Recent Change in Ownership and Name Effective January 22, 2019, deVere Recruitment Limited (“deVere Recruitment”), the
parent company of deVere USA, Inc. (“deVere USA”), was acquired by Mr. David
McKenna, Chief Marketing Officer of Brite Advisors Ltd., a Hong Kong pension advisory
firm. Following the change in ownership, deVere USA and deVere Recruitment changed
their names to Brite Advisors USA, Inc. (“Brite USA” or the “Firm”) and Brite Advisors
Ltd. (“Brite Limited”), respectively. As a result of the change in ownership, Brite USA is
indirectly wholly-owned by Mr. McKenna and is no longer affiliated with the deVere
Group companies.
Description of Business
Brite USA is a registered investment adviser with the U.S. Securities and Exchange
Commission (“SEC”). The Firm’s advisory clients (“Clients”) consist primarily of
United Kingdom (“U.K.”) expatriates residing in the United States (“U.S.”) who have
pension assets located overseas. The Firm has been actively operational in the U.S. since
September 2012.
Brite USA provides customized, non-discretionary investment advisory services to Clients
based upon such factors as their age, income, assets and debts, education, need for cash
flow, investment goals and experience, and tolerance for risk. The Firm collects this
information during Client meetings, interviews, and telephone calls. Brite USA Investment
Adviser Representatives (“IARs”) analyze each Client’s financial situation and formulate
an investment strategy using a combination of investments that is tailored for, and in the
best interest of, the Client.
Prior to engaging Brite USA to provide investment advisory services, each Client is
required to enter into one or more written agreements with the Firm setting forth the terms
and conditions under which Brite USA renders such services (collectively, the
“Agreement”).
This disclosure brochure (“brochure”) describes the business of Brite USA. Certain
sections also describe the activities of supervised persons of Brite USA, including its
officers, directors (or other persons occupying a similar status or performing similar
functions), or employees, or any other person who provides investment advice on the
Firm’s behalf and who is subject to Brite USA’s supervision or control.
Description of Investment Advisory Services
Clients engage the Firm to manage all or a portion of their assets on a non-discretionary
basis only. The Firm does not act on a discretionary basis for Clients.
The Firm’s investment advisory services primarily focus on the use of international
pension schemes, described below, and the allocation of Client assets among mutual
funds, exchange-traded funds (“ETFs”), individual debt and equity securities,
Undertakings for Collective Investment in Transferable Securities (“UCITS”), and
currency, consistent with the investment objectives of each Client. Clients may elect to
allocate their assets according to model portfolios developed by the Firm. Clients also
may elect to automatically rebalance their portfolios to their starting allocations on a
monthly, quarterly, or semi-annual basis.
In addition to the Firm’s focus on international pension schemes, the Firm’s investment
advisory services include the management of Client assets custodied in the U.S. These
services include the allocation of Client assets among mutual funds, ETFs, and individual
debt and equity securities, consistent with the investment objectives of each Client.
The Firm tailors its investment advisory services to the individual needs of Clients.
The Firm consults with Clients initially and on an ongoing basis to evaluate their financial
situations and recent developments that may impact their investment goals. The Firm
seeks investments that it believes are in the best interest of each of its Clients. Clients
are advised to promptly notify the Firm if there are changes in their financial situation or
investment objectives or if they wish to impose any reasonable restrictions upon the Firm’s
investment advisory services.
Use of International Pension Schemes
The Firm’s business model focuses on advising Clients with respect to their U.K.-based
pension plans and the investments held within those plans.
A. Qualifying Recognised Overseas Pension Scheme (“QROPS”)
In 2017, the U.K. Chancellor of the Exchequer announced that pension transfers requested
on or after March 9, 2017, to certain QROPS, a type of international pension scheme, could
be subject to an overseas tax charge of 25% on the value of the pension transfer. In light
of the recent announcement of the imposition of a 25% tax charge on certain QROPS, the
Firm has determined, at this juncture, to cease accepting any new advisory business from
persons residing in the United States who seek to transfer their U.K. pension assets to a
QROPS. Additional investments cannot be added to existing QROPS arrangements. The
Firm currently intends to continue to service existing Clients who have QROPS
arrangements.
B. Self-Invested Personal Pension (“SIPP”) If in the best interest of the Client, Brite USA IARs may recommend that Clients transfer
their U.K. pension assets to a SIPP, which is a type of personal pension plan offered by
third party providers. A SIPP, subject to any applicable restrictions, allows Clients to
invest in a range of assets. The value of SIPP retirement benefits is determined by, among
other things, (i) the amount of contributions made, (ii) the period that each contribution
has been invested, and (iii) investment performance over the period.
C. General
Brite USA does not maintain pension assets. All QROPS and SIPP assets are administered
by an overseas third party pension trustee (regulated by the relevant financial services
regulator where the pension plan is held) and subject to the terms and conditions of a
separate agreement between Client and the pension trustee. The QROPS pension trustees
with which Clients currently have agreements include STM Malta Trust and Company
Management Ltd (“STM Malta”), Trireme Pension Services (“Trireme”), Dominion
Fiduciary Services (Malta) Limited (“Dominion”) and Harbour Pension Limited
(“Harbour”), each an overseas financial services company. The pension trustees for the
SIPPs that the Firm recommends currently include London and Colonial Services Limited
(“L&C”), and The Pension Solutions Group SIPP Limited (“PSG”). L&C, and PSG are each
companies authorized and regulated by the U.K. Financial Conduct Authority (“FCA”). L&C
is wholly-owned by STM Group Plc, which also owns STM Malta. PSG is indirectly
partially owned, on a non-controlling basis, by Brite Advisory Group Limited, a Hong
Kong company (“BAG”).
