SGH Wealth Management (“We”) is a S-Corporation formed in 2005 and was subsequently
registered as a Michigan investment adviser in 2016. In 2018 we began the process of registering
as a large advisory firm with the Securities and Exchange Commission (SEC). Sam G. Huszczo,
CFP®, CFA® (“Mr. Huszczo”) is our owner and investment adviser representative.
We offer a wrap fee program. Our 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 accounts. Additional information
about our wrap program can be found in our Appendix 1 to the ADV Part 2A (i.e. Wrap Fee
Program Brochure).
SERVICES We provide investment management services to interested clients on a client specific basis, based
upon your unique facts and circumstances. Although we manage your accounts based on your
individual needs, we construct client portfolios in accordance with our model asset allocation
strategies, which are adjusted for each client’s risk profile. The model asset allocation strategies
range from aggressive growth to capital preservation. They also differ according to the type of
account such as individual retirement accounts verses non-qualified accounts. Upon selecting your
risk tolerance profile, allocations are made to each of the models depending upon what is
appropriate for you. We rely on the client to accurately specify their own risk tolerance to be able
to fit their needs to the appropriate model portfolio. All of the model strategies include some
combination of individual stocks, mutual funds, exchange traded funds, alternative investments,
options, individual bonds, certificates of deposit, and may potentially include other investment
products. We develop these models based upon our proprietary research on markets and market
conditions as well as perceived value in selecting securities. Please see Item 8 for additional details.
We periodically review your accounts on an ongoing basis (by monitoring our models) to ensure
that risk levels stay within the parameters established by your risk tolerance. We rebalance your
portfolios as necessary. More or less frequent rebalancing may be required depending on
macroeconomic, market or sector factors, as well as changes in your personal or family
circumstances.
FEES Management fees for accounts are charged annually, calculated and billed quarterly in advance
based upon the inception value of the account(s). Although we may negotiate our fee under certain
circumstances, our standard annualized rates are below:
Custodian Reported Value of Account Annual Management Fee $500,000 to $1,000,0000.90%
$1,000,000 to $2,000,0000.85%
$2,000,000 to $5,000,0000.80%
$5,000,000 to $10,000,0000.70%
SGH Wealth Management Page 5 Appendix 1 – 1/1/2020
$10,000,000 +0.60%
Please Note: Wrap Program Conflict. As indicated in this Brochure, SGH sponsors a wrap
program. The wrap program will generally be offered to clients who maintain in excess of
$500,000 of assets under SGH’s management. Under a wrap program, the client pays one
“bundled” fee (
see Item 5 below) which includes both SGH’s advisory fee and the transaction fees
charged by the account custodian. When managing a client’s account on a wrap fee basis, we shall
receive as payment for our investment advisory services, the balance of the wrap fee after all wrap-
fee costs (including account transaction fees) have been deducted. Accordingly, we have a conflict
of interest because we could have an economic incentive to maximize our compensation by
seeking to minimize the number of transactions/total costs in the client's account. Participation in
the Program may cost more or less than purchasing such services separately. The fee that we charge
for participation in the Program may be higher or lower than those charged by other sponsors of
comparable wrap fee programs. ANY QUESTIONS: Our Chief Compliance Officer, Sam
Huszczo, remains available to address any questions that a client or prospective client may have
regarding the corresponding conflict of interest a wrap fee arrangement may create.
The first quarter’s management fee will be calculated on the account’s initial inception value as
reported by the account’s custodian. The first quarter’s management fee will also be prorated for
the number of days that services were provided during the initial quarter. It is withdrawn at account
opening. Thereafter, the management fee will be calculated on the account’s previous quarter-end
value as reported by the account’s custodian. Although you can restrict our services, the securities
included in your account are subject to our advisory fees unless restricted by you in writing. This
includes investments in money market funds, demand deposit accounts, and certificates of deposit
are included in the base amount on which fees are calculated. The management fee will be directly
deducted from the client’s account.
In a wrap account, clients pay a single annual advisory fee for advisory services and execution of
transactions. Clients do not pay brokerage commissions, markups or transaction charges for
execution of transactions in addition to the advisory fee.
Although clients do not pay a transaction charge for transactions in a program account, clients
should be aware that we pay Charles Schwab transaction charges for the transactions. The
transaction charges paid by us vary based on the type of transaction (e.g., mutual fund, equity or
fixed income security) and range from $0 to $40. Because we pay the transaction charges in
program accounts, there is a conflict of interest. Clients should understand that the cost to us of
transaction charges may be a factor that we consider when deciding which securities to select and
how frequently to place transactions in a program account.
Termination of Portfolio Management Services
A client may terminate the Investment Management Agreement for any reason at any time and,
within the first five (5) business days after signing the contract, without any cost or penalty.
