Enlightened Wealth Management, LLC
520 Broadway, 3rd Floor
Santa Monica, CA 90401
January 31st, 2017
This Brochure provides information about the qualifications and business practices of Enlightened Wealth Management, LLC (“EWM”). If you have any questions about the contents of this Brochure, please contact us at 310-975-7073. The information in this Brochure has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority.
Enlightened Wealth Management, LLC is a registered investment adviser. Registration of an Investment Adviser does not imply any level of skill or training. The oral and written communications of an Adviser provide you with information about which you determine to hire or retain an Adviser.
Additional information about Enlightened Wealth Management, LLC also is available on the SEC’s website at www.adviserinfo.sec.gov. You can search this site by a unique identifying number, known as a CRD number. The CRD number for EWM is 174587.
Since the most recent filing of this brochure, dated July 1, 2017, we have made the following material changes:
Item 5 – We have updated our language pertaining to the billing of financial planning fees.
Please note, this section only discusses material changes.
Currently, our Brochure may be requested by contacting Christopher Girbés-Pierce at 310-975-7073.
Brochure Supplements (see attached)
Description of the Firm
EWM is an independent registered investment adviser solely owned by Christopher Girbés-Pierce and has been providing investment advisory services since June of 2015. In addition to our 2015 registration with the State of California, EWM may register or meet certain exemptions to registration and/or licensing in other jurisdictions in which financial planning and investment advisory business is conducted. Mr. Christopher Girbés-Pierce, CFP® is the firm’s Founder, CEO and majority shareholder. Additional information about Mr. Girbés-Pierce may be found in the incorporated Form ADV Part 2B at the end of this brochure. As of January 31st, 2017, EWM had $7,446,848 in assets under management, of which $7,446,848 was managed on a discretionary basis.
Description of Advisory Services Offered
EWM provides Wealth Management services (consisting of personalized integrated financial planning and investment management). Prior to the rendering of any of the foregoing advisory services, clients are required to enter into one or more written agreements with EWM setting forth the relevant terms and conditions of the advisory relationship.
Wealth Management Services:
Clients can engage EWM to manage all or a portion of their assets through the firm’s Wealth Management services, which include a broad range of comprehensive financial planning services as well as discretionary management of investment portfolios.
Investment Advisory Services
The investment management component of the firm’s Wealth Management services encompasses initial and ongoing consultations with clients to determine risk tolerance, time horizon and other factors that may impact the client’s investment needs, goals, and objectives. Through this process, EWM ensures that client’s investments are suitable for their individual circumstances.
EWM primarily allocates client assets with a strong bias for low-fee, tax-advantaged investments typically embodied through a passive approach to the markets. Where appropriate, EWM may also provide advice about client-selected securities, legacy positions, or other investments held in client portfolios. EWM tailors its advisory services to meet the needs of its individual clients and continuously seeks to ensure that client portfolios are managed in a manner consistent with their specific investment profiles. EWM consults with clients on an initial and ongoing basis to determine their specific risk tolerance, time horizon, liquidity constraints and other qualitative factors relevant to the management of their portfolios.
While the purchase of individual equity securities is never a part of EWM’s recommended investment strategy, client portfolios may include some individual equity securities if a position held over from a prior investment manager has significant unrealized capital gains or the client specifically requests they be retained for a personal reason.
To ensure proper management of their portfolios, clients are advised to promptly notify EWM if there are changes in their financial situation or if they wish to place any limitations on the management of their portfolios. Clients may impose reasonable restrictions or mandates on the management of their accounts if EWM determines, in its sole discretion, the conditions would not materially impact the performance of a management strategy or prove overly burdensome to the EWM’s management efforts.
Use of Independent Managers:
EWM may allocate client assets to certain independent managers (“Independent Managers”) to manage those assets. The specific terms and conditions under which a client engages an Independent Manager are set forth in a separate written agreement between the designated Independent Manager and the client. When employed, EWM evaluates various information about the Independent Managers it chooses to manage client portfolios, which may include the Independent Managers’ public disclosure documents, materials supplied by the Independent Managers themselves and other third-party analyses it believes are reputable. To the extent possible, EWM seeks to assess the Independent Managers’ investment strategies, past performance and risk results in relation to its clients’ individual portfolio allocations and risk exposure. EWM also takes into consideration each Independent Manager’s management style, returns, reputation, financial strength, reporting, pricing and research capabilities, among other factors.
EWM continues to provide services relative to the selection of the Independent Managers. On an ongoing basis, EWM monitors the performance of those accounts being managed by Independent Managers. EWM seeks to ensure the Independent Managers’ strategies and target allocations remain aligned with its clients’ investment objectives and overall best interests.
EWM also provides sub-advisory services to clients referred to it by Betterment LLC, a registered investment adviser. EWM provides the services set forth above to such referred clients on the fee terms described in Item 5.
Comprehensive Financial Planning Services
The financial planning component of the firm’s Wealth Management services encompasses areas such as budgeting and cash flow needs, insurance, retirement, education, tax concerns, and estate planning. For more in-depth tax and estate issues, the firm recommends that clients seek the advice of a qualified accountant and/or attorney.
Wrap Fee Programs
EWM does not sponsor or serve as a portfolio manager in any investment program involving wrap fees.
Employee Benefit Plan Services
EWM also provides advisory services to participant-directed employee retirement benefit plans (a “Plan”). EWM will analyze the Plan’s current investment platform, and assist the Plan with defining the types of investments to be offered and the restrictions that may be imposed. EWM will recommend investment options to achieve the Plan’s objectives, provide participant education meetings, and monitor the performance of the Plan’s investment vehicles.
EWM will recommend changes in the Plan’s investment vehicles as may be appropriate from time to time. EWM generally will review the Plan’s investment vehicles as necessary on an ongoing basis.
