatives offer portfolio management and trading advice to other
RIA’s for a fee. While this had no material impact on the clients of PBS, PBS does receive a
fee from the other entities for this activity. Some of our firm’s advisory affiliates offer non-
investment related financial planning and retirement seminars for Federal employees. They
provide general financial advice which is not geared towards the individual needs of the
attendees. Our advisory affiliates spend approximately 20% of their time in this outside
business activity.
C. If we recommend or select other investment advisers for our clients and we receive
compensation directly or indirectly from those advisers, or we have other business relationships
with those advisers, we are required to describe these practices and discuss the conflicts of
interest these practices create and how we address them.
3 Our Related Persons are any advisory affiliates and any person that is under common control with our firm.
Advisory Affiliate: Our advisory affiliates are (1) all of our officers, partners, or directors (or any person performing
similar functions); (2) all persons directly or indirectly controlling or controlled by us; and (3) all of our current
employees (other than employees performing only clerical, administrative, support or similar functions). Person: A
natural person (an individual) or a company. A company includes any partnership, corporation, trust, limited liability
company (“LLC”), limited liability partnership (“LLP”), sole proprietorship, or other organization.
Please see Item 4B(v) of this Brochure. The compensation paid to us by third party managers
may vary, and thus, there may be a conflict of interest in recommending a manager who shares
a larger portion of its advisory fees over another manager. Our firm’s fees are not
higher than they would have been had our client obtained services directly from the third party
money manager.
Prior to referring clients to third party advisors, we will ensure that third party advisors are
licensed, or notice filed with the respective authorities.
A potential conflict of interest in utilizing third party advisors may be an incentive to us in
selecting a particular advisor over another in the form of fees or services. In order to minimize
this conflict our firm will make our selections in the best interest of our clients.
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Transactions and Personal Trading A. Brief description of our Code of Ethics adopted pursuant to SEC rule 204A-1 and offer to
provide a copy of our Code of Ethics to any client or prospective client upon request.
We recognize that the personal investment transactions of members and employees of our firm
demand the application of a high Code of Ethics and require that all such transactions be carried
out in a way that does not endanger the interest of any client. At the same time, we believe that
if investment goals are similar for clients and for members and employees of our firm, it is logical
and even desirable that there be common ownership of some securities.
Therefore, in order to prevent conflicts of interest, we have in place a set of procedures (including
a pre-clearing procedure) with respect to transactions effected by our members, officers and
employees for their personal accounts4. In order to monitor compliance with our personal trading
policy, we have a quarterly securities transaction reporting system for all of our associates.
Furthermore, our firm has established a Code of Ethics which applies to all of our associated
persons. An investment adviser is considered a fiduciary. As a fiduciary, it is an investment
adviser’s responsibility to provide fair and full disclosure of all material facts and to act solely in
the best interest of each of our clients at all times. We have a fiduciary duty to all clients. Our
fiduciary duty is considered the core underlying principle for our Code of Ethics which also
includes Insider Trading and Personal Securities Transactions Policies and Procedures. We require
4 For purposes of the policy, our associate’s personal account generally includes any account (a) in the name of our
associate, his/her spouse, his/her minor children or other dependents residing in the same household, (b) for which our
associate is a trustee or executor, or (c) which our associate controls, including our client accounts which our associate
controls and/or a member of his/her household has a direct or indirect beneficial interest in.
all of our supervised persons to conduct business with the highest level of ethical standards and
to comply with all federal and state securities laws at all times. Upon employment or affiliation
and at least annually thereafter, all supervised persons will sign an acknowledgement that they
have read, understand, and agree to comply with our Code of Ethics. Our firm and supervised
persons must conduct business in an honest, ethical, and fair manner and avoid all circumstances
that might negatively affect or appear to affect our duty of complete loyalty to all clients. This
disclosure is provided to give all clients a summary of our Code of Ethics. However, if a client or
a potential client wishes to review our Code of Ethics in its entirety, a copy will be provided
promptly upon request.
If our firm or a related person invests in the same securities (or related securities, e.g., warrants,
options or futures) that our firm or a related person recommends to clients, we are required to
describe our practice and discuss the conflicts of interest this presents and generally how we
address the conflicts that arise in connection with personal trading.
See Item 11A of this Brochure. Related persons of our firm may buy or sell securities and other
investments that are also recommended to clients. In order to minimize this conflict of interest,
our related persons will place client interests ahead of their own interests and adhere to our firm’s
Code of Ethics, a copy of which is available upon request.