Thereafter, the agreement may be terminated at any time by giving seven (7) days written notice.
To cancel the Agreement, the client must notify the firm in writing to SGH Wealth Management,
26211 Central Park Blvd., Suite 601, Southfield, MI 48076. Upon receipt of written notice of
SGH Wealth Management Page 6 Appendix 1 – 1/1/2020
termination, we will cease all activity on your behalf and transactions placed on your behalf are
allowed to settle. Because we charge in advance, any client that terminates his or her contract
within a quarter will receive a prorated refund of fees that is based on the amount of time elapsed
during the quarter. For example, if a client cancels on 45 days in to a 90-day quarter, the client will
receive a refund of 50% of the fees. (45 days divided by 90 days equal 50 percent.) Please note
the prorated refund may be adjusted for additional deposits and withdrawals to the advisory
account within the termination quarter. If permitted by the client’s custodian the refund will be
deposited into the client’s account; otherwise the refund will be paid to the client by company
check directly to the client within 30 days of termination notice receipt. We reserve the right to
terminate any Investment Management Agreement at our discretion at any time. Should we
terminate prior to the end of the quarter you will receive a prorated refund as explained above.
Other Types of Fees and Charges Program accounts will incur additional fees and charges from parties other than us as noted below.
These fees and charges are in addition to the advisory fee paid to us. We do not share in any portion
of these third party fees. The fee does not include other expenses such as account maintenance
fees, transfer fees, electronic fund and wire fees, interest, exchange fees, taxes, spreads, mark-
ups/mark-downs, custody fees for alternative investments, short-term redemption fees on mutual
funds, etc.
Charles Schwab, as the custodian and broker-dealer providing brokerage and execution services
on program accounts, will impose certain fees and charges. Charles Schwab notifies clients of
these charges at account opening. Charles Schwab will deduct these fees and charges directly from
the client’s program account.
There are other fees and charges that are imposed by other third parties that apply to investments
in program accounts. Some of these fees and charges are described below.
If a client’s assets are invested in mutual funds or other pooled investment products, clients
should be aware that there will be two layers of advisory fees and expenses for those assets.
Client will pay an advisory fee to the fund manager and other expenses as a shareholder of the
fund. Client will also pay us the advisory fee with respect to those assets. Most of the mutual
funds available in the program may be purchased directly. Therefore, clients could generally
avoid the second layer of fees by not using our management services and by making their own
investment decisions.
Certain mutual funds impose fees and charges such as contingent deferred sales charges, early
redemption fees and charges for frequent trading. These charges may apply if a client transfers
into or purchases such a fund with the applicable charges in a program account.
Although only no-load and load-waived mutual funds can be purchased in a program account,
clients should understand that some mutual funds pay asset based sales charges or service fees
(e.g., 12b-1 fees) to the custodian with respect to account holdings.
If a client holds a variable annuity as part of an account, there are mortality, expense and
administrative charges, fees for additional riders on the contract and charges for excessive
transfers within a calendar year imposed by the variable annuity sponsor.
SGH Wealth Management Page 7 Appendix 1 – 1/1/2020
Further information regarding fees assessed by a mutual fund or variable annuity is available in
the appropriate prospectus, which is available upon request from us or from the product sponsor
directly.
Other Important Considerations The advisory fee is an ongoing wrap fee for investment advisory services, the execution of
transactions, and other administrative and custodial services. The advisory fee may cost the
client more than purchasing the program services separately. Factors that bear upon the cost of
the account in relation to the cost of the same services purchased separately include the type
and size of the account, historical and expected size or number of trades for the account, and
number and range of supplementary advisory and client-related services provided to the client.
The advisory fee also may cost the client more than if assets were held in a traditional
brokerage account. In a brokerage account, a client is charged a commission for each
transaction, and the representative has no duty to provide ongoing advice with respect to the
account. If the client plans to follow a buy and hold strategy for the account or does not wish
to purchase ongoing investment advice or management services, the client should consider
opening a brokerage account rather than a program account.
The investment products available to be purchased in the program can be purchased by clients
outside of a program account, through broker-dealers or other investment firms not affiliated
with us.
As we absorb certain transaction costs in wrap fee accounts, we may have a financial incentive
not to place transaction orders in those accounts since doing so increases its transaction costs.
Thus, an incentive exists to place trades less frequently in a wrap fee arrangement.
We do not charge our clients higher advisory fees based on their trading activity, but you
should be aware that we may have an incentive to limit our trading activities in your account(s)
because we are charged for executed trades.
please register to get more info
We offer our services to individuals, pensions and profit-sharing plans, trusts, estates, corporations
and other business entities. Client relationships vary in scope and length of service. We generally
require a minimum account size of $100,000, but we may waive this at our discretion.