See “E. The Brite Platform,” below.
Other QROPS and SIPP providers may be available through other investment advisers
under different arrangements, including but not limited to applicable fees and charges, and
residency requirements.
Clients are strongly encouraged to review their agreements with their pension trustees and
any and all other disclosure materials provided by the pension trustees or other parties for
a full understanding of the services provided by the pension trustees and any associated
costs therein. The pension trustees generally send account statements on at least an
annual basis directly to Clients. The pension trustees also make account information
available online to Clients through the investment platforms utilized in connection with
QROPS and SIPP arrangements. Clients are encouraged to review such material carefully
for more information about the services offered by the pension trustees, the costs associated
with the management of such pension plans, and the activity in their accounts.
Questions regarding Brite USA’s services and fees may be addressed directly with Firm
personnel.
D. Tax Matters
Brite USA does not provide any tax advice including, without limitation, in relation to any
U.S. tax reporting requirements and/or other tax implications arising in relation to Clients’
pension transfers. Although, from time to time, the Firm may inform Clients of tax
developments, the Firm recommends that Clients seek their own tax advice, including
advice on procedures under tax treaties between the U.S. and the U.K. (or other applicable
jurisdiction) for the avoidance of double taxation on their respective pension arrangements.
For the convenience of Clients, the Firm has entered into a retainer agreement with Jim
Cassidy, C.P.A. (“Cassidy”), a tax and accounting firm based in New York City that is not
affiliated with the Firm. Pursuant to the retainer agreement, Cassidy has agreed to provide
certain tax and accounting services to Clients at rates no higher than those specified in the
agreement. These rates are provided to interested Clients, who are free to negotiate
different rates and services if they desire. Clients who wish to avail themselves of Cassidy’s
services will need to directly retain Cassidy pursuant to a separate agreement to which the
Firm will not be a party. As consideration for Cassidy entering into this retainer
arrangement, the Firm has agreed to pay Cassidy a monthly retainer of $20,000 less the
amount of any fees received from Clients who retain Cassidy. Because Client fees will
reduce the Firm’s fee obligation under the retainer agreement, the Firm may have an
incentive to refer business to Cassidy, which would create a conflict of interest. To address
this conflict of interest, the Firm does not compensate its IARs for referring business to
Cassidy. In addition, the retainer arrangement is terminable upon 30 days’ written notice.
Furthermore, Clients are under no obligation to use Cassidy’s services.
E. The Brite Platform
The Firm has entered into a platform agreement with BAG (the “Platform Provider”),
pursuant to which BAG, through one or more of its direct and indirect wholly-owned
companies, has agreed to make available to Clients an end-to-end retirement solution that
is tailored for U.K. expatriates residing in the U.S. who desire to transfer their U.K. pension
assets out of the U.K. (“Brite Platform”). The Brite Platform also is available to Clients
with existing QROPS or SIPP accounts. The Brite Platform integrates the U.K. pension
asset transfer process with overseas pension trusteeship, asset management, trading,
custody, and reporting, as follows:
Service Provider • Pension Transfer Analysis Onvestor Advisory Limited (“Onvestor”).
• Pension Trustees SIPPs: L&C, and PSG
QROPS: MC Trustees (Malta) Ltd. (“MC
Trustees Malta”) and STM Malta
• Investment Adviser Brite USA
• Trading Interactive Brokers (Australia) (“IB”)
• Custody and Reporting Brite Advisors Pty Ltd (Australia) (“PTY”)
Onvestor is an “Appointed Representative” of Basi & Basi Financial Planning Limited
(“B&B”) per regulations of the FCA. Michael Basi, managing director of B&B, currently
owns a non-controlling interest in Onvestor. B&B is authorized and regulated by the FCA,
and directly wholly-owned by BAG. PTY is directly wholly-owned by BAG. BAG
indirectly owns a non-controlling interest in MC Trustees Malta, and PSG. The Firm’s
ultimate individual owner currently serves as Chief Marketing Officer of BAG, but BAG
does not own any direct or indirect interest in the Firm.
As consideration to BAG for making the Brite Platform available to Firm Clients, the Firm
has agreed to pay BAG a quarterly fee at the annual rate of 0.10% of the Clients’ pension
assets on the Platform (“Platform Fee”). The Firm pays the Platform Fee out of the 1%
advisory fee it charges Clients, as discussed in “Item 5. Fees and Compensation,” below.
It is not a separate or additional charge. For performing the Pension Transfer Analysis
required by FCA regulation, Onvestor charges a fee that is described in “U.K. Suitability
Report Fee” under “Item 5 – Fees and Compensation – Additional Compensation, below.”
For existing Clients who are currently utilizing a QROPS or a SIPP from one of the pension
trustees discussed above in “C. General” under “International Pension Schemes,” the Brite
Platform is expected to offer cost savings. Accordingly, it may be in the best interest of
Clients to transfer their pension assets to the Brite Platform. To help determine whether a
transfer to the Brite Platform is in a Client’s best interest, the Firm’s IARs will provide the
Client with a comparative analysis of the fees and costs, available investment alternatives,
and other features of the Client’s current QROPS or SIPP arrangement as compared to those
available under the Brite Platform (“Comparative Analysis”).
F. Brite Transfer Program for Clients with Existing QROPS and SIPP
Accounts
Existing Clients who wish to transfer their current QROPS or SIPP to the Brite Platform
generally will incur exit fees charged by their existing pension trustees and platforms. The
amount of the exit fees will vary depending on such factors as the pension trustee, the
platform, and how long the QROPS or SIPP account has been in existence. The Firm
understands that the pension trustee exit fees are approximately €2,200 (STM Malta),
€2,000 (Trireme), €2,000 (Harbour), €2,000 (PSG), and ₤500 (L&C). In addition, the
platform exit fees are generally a percentage of assets and can be as high as 10% of the
original pension assets invested. The specifics of the arrangement with your QROPS or
SIPP provider may be different. Please review the terms and conditions of your
arrangement or ask the Firm IAR who handles your advisory account for more information.