B. If our firm or a related person recommends securities to clients, or buys or sells securities for
client accounts, at or about the same time that you or a related person buys or sells the same
securities for our firm’s (or the related person's own) account, we are required to describe our
practice and discuss the conflicts of interest it presents. We are also required to describe
generally how we address conflicts that arise.
See Item 11A of this brochure. Related persons of our firm may buy or sell securities for
themselves at or about the same time they buy or sell the same securities for client accounts. In
order to minimize this conflict of interest, our related persons will place client interests ahead of
their own interests and adhere to our firm’s Code of Ethics, a copy of which is available upon
request. Further, our related persons will refrain from buying or selling the same securities within
48 hours of buying or selling for our clients. If related persons’ accounts are included in a block
trade, our related persons will always trade personal accounts last.
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A. Description of the factors that we consider in selecting or recommending broker-dealers for
client transactions and determining the reasonableness of their compensation (e.g.,
commissions).
1. Research and Other Soft Dollar Benefits. If we receive research or other products or services
other than execution from a broker-dealer or a third party in connection with client securities
transactions (“soft dollar benefits”), we are required to disclose our practices and discuss
the conflicts of interest they create. Please note that we must disclose all soft dollar benefits
we receive, including, in the case of research, both proprietary research (created or
developed by the broker-dealer) and research created or developed by a third party.
Investment advisory services are offered through E*TRADE Capital Management, LLC
(“ETCM”), an investment adviser registered with the U.S. Securities and Exchange
Commission. ETCM generally provides investment advisory services to individuals, joint
accounts, trusts, charitable organizations, corporations, retirement accounts, and business
entities residing in the United States. ETCM does not provide financial planning, estate
planning, tax preparation, security rating and pension consulting, or market timing services.
As a result, we do not have the discretion to choose the broker-dealer or commission rates
to be paid. However, we do believe that E-Trade’s blend of execution services, commission
and transaction costs as well as professionalism will allow us to seek best execution and
competitive prices.
a. Explanation of when we use client brokerage commissions (or markups or markdowns) to
obtain research or other products or services, and how we receive a benefit because our firm
does not have to produce or pay for the research, products or services.
We do not use any client brokerage commissions to obtain research or other products or
services.
b. Incentive to select or recommend a broker-dealer based on our interest in receiving the
research or other products or services, rather than on our clients’ interest in receiving best
execution.
Our firm may have an incentive to select or recommend a broker- dealer based on our interest
in receiving the research or other products or services, rather than on our clients’ interest in
receiving the most favorable execution.
Our firm examined this potential conflict of interest when we chose to enter into the
relationship with E-Trade and we have determined that the relationship is in the best interest
of our firm’s clients and satisfies our client obligations, including our duty to seek best
execution.
c. Causing clients to pay commissions (or markups or markdowns) higher than those charged
by other broker-dealers in return for soft dollar benefits (known as paying- up).
Our non-wrap fee program clients may pay a commission to E-Trade that is higher than
another qualified broker dealer might charge to effect the same transaction where we
determine in good faith that the commission is reasonable in relation to the value of the
brokerage and research services received. In seeking best execution, the determinative
factor is not the lowest possible cost, but whether the transaction represents the best
qualitative execution, taking into consideration the full range of a broker-dealer’s services,
including the value of research provided, execution capability, commission rates, and
responsiveness. Accordingly, although we will seek competitive rates, to the benefit of all
clients, we may not necessarily obtain the lowest possible commission rates for specific
client account transactions.
d. Disclosure of whether we use soft dollar benefits to service all of our clients’ accounts or
only those that paid for the benefits, as well as whether we seek to allocate soft dollar
benefits to client accounts proportionately to the soft dollar credits the accounts generate.
Although the investment research products and services that may be obtained by our firm
will generally be used to service all of our clients, a brokerage commission paid by a specific
client may be used to pay for research that is not used in managing that specific client’s
account.
e. Description of the types of products and services our firm or any of our related persons
acquired with client brokerage commissions (or markups or markdowns) within our last
fiscal year.
We do not acquire client brokerage commissions (or markups or markdowns).
f. Explanation of the procedures we used during our last fiscal year to direct client
transactions to a particular broker-dealer in return for soft dollar benefits we received.
We do not direct client transactions to a particular broker-dealer in return for soft dollar
benefits.