SGH, in its sole discretion, may waive its $100,000 asset minimum and/or charge a lesser
investment management fee based upon certain criteria (i.e. anticipated future earning capacity,
anticipated future additional assets, dollar amount of assets to be managed, related accounts,
account composition, negotiations with client, etc.). Please Note: As result of the above, similarly
situated clients could pay different fees. In addition, similar advisory services may be available
from other investment advisers for similar or lower fees.
please register to get more info
In our wrap program, we do not select, review or recommend other investment advisors or portfolio
managers. We, through our investment adviser representatives (“IAR”), are responsible for the
investment advice and management offered to clients. For more information about the IAR
managing the account, client should refer to the IAR’s Brochure Supplement (ADV Part 2B),
SGH Wealth Management Page 8 Appendix 1 – 1/1/2020
which the client should have received along with this Brochure at the time the client opened the
account. By having our IARs act as the portfolio managers to the program there is a conflict of
interest because our evaluation of the IARs as the managers may not be objective. We attempt to
mitigate this conflict of interest by holding our IARs to the same standards that we would hold a
non-affiliated portfolio manager. Additionally, we attempt to mitigate this conflict of interest to
the best of our ability by placing the client’s interest ahead of our own through our fiduciary duty.
Our services are tailored to the client’s stated goals, needs and objectives. We allow them to impose
restrictions on investment in certain securities or types of securities. All restrictions must be
presented to us in writing. Additionally, we receive a portion of the wrap fee because we provide
portfolio management services. The wrap fee does not include performance based fees.
METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF LOSS METHODS OF ANALYSIS AND INVESTMENT STRATEGIES
With respect to our portfolio management services, we use a proprietary combination of the
following types of securities analysis and investment strategies.
Asset allocation is an investment strategy that aims to balance risk and reward by apportioning a
portfolio's assets according to an individual's goals, risk tolerance and investment horizon among
various asset classes. The asset classes typically include equities, fixed-income, alternative
investments, and cash and equivalents. Each class has different levels of risk and return, so each
will behave differently over time. Any asset allocation advice provided by SGH Wealth
Management is based on a number of factors, including the client’s investment objectives, risk
tolerances, asset class preferences, time horizons, liquidity needs, expected returns and an
assessment of current economic and market views expressed by economists, analysts, banks and
securities firms. These factors are based on the specific client objectives stated by the client during
consultations. The client may change these objectives at any time
Fundamental analysis is a technique that attempts to determine a security’s value by focusing on
underlying factors that affect a company's
actual business and its future prospects. The analysis is
performed on historical and present data. On a broader scope, one can perform fundamental
analysis on industries, sectors or the economy as a whole. The term refers to the analysis of the
economic well-being of a financial entity as opposed to only its price movements. The risk
associated with fundamental analysis is that despite that appearance that a security is undervalued,
it may not rise in value as predicted.
Technical Analysis is a method of evaluating securities by analyzing statistics generated by market
activity, such as past prices and volume. Technical analysts do not attempt to measure a security's
intrinsic value, but instead use charts and other tools to identify patterns that can suggest future
activity. The risk associated with technical analysis is that there is no broad consensus among
technical traders on the best method of identifying future price movements.
Long-Term Purchases – We purchase certain securities with the expectation that the value of those
securities will grow over a relatively long period of time, generally greater than one year. The risk
associated with using a long-term purchase strategy is that it generally assumes the financial
markets will go up in the long-term, which may not be the case. There is also the risk that the
SGH Wealth Management Page 9 Appendix 1 – 1/1/2020
segment of the market that the client is invested in or perhaps just that client’s particular investment
will go down over time even if the overall financial markets advance. Purchasing investments
long-term may create an opportunity cost - "locking-up" assets that may be better utilized in the
short-term in other investments.
Options Writing: We write option, which are derivative securities, which mean they derive their
value from that of an underlying instrument, such as a stock, stock index, interest rate or foreign
currency. An option is a contract that establishes a price and time frame for the purchase or sale
of a particular security. Two parties are involved in the contract: one party receives the right to
exercise the contract to buy or sell the underlying security; the other is obligated to fulfill the terms
of the contract. Like other securities - including stocks, bonds, and mutual funds - options carry
no guarantees, and a person must be aware that it is possible to lose all of the principal he/she
invests, and sometimes more. As an option holder, a person risks the entire amount of the premium
he/she paid pay. But as an options writer, a person takes on a much higher level of risk. For
example, if a person writes an uncovered call, he/she faces unlimited potential loss, since there is
no cap on how high a stock price can rise. However, since initial options investments usually
requires less capital than equivalent stock positions, a potential cash losses as an options investor
are usually smaller than if someone bought the underlying stock or sold the stock short. The
exception to this general rule occurs when an option is used to provide leverage: Percentage returns
are often high, but it is important to remember that percentage losses can be high as well.