To help mitigate the cost of such exit fees for Clients who decide to transfer to the Brite
Platform, PTY has agreed for a limited time to bear the cost of all trustee exit fees. In
addition, to enable Clients to invest 100% of the pension assets being transferred from an
existing QROPS arrangement to the Brite Platform, PTY has agreed for a limited time to
advance the cost of any platform exit fees imposed on transfer, subject to reimbursement
of the fees over a period of ten (10) years. Please ask your IAR for a Comparative Analysis
and for more information.
This transfer program (“Transfer Program”) allows Clients to transfer 100% of their
pension assets to the Brite Platform. To participate in the Transfer Program, Clients must
submit a completed application to the applicable Pension Trustee and PTY for approval,
which the Pension Trustees and PTY may or may not approve in its sole discretion. PTY
may modify or terminate the Transfer Program at any time and in any manner in its sole discretion without prior notice, except for applications it has already approved.
Non-International Pension Advisory Services
In managing a Client’s non-international pension assets, Brite USA does not follow a
specific investment strategy but rather utilizes strategies driven by and tailored to each
Client’s needs and specific circumstances. In developing investment recommendations, the
Firm’s IARs principally will employ an analysis of a Client’s financial and other
information regarding such matters as the Client’s age, investment objectives, annual
income, assets and debts, tax status, investment experience, liquidity needs, risk tolerance,
and employment/retirement status. For some Clients, the Firm’s IARs may determine to
seek more information in order to formulate a comprehensive financial plan. The Firm’s
IARs generally do not provide tax advice regarding Client non-international pension assets.
See Item 8 below for more information regarding the types of securities used in these Client
portfolios and related supervision.
Financial Planning
Brite USA utilizes a number of technologies to assist with the process of financial
planning for its clients. The intent of the financial planning service is to help clients
understand how their income, savings, and investment decisions today will impact their
families, their lifestyle choices and their ability to retire comfortably. In addition to looking
at the client’s current financial picture, Brite USA takes into consideration the current risk
tolerance of the Client as well as how that risk tolerance will evolve as Client moves from
wealth generation to wealth preservation and ultimately future consumption.
Assets Under Management
As of March 2019, Brite USA had $417,763,061 of assets under management on a non-
discretionary basis. The Firm does not manage assets under management on a discretionary
basis.
Sponsor / Manager of Wrap Program
Brite USA does not sponsor or participate in wrap fee programs.
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Brite USA charges investment advisory fees (“advisory fees”) at the annual rates shown
below, which are expressed as a percentage of Client assets under management. Advisory
fees may be based on a different applicable currency, as reflected in the Client’s
Agreement. Each fee category is separate.
Client Assets Under
Management
Fee for SIPP Accounts opened on or before July 26, 2019
Fee for SIPP Accounts opened after July 26, 2019
Fee for QROPS
existing clients only Up to $1,000,000 1.25% 1% 1%
$1,000,001 - $5,000,000 1.00 % 1% 1%
Above $5,000,000 Negotiable 1% 1%
Billing Cycles Billed monthly in
arrears
Billed monthly in
arrears
Billed monthly in
arrears
Negotiable Generally only
negotiable over
$5,000,000 subject to
management’s
approval
Generally only
negotiable over
$5,000,000 subject to
management’s
approval
No longer
applicable
Payments Directly debited from
the account
Directly debited from
the account
Directly debited from
the account
Minimum Account Size ₤110,000 if transferring
from a defined
contribution plan,
₤200,000 if transferring
from a defined benefit
plan
₤110,000 if
transferring
from a defined
contribution
plan, ₤150,000
if transferring
from a defined
benefit plan
Pre-March 8, 2017
$100,000
Assets under management are valued by the Custodians that hold the assets. Brite USA’s
advisory fees are exclusive of, and in addition to, custody fees, brokerage commissions,
transaction fees, and other related costs and expenses, that are incurred by Clients.
Generally, the advisory fee is non-negotiable for accounts less than $5 million, although
Brite USA, in its sole discretion, may agree to charge a lesser advisory fee based upon
certain criteria (such as anticipated future earning capacity, anticipated future additional
assets, dollar amount of assets to be managed, related accounts, account composition, pre-
existing client relationship, account retention, pro bono activities, etc.).
Advisory fees are computed based on the value of assets held in Client’s account as of the
end of a given month or quarter, as the case may be. If assets are deposited into Client’s
account after the inception of a billing period, the advisory fee payable with respect to
such assets will be adjusted pro rata to reflect the period for which those assets were
managed by the Firm. In determining the value of the assets held in Client’s account, the
Firm will rely exclusively on the custodian of the assets to determine such values. If the
Client Assets Under
Management
Fee for Debt and Equities, ETFs and Mutual Funds, etc.
Up to $500,000 1.5%
$500,001 - $1,000,000 1.25%
$1,000,001 - $5,000,000 1.00%
Above $5,000,000 Negotiable
Billing Cycles Billed monthly
and/or quarterly in
arrears
Negotiable Generally only
negotiable over
$5,000,000 subject to
management’s approval
custodian is unable to provide such valuations, the Firm will obtain and rely on valuations
provided by an independent party that the Firm, in its sole discretion, selects and believes
is reliable.
Cash Positions. At any specific point in time, depending upon perceived or anticipated
market conditions or events (there being no guarantee that such anticipated market
conditions or events will occur), the Firm may recommend holding a position in cash
for defensive purposes, with Client’s consent. All cash positions (money markets, etc.)
may be included as part of assets under management for purposes of calculating the Firm’s
advisory fee.