2. Brokerage for Client Referrals.
If we use client brokerage to compensate or otherwise reward brokers for client referrals, we
must disclose this practice, the conflicts of interest it creates, and any procedures we used to
direct client brokerage to referring brokers during the last fiscal year (i.e., the system of controls
used by us when allocating brokerage).
Our firm does not receive brokerage for client referrals and vice versa.
3. Directed Brokerage.
a. If we routinely recommend, request or require that a client directs us to execute
transactions through a specified broker-dealer, we are required to describe our practice
or policy. Further, we must explain that not all advisers require their clients to direct
brokerage. If our firm and the broker-dealer are affiliates or have another economic
relationship that creates a material conflict of interest, we are further required to describe
the relationship and discuss the conflicts of interest it presents by explaining that
through the direction of brokerage we may be unable to achieve best execution of client
transactions, and that this practice may cost our clients more money.
We routinely recommend that we direct our clients to use E-Trade. However, not all
advisers require their clients to direct brokerage. Our firm is not affiliated nor has any
material conflicts of interest.
Neither we nor any of our firm’s related person have discretionary authority in making
the determination of the brokers with whom orders for the purchase or sale of securities
are placed for execution, and the commission rates at which such securities transactions
are effected.
Special Considerations for ERISA Clients A retirement or ERISA plan client may direct all or part of portfolio transactions for its
account through a specific broker or dealer in order to obtain goods or services on behalf
of the plan. Such direction is permitted provided that the goods and services provided
are reasonable expenses of the plan incurred in the ordinary course of its business for
which it otherwise would be obligated and empowered to pay. ERISA prohibits directed
brokerage arrangements when the goods or services purchased are not for the exclusive
benefit of the plan. Consequently, we will request that plan sponsors who direct plan
brokerage provide us with a letter documenting that this arrangement will be for the
exclusive benefit of the plan.
b. If we permit a client to direct brokerage, we are required to describe our practice. If
applicable, we must also explain that we may be unable to achieve best execution of
your transactions. Directed brokerage may cost clients more money. For example, in a
directed brokerage account, you may pay higher brokerage commissions because we
may not be able to aggregate orders to reduce transaction costs, or you may receive less
favorable prices on transactions.
We do not allow client-directed brokerage.
B. Discussion of whether, and under what conditions, we aggregate the purchase or sale of
securities for various client accounts in quantities sufficient to obtain reduced transaction costs
(known as bunching). If we do not bunch orders when we have the opportunity to do so, we
are required to explain our practice and describe the costs to clients of not bunching.
We perform investment management services for various clients. There are occasions on which
portfolio transactions may be executed as part of concurrent authorizations to purchase or sell the
same security for numerous accounts served by our firm, which involve accounts with similar
investment objectives. Although such concurrent authorizations potentially could be either
advantageous or disadvantageous to any one or more particular accounts, they are affected only
when we believe that to do so will be in the best interest of the effected accounts. When such
concurrent authorizations occur, the objective is to allocate the executions in a manner which is
deemed equitable to the accounts involved. In any given situation, we attempt to allocate trade
executions in the most equitable manner possible, taking into consideration client objectives,
current asset allocation and availability of funds using price averaging, proration and consistently
non-arbitrary methods of allocation.
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A. Review of client accounts or financial plans, along with a description of the frequency and
nature of our review, and the titles of our employees who conduct the review.
We review accounts on at least a weekly basis for our clients subscribing to the following
services: RASA Account Program and Vision 2020 Wealth Management Platform. Third Party
Money Management clients receive at least quarterly reviews. The nature of these reviews is to
learn whether clients’ accounts are in line with their investment objectives, appropriately
positioned based on market conditions, and investment policies, if applicable. Only our
Financial Advisors or Portfolio Managers will conduct reviews.
Financial planning clients do not receive reviews of their written plans unless they take action
to schedule a financial consultation with us. We do not provide ongoing services to financial
planning clients, but are willing to meet with such clients upon their request to discuss updates
to their plans, changes in their circumstances, etc.
B. Review of client accounts on other than a periodic basis, along with a description of the
factors that trigger a review.
We may review client accounts more frequently than described above. Among the factors which
may trigger an off-cycle review are major market or economic events, the client’s life events,
requests by the client, etc.
C. Description of the content and indication of the frequency of written or verbal regular reports
we provide to clients regarding their accounts.