Short Sales – We may enter into transactions known as short sales in which we sell a security that
we do not own in anticipation of a decline in the market value of the security. Losses from short
sales are potentially unlimited. In particular, a tender offer or similar transaction with respect to a
company whose securities we have sold short could cause the value of such securities to rise
dramatically resulting in substantial losses. Brokers may also require that we cover short position
at an inopportune time.
Short-Term Purchases – We purchase certain securities with the expectation that they will be sold
within a relatively short period of time, generally less than one year, to take advantage of the
securities' short-term price fluctuations. The risk associated with using a short-term purchase
strategy is that it generally assumes that we can predict how financial markets will perform in the
short-term, which may be very difficult and will incur a disproportionately higher amount of
transaction costs compared to long-term trading. There are many factors that can affect financial
market performance in the short-term (such as short-term interest rate changes, cyclical earnings
announcements, etc.) but may have a smaller impact over longer periods of times. There may be
more risk involved in executing short-term strategies. In addition, securities held less than one year
before selling it are classified, by the IRS, as a short-term gain and profits may be taxed as ordinary
income.
Our analysis of securities and advice relating thereto may be based upon information obtained
from financial newspapers and magazines, research materials prepared by others, corporate ratings
services, and annual reports, prospectuses and filings made with the Securities and Exchange
Commission. Other sources of information may include MorningStar Principia mutual fund
information, MorningStar Principia stock information, the World Wide Web, and other sources
SGH Wealth Management Page 10 Appendix 1 – 1/1/2020
deemed by the investment advisor representative to be appropriate. We may also utilize computer
models for performance analysis, asset allocation and risk management.
RECOMMENDED SECURITIES AND INVESTMENT RISKS
We use several types of securities in our clients’ accounts. These securities may include, but are
not limited to, the following: bonds and other corporate debt instruments; exchange traded funds
(ETFs); mutual funds; government debt instruments including treasury bills and municipal
securities; stocks; preferred stocks; high-yield debt; domestic fixed income; options; traded and
non-traded real estate investment trusts; limited partnerships; managed futures; money market
funds and cash.
All investments bear different types and degrees of risk and investing in securities involves risk
of loss that clients should be prepared to bear. Investments may fluctuate in value or lose value.
Our investment approach continually keeps the risk of loss in mind. While we use investment
strategies that are designed to provide appropriate investment diversification, some investments
have significantly greater risks than others. Obtaining higher rates-of-return on investments entails
accepting higher levels of risk. Recommended investment strategies seek to balance risks and
rewards to achieve investment objectives. If a client has questions about risks he/she does not
understand, we would be pleased to discuss them.
We strive to render our best judgment on behalf of our clients. Still, we cannot assure or guarantee
clients that investments will be profitable or assure that no losses will occur in an investment
portfolio. Past performance is an important consideration with respect to any investment or
investment adviser, but is not a reliable predictor of future performance. We continuously strive
to provide outstanding long-term investment performance, but many economic and market
variables beyond our control can affect the performance of an investment portfolio.
An investment could lose money over short or even long periods. A client should expect his/her
account value and returns to fluctuate within a wide range, like the fluctuations of the overall stock
and bond markets. A client’s account performance could be hurt by:
Credit risk: This is the risk that an issuer of a bond could suffer an adverse change in
financial condition that results in a payment default, security downgrade, or inability to
meet a financial obligation.
Inflation risk: This is the risk that inflation will undermine the performance of an
investment and/or the future purchasing power of a client's assets.
Interest rate risk: The chance that bond prices overall will decline because of rising
interest rates.
International investing risk: Investing in the securities of non-U.S. companies involves
special risks not typically associated with investing in U.S. companies. Foreign securities
tend to be more volatile and less liquid than investments in U.S. securities, and may lose
value because of adverse political, social or economic developments overseas or due to
changes in the exchange rates between foreign currencies and the U.S. dollar. In addition,
SGH Wealth Management Page 11 Appendix 1 – 1/1/2020
foreign investments are subject to settlement practices, as well as regulatory and financial
reporting standards, that differ from those of the U.S.
Currency Risk: Investments overseas are subject to fluctuations in the value of the dollar
against the currency of the investment’s originating country. Also known as exchange rate
risk.
Leverage risk: Using derivatives to increase the fund's combined long and short exposure
creates leverage, which can magnify the fund's potential for gain or loss and, therefore,
amplify the effects of market volatility on the fund's share price.
Liquidity risk: Liquidity risk exists when a particular investment would be difficult to
purchase or sell, possibly preventing the investor from selling such illiquid securities at an
advantageous time or price, or possibly requiring the investor to dispose of other
investments at unfavorable times or prices in order to satisfy its obligations.