Margin. To the extent that Client authorizes the use of margin, and margin is thereafter
employed by the Firm in the management of Client’s account, the market value of
Client’s account and corresponding fee payable by Client to Brite USA may be increased.
As a result, in addition to understanding and assuming the additional principal risks
associated with the use of margin, Clients authorizing margin are advised of the conflict
of interest whereby Client’s decision to employ margin may correspondingly increase the
advisory fee payable to the Firm. The decision as to whether to employ margin is left to
the discretion of Client.
Additional Compensation: (i) QROPS: Historically, on pension assets transferred to a QROPS, a former affiliated
company of the Firm received a fee equal to 7% of the amount of U.K. pension assets
transferred to a QROPS (“Fee”), which utilized long-term business contracts of insurance
written by life insurance companies described under “Brokerage Practices” below (“Life
Companies”). The Life Companies paid the Fee. No part of the Fee was deducted from the
contributions paid into the QROPS by any Client and, as a result, 100% of such
contributions were available for investment. The former affiliated company paid 15% of
the Fee directly to the Firm to fund its administrative and operational expenses, and 50%
of the Fee directly to the Firm, which it could use to fund certain discretionary quarterly
bonuses paid to the Firm’s IARs. A conflict of interest was deemed to arise under these
circumstances. The Firm no longer pays the foregoing discretionary quarterly bonuses nor
receives any part of any Fee with respect to any new QROPS advisory business.
(ii) SIPP: The Firm charges an upfront flat fee to facilitate the opening of a SIPP account
(“flat fee” or “SIPP Fee”), as follows:
Amount Transferred to a SIPP Upfront Flat Fee Type of Transferring Plan £110,000 or more £2,500 Defined Contribution
Only
£150,000 -- £499,999 £5,000 Some or all from
Defined Benefit
£500,000-£999,999 £7,500 Some or all from
Defined Benefit
£1,000,000- £1,999,999 £10,000 Some or all from
Defined Benefit
£2,000,000-£2,999,999 £15,000 Some or all from
Defined Benefit
£3,000,000-£4,999,999 £20,000 Some or all from
Defined Benefit
£5,000,000 above £25,000 Some or all from
Defined Benefit
The flat fee is deducted directly from the value of the assets transferred, unless paid by
the Client separately and directly to the SIPP Trustee. The flat fee covers, among other
things: the Firm working with the U.K. pension company to obtain the U.K. pension plan
valuation; IARs’ meetings with Client to discuss potential pension transfer options; Brite
USA working with the U.K. regulated pension transfer specialist that performs the pension
transfer analysis where necessary; and, if in the best interest of the Client, the Firm’s Brite
IAR assisting Client on the final steps to transfer the pension to the SIPP. The Firm may
pay all or a portion of the SIPP Fee to its IARs as compensation. A conflict of interest is
deemed to arise under these circumstances insofar as IARs can be viewed as receiving an
economic incentive to recommend a SIPP. To address this conflict, SIPP recommendations
are subject to the Firm’s supervisory review and sign-off process.
(iii) U.K. Suitability Report Fee (“Report Fee”) for U.K. Pension Transfers with
Safeguarded Benefits in excess of £30,000. U.K. pension transfers with safeguarded
benefits in excess of £30,000 are subject to a pension transfer analysis (“U.K. Report”) by
a U.K. regulated pension transfer specialist that will analyze whether the proposed U.K.
pension transfer to the SIPP is in the best interest of the Client. The U.K. Report is prepared
by Onvestor, which is described under “The Brite Platform” under “Item 4. Advisory
Business,” above. Onvestor currently charges a Report Fee of £1,750, but the Fee may
vary depending on the number of U.K. pensions and the amount of U.K. pension assets to
be analyzed. Brite USA does not set, nor does it share in, any portion of the Report Fee.
For Pension Transfer Analysis requests that are not on the Brite Platform
(currently, only SIPPs on the Novia platform), the Report Fee is paid by the
individual IAR. In the event that the Client proceeds with the U.K. pension transfer, the
Client, in writing, authorizes the SIPP Trustee to deduct the Report Fee directly from the
pension assets once the transfer to the SIPP has been completed. The SIPP Trustee then
pays the Report Fee to the Firm and the Firm reimburses the cost of the Report Fee to the
individual IAR. If the U.K. pension transfer does not proceed, the individual IAR bears the
total cost of the Report Fee. A conflict of interest is deemed to arise under these
circumstances insofar as they create an economic incentive for IARs to recommend the
SIPP to a Client in order to be reimbursed the Report Fee even if the U.K. Report advises
against proceeding with the pension transfer to a SIPP. To address this conflict of interest,
SIPP recommendations are subject to the Firm’s supervisory review and sign-off
process. If a SIPP recommendation is not approved pursuant to the Firm’s supervisory
review and sign-off process, the IAR will not be reimbursed the Report Fee, which creates
an economic disincentive to make recommendations that are not in the best interest of a
Client. In addition, the Firm will provide the U.K. Report to Clients to give them the
opportunity to evaluate an IAR’s SIPP recommendation in light of the advice contained in
the U.K. Report.
For Pension Transfer Analysis requests on the Brite Platform, the Report Fee is paid for by
the Client whether or not the pension transfer is effected. Currently, B&B advances Report
Fees for pension transfers on the Brite Platform and is reimbursed out of pension assets
upon transfer. If the transfer is not effectuated, B&B will invoice the Client for the cost of
the Report Fee. Because IARs do not bear the cost of the Report Fee for pension transfers
on the Brite Platform, a conflict of interest is deemed to arise insofar as an IAR has an
economic incentive to recommend the Brite Platform over the Novia SIPP platform, and
anyh other platform the Firm permits its IARs to advise on, that require them to pay the
Report Fee. The Firm manages this conflict of interest through its supervisory review and
sign-off process.