We do not provide written reports to clients, unless asked to do so. The client will however
receive an account statement from their custodian. Verbal reports to clients take place on at
least an annual basis when we meet with clients who subscribe to the following services: RASA
Account Program, Vision 2020 Wealth Management Platform, and Third Party Money
Management.
As also mentioned in Item 13A of this Brochure, financial planning clients do not receive
written or verbal updated reports regarding their financial plans unless they separately
contract with us for a post-financial plan meeting or update to their initial written financial
plan.
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A. If someone who is not a client provides an economic benefit to our firm for providing
investment advice or other advisory services to our clients, we must generally describe the
arrangement. For purposes of this Item, economic benefits include any sales awards or other
prizes.
We do not have any arrangements that provide an economic benefit to our firm for providing
investment advice or other advisory services to our clients.
B. If our firm or a related person directly or indirectly compensates any person who is not our
employee for client referrals, we are required to describe the arrangement and the
compensation.
We do not pay referral fees (non-commission based) to independent solicitors (non-registered
representatives) for the referral of their clients to our firm in accordance with our state statutes
and rules.
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A. If we have custody of client funds or securities and a qualified custodian as defined in SEC rule
206(4)-2 or similar state rules (for example, a broker-dealer or bank) does not send account
statements with respect to those funds or securities directly to our clients, we must disclose that
we have custody and explain the risks that you will face because of this.
State Securities Bureaus, or their equivalents, generally take the position that any arrangement
under which a registered investment adviser is authorized or permitted to withdraw client funds
or securities maintained with a custodian upon the adviser’s instruction to the custodian is
deemed to have custody of client funds and securities. As such, we have adopted the following
safeguarding procedures:
1) Our clients must provide us with written authorization permitting direct payment to us
of our advisory fees from their account(s) maintained by a custodian who is independent
of our firm;
2) We must send a statement to our clients showing the amount of our fee, the value of
your assets upon which our fee was based, and the specific manner in which our fee
was calculated;
3) We must disclose to you that it is your responsibility to verify the accuracy of our fee
calculation, and that the custodian will not determine whether the fee is properly
calculated; and
4) Your account custodian must agree to send you a statement, at least quarterly, showing
all disbursements from your account, including advisory fees.
B. If we have custody of client funds or securities and a qualified custodian sends quarterly, or
more frequent, account statements directly to our clients, we are required to explain that you
will receive account statements from the broker-dealer, bank, or other qualified custodian and
that you should carefully review those statements.
We encourage our clients to raise any questions with us about the custody, safety or security of
their assets. The custodians we do business with will send you independent account statements
listing your account balance(s), transaction history and any fee debits or other fees taken out of
your account.
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If we accept discretionary authority to manage securities accounts on behalf of clients, we are
required to disclose this fact and describe any limitations our clients may place on our authority.
The following procedures are followed before we assume this authority:
We accept discretion over asset management accounts. In order for our firm to have discretionary
authority our clients must sign a discretionary investment advisory agreement with our firm. Our
discretionary authority will be limited to type and amount of securities purchased or sold in client
accounts. This type of agreement only applies to our RASA Account V2A Account, WMAP clients.
Clients will retain the right to redirect investment decisions made by our firm.
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If we have, or will accept, proxy authority to vote client securities, we must briefly describe our
voting policies and procedures.
We do not and will not accept the proxy authority to vote client securities. Clients will receive
proxies or other solicitations directly from their custodian or a transfer agent. In the event that
proxies are sent to our firm, we will forward them on to you and ask the party who sent them to
mail them directly to you in the future. Clients may call, write or email us to discuss questions they
may have about particular proxy votes or other solicitations.
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A. If we require or solicit prepayment of more than $1200 in fees per client, six months or more
in advance, we must include a balance sheet for our most recent fiscal year.
We do not require nor do we solicit prepayment of more than $1200 in fees per client, six
months or more in advance. Therefore we have not included a balance sheet for our most recent
fiscal year.
B. If we are a State-registered adviser and have discretionary authority or custody of client funds
or securities, or we require or solicit prepayment of more than $1200 in fees per client, six
months or more in advance, we must disclose any financial condition that is reasonably likely
to impair our ability to meet contractual commitments to clients.
We have nothing to disclose in this regard.
C. If we have been the subject of a bankruptcy petition at any time during the past ten years,
we must disclose this fact, the date the petition was first brought, and the current status.
We have nothing to disclose in this regard.
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Open Brochure from SEC website