Manager risk: The chance that the proportions allocated to the various securities will
cause the client’s account to underperform relevant to benchmarks or other accounts with
a similar investment objective.
Options risk: Like other securities - including stocks, bonds, and mutual funds - options
carry no guarantees, and a person must be aware that it is possible to lose all of the principal
he or she invests, and sometimes more. As an option holder, a person risks the entire
amount of the premium he or she paid. But as an options writer, a person takes on a much
higher level of risk. For example, if a person writes an uncovered call, he or she faces
unlimited potential loss, since there is no cap on how high a stock price can rise. However,
since initial option investments usually require less capital than equivalent stock positions,
potential cash losses as an options investor are usually smaller than if someone bought the
underlying stock or sold the stock short. The exception to this general rule occurs when an
option is used to provide leverage; percentage returns are often high, but it is important to
remember that percentage losses can be high as well.
Portfolio concentration: Accounts that are not diversified among a wide range of types of
securities, countries or industry sectors may have more volatility and are considered to
have more risk than accounts that are invested in a greater number of securities because
changes in the value of a single security may have more of a significant effect, either
negative or positive. Accordingly, portfolios are subject to more rapid changes in value
than would be the case if the client maintained a more diversified portfolio.
Stock market risk: The chance that stock prices overall will decline. Stock markets tend
to move in cycles, with periods of rising stock prices and periods of falling stock prices.
TYPES OF SERVICES WE OFFER: ADVISORY SERVICES OFFERED
We offer discretionary investment management services and financial planning services. Before
we enter into an advisor-client relationship, we may offer a complimentary general consultation to
determine a prospective client’s needs and discuss services available that meet those needs. Only
SGH Wealth Management Page 12 Appendix 1 – 1/1/2020
after a prospective client has had time to review our solutions/services can they determine whether
a relationship might benefit them. Investment advisory services begin only after we and the client
formalize the relationship with a properly executed agreement setting forth the terms and
conditions under which we will provide our services.
FINANCIAL PLANNING
We offer clients limited financial planning services to evaluate their financial situations, goals,
including risk tolerance, and time horizon, upon request. Through a series of personal exploratory
interviews and the use of questionnaires, the firm will collect pertinent data, identify goals,
objectives, financial problems, and potential solutions. This initial meeting will determine the
extent to which financial planning and investment management is necessary. We will prepare and
present specific recommendations and implement those recommendations, as agreed upon with
the client. As a result of these actions, our advice may be provided on, (but is not limited to):
financial and cash flow management, asset allocation and diversification planning, estate planning,
strategic income tax planning, retirement planning, educational funding, goal setting, a review of
insurance policies with risk management, review of employer sponsored retirement plan options
or other needs as identified by the client and the firm, all potentially provided with
recommendations. We may offer comprehensive planning services or the client may desire advice
on certain planning components; the firm can tailor services as desired by the client. At the
conclusion of the financial planning service, the firm may present the client with a written financial
plan.
This financial planning service involves rendering a financial consultation for you based upon an
analysis of the documents and information that you provide us. We may recommend that you
utilize various financial products, such as insurance or other advisory services, to implement our
recommendations and to achieve your goals. You are not obligated to follow our
recommendations. We also may recommend that you work with other professionals, such as
attorneys or accountants. Additionally, SGH Wealth Management takes no responsibility for the
outcome of our advice related to employer sponsored retirement plans in part due to the limited
options available within these type of plans.
PORTFOLIO MANAGEMENT
We provide investment management services to interested clients on a client specific basis, based
upon your unique facts and circumstances. Although we manage your accounts based on your
individual needs, we construct client portfolios in accordance with our model asset allocation
strategies, which are adjusted for each client’s risk profile. The model asset allocation strategies
range from aggressive growth to capital preservation. They also differ according to the type of
account such as individual retirement accounts verses non-qualified accounts. Upon selecting your
risk tolerance profile, allocations are made to each of the models depending upon what is
appropriate for you. We rely on the client to accurately specify their own risk tolerance to be able
to fit their needs to the appropriate model portfolio. All of the model strategies include some
combination of individual stocks, mutual funds, exchange traded funds, alternative investments,
options, individual bonds, certificates of deposit, and may potentially include other investment
products. We develop these models based upon our proprietary research on markets and market
SGH Wealth Management Page 13 Appendix 1 – 1/1/2020
conditions as well as perceived value in selecting securities. Please see Item 8 for additional details.
We periodically review your accounts on an ongoing basis (by monitoring our models) to ensure
that risk levels stay within the parameters established by your risk tolerance. We rebalance your
portfolios as necessary. More or less frequent rebalancing may be required depending on
macroeconomic, market or sector factors, as well as changes in your personal or family
circumstances.