Other Fees and Expenses Charged by Financial Institutions
As further discussed in response to Item 12 (below), Brite USA generally recommends
that Clients utilize the brokerage and clearing services of an independent broker-dealer for
investment advisory accounts.
Brite USA may only implement its investment advisory recommendations after Client has
arranged for and furnished Brite USA with all information and authorizations regarding
accounts with the appropriate financial institutions. Financial institutions include, but are
not limited to, any broker-dealers recommended by Brite USA, broker-dealers directed by
Client, trust companies (including overseas third-party pension trustees for QROPS or
SIPP accounts), banks, etc. (collectively referred to herein as the “Financial Institutions”).
Clients may incur certain charges imposed by Financial Institutions and other third parties,
custodial fees, and charges imposed directly by a mutual fund or ETF in the account, which
are disclosed in the fund’s prospectus (e.g., fund management fees and other fund
expenses), deferred sales charges, odd-lot differentials, transfer taxes, wire transfer and
electronic fund fees, and other fees and taxes on brokerage accounts and securities
transactions. Additionally, Clients may incur brokerage commissions and transaction fees.
Such charges, fees, and commissions are exclusive of and in addition to Brite USA’s fees.
The Agreement, and any separate agreement with Financial Institutions, may authorize the
Financial Institutions to debit Client’s account for the advisory fees payable to Brite USA,
and to remit directly the advisory fees to Brite USA. Financial Institutions debit the
advisory fees from Client accounts on a quarterly basis in arrears for QROPS accounts, on
a monthly basis in arrears for SIPP accounts, and on a quarterly or monthly basis in arrears
for non-international pension retirement accounts. Brite USA understands that Clients
have online access to their statements evidencing the debit of the advisory fees.
The Agreement will continue in effect until terminated by either party pursuant to the terms
of the Agreement.
Clients may make additions to and withdrawals from their accounts at any time, subject to
Brite USA’s right to terminate an account and any applicable restrictions based on the
nature of the investments.
Additions to Client accounts may be in cash or securities, provided however, that Brite
USA reserves the right to decline to accept particular securities into Client’s account.
Clients may withdraw account assets on notice to Brite USA, subject to the usual and
customary securities settlement procedures. Brite USA, however, designs its portfolios as
long-term investments and the withdrawal of assets may impair the achievement of Client’s
investment objectives. Brite USA may consult with Clients about the options and
ramifications of transferring securities. However, Clients are advised that when transferred
securities are liquidated, they are subject to transaction fees, fees assessed at the mutual
fund level (i.e., contingent deferred sales charge), and/or tax ramifications.
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Brite USA does not provide any services for performance-based fees, which are fees based
on a share of capital gains on, or capital appreciation of, the assets of Client.
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Brite USA currently provides its services primarily to retail individuals.
Minimum Account Size/SIPP Fee
Brite USA does not impose a minimum portfolio size on advisory business, except that a
SIPP generally is subject to a minimum of GBP 110,000 (for transfers from defined
contribution plans) or GBP 150,000 (for transfers including defined benefit plans).
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Methods of Analysis The Firm attempts to identify an appropriate asset allocation in mutual funds, ETFs,
individual debt and equity securities, UCITS, and currency, suitable for Clients.
When advising on international pension assets, the Firm’s IARs typically will select
securities from the Firm’s internal approved securities list maintained by the Firm’s
Investment Committee, though IARs may request approval of specific individual securities
for addition to the list. The Firm’s Investment Committee consists of the Firm’s chief
executive officer, chief compliance officer, and senior managers and currently meets at
least quarterly.
When advising on non-international pension assets, the Firm’s IARs will assist Clients in
developing individual portfolios consisting of mutual funds, ETFs, and individual equity
and debt securities that are available on custodial platforms offered by Charles Schwab,
SEI, and Interactive Brokers. The Firm requires regular supervisory reviews of these Client
portfolios to ensure, among other things, that sufficient and current Client information is
on file to form the basis of advice provided, and that the portfolios are consistent with the
investment objectives and risk profiles on file for these Clients.
Investment Strategies
The Firm does not follow a single investment strategy but rather utilizes strategies driven
by and tailored to each Client’s need and specific circumstances. The Firm’s IARs
principally employ an analysis of a Client’s current financial situation and other information
provided by a Client, as discussed above, to determine an appropriate mix of investments
for the Client.
Risks of Loss General Risk of Loss – Investing in securities involves the risk of loss. Clients
should be prepared to bear such loss. The value of securities may go up or down. Past
performance is not indicative of future results. Additional information regarding risks of
loss is set forth below.
Asset Allocation Risk -- One risk of asset allocation is that Clients may not
participate in increases in a particular security, industry, or market sector. Another risk is
that the ratio of equity securities, fixed income securities, and cash will change over time
due to stock and market movements and, if not corrected, will no longer be appropriate for
a Client’s goals.
Credit Risk – Brite USA cannot control, and Clients are exposed to, the risk that
Financial Institutions, financial intermediaries, trustees, or security issuers may experience
adverse economic consequences that may include impaired credit ratings, default,
bankruptcy, or insolvency, any of which may affect portfolio values or management. This
risk applies to assets on deposit with any broker utilized by Client, notwithstanding asset
segregation and insurance requirements that are beneficial to broker clients generally. In
addition, exchange trading venues or trade settlement and clearing intermediaries could
experience adverse events that may temporarily or permanently limit trading or adversely
affect the value of Client securities. Finally, any issuer of securities may experience a credit
event that could impair or erase the value of the issuer’s securities held by Client.
Cybersecurity Risk – The Firm’s information and technology systems may be
vulnerable to damage or interruption from computer viruses, network failures, computer
and telecommunication failures, infiltration by unauthorized persons and security
breaches, usage errors, power outages, and catastrophic events such as fires, tornadoes,
floods, hurricanes and earthquakes. Although the Firm has implemented various measures
to manage risks relating to these types of events, if these systems are compromised, become
inoperable for extended periods of time, or cease to function properly, Brite USA may have
to make a significant investment to fix or replace such systems. The failure of these
systems or of disaster recovery plans for any reason could cause significant interruptions
in Brite USA’s operations and result in a failure to maintain the security, confidentiality,
or privacy of sensitive data, including personal information relating to Clients. Such a
failure could harm the Firm’s reputation or otherwise affect its business and financial
performance.
Inflation, Currency, and Interest Rate Risks – Security prices and portfolio
returns will likely vary in response to changes in inflation and interest rates. Inflation
causes the value of future dollars to be worthless and may reduce the purchasing power
of an investor’s future interest payments and principal. Inflation also generally leads to
higher interest rates, which in turn may cause the value of many types of fixed income
investments to decline. In addition, the relative value of the U.S. dollar-denominated
assets primarily managed by Brite USA may be affected by the risk that currency
devaluations affect Client’s purchasing power.
Legislative Risk – Performance may directly or indirectly be affected by
government legislation or regulation, which may include, but is not limited to: changes in
investment adviser or securities trading regulation, changes in U.K. government regulation,
or changes in the U.S. government’s guarantee of ultimate payment of principal and interest
on certain government securities. Brite USA does not engage in financial or tax planning,
and in certain circumstances Client may incur taxable income on her investments without
a cash distribution to pay the tax due.
Liquidity Risk- Liquidity risk exists when particular investments are difficult to
purchase or sell (e.g., not publicly traded and/or no market is currently available or
becomes less liquid in response to market developments). This can reduce the returns of a
Client’s investment, because the investment is unable to transact at advantageous times or
prices.
Management Risk- Management risk is the risk that the investment process,
techniques, and analyses applied do not produce the desired or intended results.
Margin – Brite USA may recommend the use of margin, which can amplify
Client’s exposure to the market, and market loss may be greater in those Client accounts
that engage in margin. For QROPS and SIPP accounts, margin is not recommended by
Brite USA IARs.
Model Portfolio Risks— allocating assets according to a model portfolio is not
risk free and there can be no assurance that a model portfolio will perform as designed or
described. Allocating assets across different asset classes according to a model portfolio
does not guarantee positive performance or reduced risk of loss, or the achievement of any
investment objective.
Mutual Funds and Exchange Traded Funds (“ETFs”) – An investment in a
mutual fund or ETF involves risk, including the loss of principal. Mutual fund and ETF
shareholders are necessarily subject to the risks arising from the individual issuers of the
fund’s underlying portfolio securities. Such shareholders are also liable for taxes on any
fund-level capital gains: mutual funds and ETFs are required by law to distribute capital
gains in the event they sell securities for a profit that cannot be offset by a corresponding
loss. Shares of mutual funds are generally distributed and redeemed on an ongoing basis
by the fund itself or a broker acting on its behalf. The trading price at which a share is
transacted is equal to a fund’s per share net asset value (“NAV”), plus any shareholder’s
fees (e.g., sales loads, purchase fees, redemption fees). The per share NAV of a mutual
fund generally is calculated at the end of each business day. Shares of ETFs are listed on
securities exchanges and transacted at negotiated prices in the secondary market.
Generally, ETF shares trade at or near their most recent NAV, which is generally
calculated at least once daily for indexed-based ETFs and more frequently for actively
managed ETFs. Certain inefficiencies, however, may cause the shares to trade at a
premium or discount to their pro rata NAV. There is also no guarantee that an active
secondary market for such shares will develop or continue to exist. Generally, an ETF
only redeems shares when aggregated as creation units (usually 50,000 shares or more).
Therefore, if a liquid secondary market ceases to exist for shares of a particular ETF, a
shareholder may have no market to dispose of such shares.
Non-U.S. Custody Risks—Clients that invest in foreign securities may hold non-
U.S. securities and cash with non-U.S. custodians. Such non-U.S. custodians may be newly
formed, or subject to little or no regulatory oversight over or independent evaluation of
their operations and the laws of certain countries may place limitations on an advisory
account’s ability to recover its assets if a non-U.S. custodian enters bankruptcy.
Non-U.S. Securities Risks— Investments in non-U.S. securities are subject to risks
associated with investing in the particular country of the issuer and/or the jurisdictions in
which these securities are traded, including risks relating to the political, regulatory,
economic, social, and other conditions or events occuring in the country or region, such as:
military confrontations, war, civil unrest, and terrorism; less developed custody and
settlement practices; currency fluctuations and restrictions on currency exchange;
nationalization of companies or expropriation of assets by foreign governments;
confiscatory taxation; withholding taxes; and varying legal, auditing, disclosure, and
reporting standards.
UCITS – UCITS are mutual funds based in the European Union. There are many
types of UCITS investment funds, including, but not limited to: equity funds, money
market funds, fund of funds, and asset allocation funds. An investment in UCITS involves
risk, including the potential loss of the principal invested.
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Brite USA is required to disclose the facts of any legal or disciplinary events that are
material to Client’s evaluation of its advisory business or the integrity of management.