TAILORED SERVICES
We tailor all of our services to the client’s stated goals, needs and objectives. For our portfolio
management service clients, we allow them to impose restrictions on investment in certain
securities or types of securities. All restrictions must be presented to us in writing.
PERFORMANCE-BASED FEES AND SIDE-BY-SIDE MANAGEMENT
We do not charge any performance-based fees (fees based on a share of capital gains on or
capital appreciation of the assets of a client) or conduct side-by-side management. We do not use
performance-based fee structures because of the potential conflict of interest, as this may create
incentives for the advisor to recommend an investment that may carry a higher degree of risk to
the client.
VOTING CLIENT SECURITIES
We will not be responsible for responding to proxies of securities held in clients' accounts. Proxy
solicitation materials will be forwarded to clients directly from their custodian for response and
voting. In the event a client has a question about a proxy solicitation, the client should contact us.
please register to get more info
In our wrap program, we are responsible for account management; there is no separate portfolio
manager involved. We obtain the necessary financial data from the client and assist the client in
setting an appropriate investment objective for the account. We obtain this information by having
the client complete an advisory agreement and other documentation. Clients are encouraged to
contact us if there have been any changes in their financial situation or investment objectives or if
they wish to impose any reasonable restrictions on the management of the account or reasonably
modify existing restrictions. Client should be aware that the investment objective selected for the
program is an overall objective for the entire account and may be inconsistent with a particular
holding and the account’s performance at any time. Client should further be aware that
achievement of the stated investment objective is a long-term goal for the account.
please register to get more info
DISCIPLINARY INFORMATION SGH Wealth Management Page 14 Appendix 1 – 1/1/2020
Registered investment advisers are required to disclose all material facts regarding any legal or
disciplinary events within the past 10-years that would be material to your evaluation of us or the
integrity of our management. We have no information applicable to this Item because we have
not been the subject of any administrative, civil, criminal or regulatory proceedings.
OTHER FINANCIAL INDUSTRY ACTIVITIES AND AFFILIATIONS our associates may be independent insurance agents (life, annuities, long-term care and health) and
they may recommend these services to clients. This other business activity pays our associates'
commissions that are separate from the fees described above. This is a conflict of interest because
the commissions give our associates a financial incentive to recommend and sell clients the
insurance products. However, our associates attempt to mitigate any conflicts of interest to the best
of their ability by placing the clients’ interests ahead of their own, through their fiduciary duty and
by informing clients that they are never obligated to purchase recommended insurance through
them. Associates may only sell insurance in states where they are properly registered.
CODE OF ETHICS, PARTICIPATION OR INTEREST IN CLIENT TRANSACTIONS AND PERSONAL TRADING Code of Ethics
Our Code of Ethics establishes ideals for ethical conduct upon fundamental principles of openness,
integrity, honesty, and trust. We will provide a copy of our Code of Ethics to any client or
prospective client upon request.
Our Code of Ethics covers all supervised persons and it describes our high standard of business
conduct, and fiduciary duty to our clients. The Code of Ethics includes provisions relating to the
confidentiality of client information, a prohibition on insider trading, a prohibition of rumor
mongering, restrictions on the acceptance of significant gifts and the reporting of certain gifts and
business entertainment items, and personal securities trading procedures, among other things. All
supervised persons must acknowledge the terms of the Code of Ethics annually, or as amended.
Material Interest in Securities
We do not have a material interest in any securities.
Investing in or Recommending the Same Securities
Our associates may buy or sell for their own accounts the same securities at or about the same time
they recommend to or purchase for client accounts. This causes a conflict of interest because they
can trade ahead of client trades. We mitigate the conflict of interest in two ways. First, our Code
of Ethics requires employees to: (1) report personal securities transactions on at least a quarterly
basis and (2) provide us with a detailed summary of certain holdings (both initially upon
commencement of employment and quarterly thereafter) in which such employees have a direct
or indirect beneficial interest. The reports are reviewed to ensure our associates do not trade ahead
of client accounts. Additionally, we require client transactions be placed ahead of our associates’
personal trades or our associates can place personal trades as part of a block trade. The records of
all associates’ personal and client trading activities are reviewed and made available to regulators
to review on the premises.
SGH Wealth Management Page 15 Appendix 1 – 1/1/2020 REVIEW OF ACCOUNTS Frequency of Account Reviews
Mr. Huszczo meets with each client, either in person or by telephone, on an annual basis. The
meeting reviews the client’s financial situation and each account to ensure that the accounts are
invested in accordance to the client’s current risk tolerance. In the event of any changes to the
client’s financial situation or risk tolerance, the client is encouraged to contact Mr. Huszczo as
soon as possible.