In June 2018, deVere USA (now known as Brite USA) submitted, and the SEC accepted,
an offer to settle an administrative proceeding relating to alleged disclosure and compliance
violations concerning its historical QROPS business. Without admitting or denying the
allegations, deVere USA consented to the SEC’s entry of an administrative order
(“Order”). According to the Order, deVere USA failed to disclose agreements with
overseas product and service providers that resulted in compensation being paid to deVere
USA advisers and an overseas affiliate. The Order found that the undisclosed
compensation, including an amount equivalent to 7% of the pension transfer value, created
an incentive for deVere USA to recommend a pension transfer and particular product or
service providers that were obligated to make payments. The Order also found that deVere
USA made materially misleading statements concerning tax treatment and available
investment options. Pursuant to the Order, deVere USA was censured, ordered to cease
and desist from violations of Sections 206(1), 206(2), 207 and 206(4) of the Advisers
Act and Rule 206(4)-7 thereunder, and ordered to pay an $8 million fine. deVere USA
also undertook to notify clients of the Order, and to provide training through 2020 to its
employees concerning the fiduciary duties of an investment adviser and disclosure of
conflicts of interest, including economic conflicts of interest. In addition, deVere USA
was ordered to retain an independent compliance consultant to conduct a comprehensive
review, as well as annual reviews for each of the next two years, of its policies, procedures,
and systems, and to report its findings and recommendations for additional changes or
improvements to deVere USA and the SEC. The settlement will result in the establishment
of a Fair Fund for distribution of the penalty to affected Clients. A copy of the Order can
be found at https://www.sec.gov/litigation/admin/2018/ia-4993.pdf.
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Personal Trading
Brite USA has adopted a Code of Ethics that sets forth the standards of conduct expected
of persons associated with Brite USA (“Associated Persons”) and that requires compliance
with applicable securities laws (“Code of Ethics”). The Code of Ethics contains written
policies reasonably designed to prevent the unlawful use of material non-public
information by Brite USA or the Associated Persons. The Code of Ethics also requires
that certain of Brite USA’s personnel (“Access Persons”) report their personal securities
holdings and transactions, and obtain pre-approval of certain investments such as initial
public offerings and limited private offerings. The Firm utilizes Schwab Compliance
Technologies, a compliance software application, to distribute the Code of Ethics and to
monitor employees’ personal trading.
Brite USA and its Associated Persons are permitted to buy or sell securities that they also
recommend to Clients consistent with Brite USA’s policies and procedures.
However, when Brite USA does engage in or considers a transaction in any security on
behalf of Client, no Access Person may affect for themselves or for their immediate family
(i.e., spouse, minor children, or adults living in the same household as the Access Person)
a transaction in that security unless: the transaction for Client has been completed or a
decision has been made not to engage in the transaction for Client. Brite USA will place
the interests of Clients before those of the Access Person.
These requirements are not applicable to: (i) direct obligations of the Government of the
United States; (ii) money market instruments, bankers’ acceptances, bank certificates of
deposit, commercial paper, repurchase agreements, and other high quality short-term
debt instruments, including repurchase agreements; (iii) shares issued by mutual funds or
money market funds; and (iv) shares issued by unit investment trusts that are invested
exclusively in one or more mutual funds.
The Code of Ethics recognizes that some securities trade in sufficiently broad markets to
permit transactions by Access Persons to be completed without any appreciable impact on
the markets of such securities. Therefore, under certain limited circumstances, exceptions
may be made to the policies stated above.
Clients and prospective Clients may contact Brite USA to request a copy of the Code of
Ethics.
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For Clients’ advisory accounts custodied in the U.S., Brite USA generally recommends
that Clients utilize the brokerage and clearing services of Charles Schwab & Co., Inc.
(“Schwab”), Interactive Brokers, or SEI as qualified custodians. Brite USA is independent
of and not affiliated with Schwab, Interactive Brokers, or SEI.
The factors that Brite USA considers in recommending Schwab, Interactive Brokers, or
SEI include the Financial Institution’s respective financial strength, reputation, execution,
pricing, and research and service.
Clients may pay fees that are higher than what another qualified Financial Institution might
charge to effect the same transaction where Brite USA determines that the fees are
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 rather,
whether the transaction represents the best qualitative execution, taking into consideration
the full range of a Financial Institution’s services, including among others, the value of
research provided, execution capability, commission rates, and responsiveness. Brite USA
seeks competitive rates but may not necessarily obtain the lowest possible fee rates for
Client transactions.
Directed brokerage arrangements. Client may direct in writing that Brite USA use a
particular Financial Institution to execute some or all transactions for Client. In that case,
Client will negotiate terms and arrangements for the account with that Financial Institution,
and Brite USA will not seek better execution services or prices from other Financial
Institutions or be able to “batch” Client transactions for execution through other Financial
Institutions with orders for other accounts managed by Brite USA (as described below).
As a result, Client may pay higher fees or other transaction costs or greater spreads, or
receive less favorable net prices, on transactions for the account than would otherwise be
the case. Subject to its duty of best execution, Brite USA may decline Client’s request
to direct brokerage if, in Brite USA’s sole discretion, such directed brokerage
arrangements would result in additional operational difficulties or violate restrictions
imposed by other broker-dealers (as further discussed below).
In the case of QROPS accounts (other than those on the Brite Platform), Clients have
authorized the QROPS pension trustees to make all portfolio transaction decisions,
including investments through the following overseas Life Companies: RL360 Insurance
Company Limited, Generali Worldwide Insurance Company Limited., or STM Life
Assurance PCC PLC. Clients have directed the Firm to execute Client’s securities
transactions through the QROPS pension trustees and Life Companies.