Other Reviews
Additional reviews are conducted periodically depending on market conditions, economic or
political events, changes in tax laws, or by changes in a client’s financial situation (such as
retirement, termination of employment, physical move or inheritance).
Reports and Account Statements
Clients will receive trade confirmations and monthly statements from the account custodian or
clearing firm, if the account has activity during the month. If the account does not have any
monthly activity, an account statement is provided by the account custodian or clearing firm at
least quarterly. Such statements will show any activity in the account, as well as period ending
position balances. If you do not receive your custodial statement directly from your custodian,
call them immediately or call us so that we may assist you.
CLIENT REFERRALS AND OTHER COMPENSATION We receive an economic benefit from Schwab in the form of the support products and services it
makes available to us and other independent investment advisors that have their clients maintain
accounts at Schwab. These products and services, how they benefit us, and the related conflicts of
interest are described above (see Item 12 – Brokerage Practices in our Firm Brochure). The
availability of Schwab’s products and services to us is not based on our giving particular
investment advice, such as buying particular securities for our clients.
In additionally, we may also receive economic benefits from the investment companies that we
work with. Occasionally, we have seminars for existing clients that are sponsored by or paid in
part by these investment companies. All sponsorship fees are used to reimburse incurred seminar
expenses. Typically, the investment company attends the events and makes payments directly to
the venue. This could be viewed as a conflict of interest because it gives us a financial incentive
to use the investment company who sponsors our events. We mitigate this conflict of interest to
the best of our ability by placing the clients’ interests ahead of our own and through our fiduciary
duty. We further mitigate the conflict of interest by allowing clients to place restrictions on
securities held in their accounts and therefore clients may exclude any investment from their
accounts.
SGH Wealth Management, including our advisors, do not pay for client referrals or use solicitors.
SGH Wealth Management Page 16 Appendix 1 – 1/1/2020 FINANCIAL INFORMATION We do not have any financial impairment that will preclude us from meeting our contractual
commitments to you. We do not serve as a custodian for your funds or securities. At no time will
fees of more than $1,200 be charged six or more months in advance by our firm or your
representative. We have established policies and procedures designed to prevent the collection of
fees greater than $1,200 six or more months in advance. As such, a balance sheet is not required
to be provided to you at this time.
CUSTODY All client funds, securities and accounts are held at third-party custodians. Under government
regulations, we are deemed to have custody of your assets if you authorize us to instruct Schwab
to deduct our advisory fees directly from your account. Schwab maintains actual custody of your
assets. You will receive account statements directly from Schwab at least quarterly. They will be
sent to the email or postal mailing address you provided to Schwab. You should carefully review
those statements promptly when you receive them. We also urge you to compare Schwab’s account
statements with the periodic portfolio reports you will receive from us. Our statements may vary
from custodial statements based on a number of factors including custodial pricing issues,
dividends due but not yet paid or fixed income accrued interest due or payable, among others.
Your custodial statement is the sole authority for tax reporting purposes.
Please note that the official record-keeper of your account is your custodian. It records includes,
but not limited to, performance, transactions, cost basis, capital gain and losses and all other related
data generated for income tax reporting purposes.
BROKERAGE PRACTICES SGH Wealth Management does not maintain custody of clients' assets on which we advise
(although we may be deemed to have custody of your assets if you give us authority to withdraw
assets from your account (see item 15 – Custody)). Clients' assets must be maintained in an
account at a “qualified custodian,” generally a broker-dealer or bank. We recommend that clients
use Charles Schwab & Co., Inc. (“Schwab”), a FINRA-registered broker-dealer, member SIPC, as
the qualified custodian. We are independently owned and operated and not affiliated with Schwab.
Schwab will hold client assets in a brokerage account and buy and sell securities when we, the
Advisor, instruct them to. While we recommend that clients use Schwab as custodian/broker, client
will decide whether to do so and open client’s account with Schwab by entering into an account
agreement directly with them. We do not open the account for the client.
How we Select Brokers/Custodians to Recommend:
We seek to recommend a custodian/broker who will hold your assets and execute transactions on
terms that are overall most advantageous when compared with other available providers and their
services. We consider a wide range of factors, including these:
Combination of transaction execution services along with asset custody services
(generally without a separate fee for custody)
SGH Wealth Management Page 17 Appendix 1 – 1/1/2020
Capability to execute, clear, and settle trades (buy and sell securities for your
account)
Capabilities to facilitate transfers and payments to and from accounts (wire
transfers, check requests, bill payment, etc.)
Breadth of investment products made available (stocks, bonds, mutual funds,
exchange-traded funds (ETFs), etc.)
Availability of investment research and tools that assist us in making investment
decisions
Quality of services
Competitiveness of the price of those services (commission rates, margin interest
rates, other fees, etc.) and willingness to negotiate them
Reputation, financial strength, and stability of the provider
Their prior service to us and our other clients
For our clients’ accounts it maintains, Schwab generally does not charge you separately for custody
services but is compensated by charging you commissions or other fees on trades that it executes
or that settle into your Schwab account. These fees are in addition to the commissions or other
compensation you pay the executing broker-dealer. In order to minimize your trading costs, we
recommend Schwab execute most trades for your account. As a fiduciary it is our highest priority
to act in our clients’ bet interest. Although our assessment and recommendation of Schwab is based
on an objective assessment of Schwab, it is an inherent conflict of interest in recommending
Schwab when we (and you) receive benefits that we do not pay for separately. We mitigate this
conflict by this disclosure to you in this Form ADV Part 2A.
Products and Services Available to Us from Schwab:
Schwab Advisor Services™ (formerly Schwab Institutional) is Schwab’s business serving
independent investment advisory firms like us. They provide our clients and us with access to its
institutional brokerage— trading, custody, reporting, and related services—many of which are not
typically available to Schwab retail customers. Schwab also makes available various support
services. Some of those services help us manage or administer our clients’ accounts, while others
help us manage and grow our business. Here is a more detailed description of Schwab’s support
services:
Services That Benefit You. Schwab’s institutional brokerage services include access to a broad
range of investment products, execution of securities transactions, and custody of client assets.
The investment products available through Schwab include some to which we might not otherwise
have access or that would require a significantly higher minimum initial investment by our clients.
Schwab’s services described in this paragraph generally benefit you and your account.
Services That May Not Directly Benefit You. Schwab also makes available to us other products
and services that benefit us but may not directly benefit you or your account. These products and
services assist us in managing and administering our clients’ accounts. They include investment
SGH Wealth Management Page 18 Appendix 1 – 1/1/2020
research, both Schwab’s own and that of third parties. We may use this research to service all or
some substantial number of our clients’ accounts, including accounts not maintained at Schwab.
In addition to investment research, Schwab also makes available software and other technology
that:
provide access to client account data (such as duplicate trade confirmations and
account statements);
facilitate trade execution and allocate aggregated trade orders for multiple client
accounts;
provide pricing and other market data;
facilitate payment of our fees from our clients’ accounts; and
assist with back-office functions, recordkeeping, and client reporting.
Services That Generally Benefit Only Us. Schwab also offers other services intended to help us
manage and further develop our business enterprise. These services include:
educational conferences and events;
technology, compliance, legal, and business consulting;
publications and conferences on practice management and business succession; and
access to employee benefits providers, human capital consultants, and insurance
providers.
Schwab may provide some of these services itself. In other cases, it will arrange for third-party
vendors to provide the services to us. Schwab may also discount or waive its fees for some of these
services or pay all or a part of a third party’s fees. Schwab may also provide us with other benefits
such as occasional business entertainment of our personnel.
Research and Soft Dollar Benefits
“Soft dollars” are defined as a form of payment investment firms can use to pay for goods and
services such as news subscriptions or research. When an investment firm gives its business to a
particular brokerage firm, the brokerage firm in return can agree to use some of its revenue to pay
for these types of services. The benefits described above from Schwab are not considered soft
dollars.
Directed Brokerage
Some clients may direct us to use a specific broker-dealer to execute securities transactions for
their accounts. In that case, you must provide access to the account, account statements, and pay
fees and commissions generated at your broker dealer/custodian. You are responsible for the
paperwork required to maintain the account as well as communications required with that firm.
When so directed, the use of a custodian other than Schwab, may not allow us to be able to
effectively achieve best execution on clients’ transactions, include affected accounts in block
trades, negotiate favorable commission and transaction fees, and/or give us access to the securities
we use for client accounts. Approval and acceptance of a custodian other than Schwab will be
SGH Wealth Management Page 19 Appendix 1 – 1/1/2020
made on a case-by-case basis.
Trade Aggregation
We may, but are not obligated to, aggregate transactions in equity and fixed income securities for
a client with other clients to improve the quality of execution. When transactions are so aggregated,
the actual prices applicable to the aggregated transactions will be averaged, and the client account
will be deemed to have purchased or sold its proportionate share of the securities involved at the
average price obtained. We may determine not to aggregate transactions, for example, based on
the size of the trades, the number of client accounts, the timing of the trades, the liquidity of the
securities and the discretionary nature of the trades. If we do not aggregate orders, some clients
purchasing securities around the same time may receive a less favorable price than other clients.
This means that this practice of not aggregating may cost clients more money. Most mutual fund
or ETF trades do not garner any client benefit from trade aggregation.
ANY QUESTIONS: SGH’s Firm’s Chief Compliance Officer, Sam Huszczo remains available
to address any questions regarding this wrap brochure.
please register to get more info
Open Brochure from SEC website