In the case of SIPP accounts (other than those on the Brite Platform), Clients authorize and
direct the Firm to transmit all Client-approved investment or other instructions with respect
to their SIPP assets to the SIPP platform provider, Novia Global Ltd., a Financial
Institution located in the U.K. Under the terms of the Agreement with the Firm, each
Client agrees that Novia, not the Firm, will be responsible for implementing such SIPP
instructions in accordance with the terms and conditions of the governing documents for the
SIPP, including but not limited to selecting financial intermediaries to execute any
securities transactions approved by Client.
In the case of Brite Platform accounts, Clients have authorized L&C, MC Trustees Malta,
STM Malta, or PSG, in its capacity as the QROPS or SIPP trustee (as applicable), to
custody assets attributable to Clients with PTY, a firm registered with the Australian
Securities and Investment Commission (“ASIC”), to make all portfolio transaction
decisions, and/or to execute all portfolio transactions through IB. Neither PTY nor IB
charge separate fees for their custody or brokerage services, respectively. PTY is a direct,
wholly-owned subsidiary of BAG, which receives a 0.10% Platform Fee as described in
“E. The Brite Platform” under “Use of International Pension Schemes” in “Item 4.
Advisory Business” above. Under the terms of the Agreement with the Firm, each Client
agrees that the pension trustee, and not the Firm, will be responsible for the implementation
of portfolio transactions consistent with the investment advice provided by Firm IARs.
Software and Support Provided by Schwab Institutional Platform
The Firm participates in Schwab Institutional Platform, which includes access to a broad
range of investment products. The investment products available include some to which
the Firm might not otherwise have access. For example, Schwab enables Brite USA to
obtain certain mutual funds without transaction charges and other securities at nominal
transaction charges. The commissions and/or transaction fees charged by Schwab may
be higher or lower than those charged by other Financial Institutions. Schwab
Institutional Platform is not utilized for QROPS and SIPP accounts.
Although not a material consideration when determining whether to recommend that Client
utilize the services of a particular broker-dealer/custodian, the Firm may receive from
Schwab (or another broker- dealer/custodian) without cost (and/or at a discount) support
services and/or products, certain of which assist the Firm to better monitor and service
Clients’ accounts maintained at such institutions. Included within the support services
may be investment-related research, pricing information and market data, software and
other technology that provide access to Client account data, compliance and/or practice
management-related publications, discounted or gratis consulting services, discounted
and/or gratis attendance at conferences, meetings, or other educational and/or social events,
marketing support, computer hardware and/or software, and/or other products used by the
Firm in furtherance of its investment advisory business operations.
As indicated above, certain of the support services and/or products that the Firm may
receive from Schwab may assist Brite USA in managing and administering Client
accounts. Other services and/or products do not directly provide such assistance to Brite
USA, but rather assist the Firm to manage and further develop its business enterprise.
Clients do not pay more for investment transactions effected and/or assets maintained at
Schwab as a result of the Firm’s arrangement with Schwab. There is no corresponding
commitment made by the Firm to Schwab or any other entity to invest any specific amount
or percentage of Clients’ assets in any specific mutual funds, securities, or other investment
products as a result of the above arrangement.
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Brite USA typically monitors Client accounts on an as needed basis. Clients are
encouraged to discuss their needs, goals, and other factors affecting their financial situation
with Brite USA and to keep the Firm informed of any changes thereto. Brite USA
typically contacts Clients annually to discuss any such changes.
To the extent that the Firm may provide Clients with periodic account statements or reports,
Client is urged to compare any statement or report provided by Brite USA with the account
statements received from the account custodian or Financial Institution.
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As discussed above, in “D. Tax Matters” under “Item 4. Advisory Business,” the Firm
pays Cassidy a monthly retainer fee for making tax and accounting services available to
Firm Clients. The retainer fee is payable regardless of whether Cassidy refers prospective
clients to the Firm. In addition, the monthly retainer is reduced by fees paid by Clients
who retain Cassidy. Nevertheless, the arrangement may create a financial incentive for
Cassidy to refer prospective clients to the Firm if, for example, the referrals result in Clients
retaining Cassidy in an amount greater than the monthly retainer paid by the Firm. To
address this conflict of interest, the Firm has determined to treat the arrangement as a cash
solicitation arrangement requiring certain disclosures to, and acknowledgements by,
prospective clients whom Cassidy refers to the Firm.
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Clients’ securities and cash are held in custody accounts with certain Financial Institutions
(“Custodians”). The Agreement, and/or a separate agreement(s) with the Custodians, may
authorize Brite USA, through such Custodians, to debit Client’s account for the amount of
Brite USA’s advisory fee and to remit that advisory fee to the Firm in accordance with
applicable custody rules. Brite USA has procedures in place to ensure that it does not have
actual custody of Client’s assets.
The Custodians have agreed to send an account statement, at least quarterly, to each Client
for which it maintains funds or securities, identifying the amount of funds and of each
security in the account at the end of the period and setting forth all transactions in the
account during that period. However, for Clients with QROPS or SIPP investments, the
pension trustee receives all account statements from the custodians holding assets of the
QROPS or SIPP and has online access to account information. The trustees have arranged
with these custodians for account information to be made available online to Clients.
In addition, as discussed in Item 13, Brite USA may send periodic account reports to
Clients. Clients should promptly and carefully review the statements sent directly by the
Financial Institutions and compare them to the periodic account reports sent by the Firm.
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Brite USA does not manage Client accounts on a discretionary basis. The Firm advises
Clients on investments on a non-discretionary basis. Clients are free to accept or disregard
the Firm’s or its IARs’ recommendations on investments.
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Brite USA does not vote proxies on behalf of its Clients. Clients receive proxies, if any,
directly from the Financial Institutions.
The Firm will not act or advise Clients in any legal proceedings, including but not limited
to class actions, involving securities held or previously held by the account.
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Open Brochure from SEC website