EWM also offers a discretionary 401k advisory program through BAM Advisor Services, LLC (“BAM”). In this program, BAM will exercise discretionary authority to select the Plan investments made available to Plan participants. BAM will exercise discretionary authority to select and maintain each Plan’s investments according to the goals and investment objectives of the Plan.
EWM will continue to work with Plans to monitor Plan investments, provide fiduciary Plan advice including regular considerations of the goals and objectives of the Plan, and provide participant education services to the Plan.
Educational Workshops and Public Appearances:
We offer periodic financial educational sessions and public appearances for those desiring general advice on personal finance and investing. Topics may include issues related to financial planning, college funding, estate planning, retirement strategies, or various other economic and investment topics. Our workshops and public appearances are educational in nature and do not involve the sale of any insurance or investment products. Information presented will not be based on any one person’s need nor do we provide individualized investment advice to attendees during our general sessions.
EWM does not provide legal or accounting services. With the Client’s consent, EWM may work with other advisors (attorneys, accountant, etc.) to assist with coordination and implementation of accepted strategies. Clients should be aware that these other advisors will charge separately for their services and these fees will be in addition to EWM’s advisory fees. Clients are under no obligation to act on EWM’s recommendations, and if the client elects to act upon such a recommendation, the client is under no obligation to effect the recommended transaction through the EWM.
Method of Compensation and Fee Schedule
Fees for Investment Advisory Services
EWM’s annual fee for investment advisory services will be charged as a percentage of assets under management, according to the fee schedule below. The fees for services shall be calculated and paid in arrears on a quarterly basis. The quarterly payment shall be based upon the average daily fair market value of the account over the preceding quarter and is calculated as follows:
|Assets Under Management||EWM’s 300Annual Fee (%)|
|$0 – $500,000||1.25%|
The Independent Manager will debit the client’s account for both the Independent Manager’s fee, and EWM’s advisory fee, and will remit EWM’s fee to EWM. Please note, the above fee schedule does not include the Independent Manager’s fee. No increase in the annual fee shall be effective without agreement from the client by signing a new agreement or amendment to their current advisory agreement.
In addition to the investment advisory fees paid to EWM and Independent Managers, clients bear certain charges that may be imposed by other third party service providers, such as custodians, broker-dealers, trust companies, banks and other financial institutions (collectively “Financial Institutions”). These additional charges may include platform fees, securities brokerage commissions, transaction fees, custodial fees, charges imposed directly by a mutual fund or ETF in a client’s account, as 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.
In certain circumstances, EWM in its sole discretion, may charge lesser fees based upon certain criteria, such as the complexity of the client’s portfolio, the level of expertise required to service the account, the time involved in servicing the account, potential value added to the client for the services to be provided, pre-existing client relationships, anticipated future additional assets, dollar amount of assets to be managed, account retention and pro bono activities among other factors. Related client accounts may be aggregated for purposes of calculating fees. EWM may waive its financial planning and investment advisory fees at any time when it deems it appropriate and/or necessary.
Fees for Comprehensive Financial Planning Services
EWM may be engaged for our Financial Planning services on a fixed fee basis, generally ranging from $1,500 to $2,500 upfront plus $0 to $500 per month thereafter, depending on factors such as the complexity of the Client’s financial profile, the depth of services to be provided through the engagement, assets that comprise the Client’s overall portfolio, number of individual accounts comprising the portfolio, and the time involved in the engagement, among others. The upfront fee will be billed upon execution of the Financial Planning Agreement entered into by EWM and the Client. The monthly fee will be billed on the first day of every month. This service may be terminated with 30 days’ notice. Upon termination of any account, the fee will be prorated and any unearned fee will be refunded to the client. EWM will not bill an amount above $500 more than 6 months in advance.
All ongoing monthly financial planning fees shall be waived for Clients who have more than $250,000 of assets being managed by EWM.
In certain circumstances, EWM in its sole discretion, may negotiate to charge lesser fees based upon certain criteria, such as the complexity of the client’s portfolio, the level of expertise required to service the account, the time involved in servicing the account, potential value added to the client for the services to be provided, pre-existing client relationships, anticipated future additional assets, dollar amount of assets to be managed, account retention and pro bono activities among other factors. Related client accounts may be aggregated for purposes of calculating fees. EWM may waive its financial planning and investment advisory fees at any time when it deems it appropriate and/or necessary.
We may be engaged for our financial planning and investment consultation services under an hourly fee arrangement. The hourly rate is $250 – $500 per hour. The hourly fee rate will take into consideration such factors as the expertise necessary for the type of engagement, services to be rendered, as well as any special requirements the client may require. Prior to entering into an agreement with the firm, the client will receive an estimate of the overall cost based on the client’s requirements and the time involved. The fee may be negotiable in certain cases. The entire fee will be paid in advance, however, EWM will not bill an amount above $500.00 more than 6 months in advance. In the event of early termination by the client, any fees for the hours already worked will be due.
Fees for Employee Benefit Plan Services
The annual fee for employee benefit retirement plan services will be charged as a percentage of assets within the Plan according to the following fee schedule for investment management services.
The 401(k) standard fee schedule is as follows:
|Assets Under Management||BAM’s Annual Fee (%)||EWM’s Annual Fee (%)||Total Annual Fee (%)|
|On the first $1,000,000||0.30%||0.70%||1.00%|
|On the next $4,000,000||0.20%||0.55%||0.75%|
|On the next $5,000,000||0.15%||0.25%||0.40%|
|On all amounts thereafter||0.10%||0.15%||0.25%|
Educational Workshops and Public Appearances
While most of our workshop engagements are generally pro bono in nature, in the event there is a charge for a workshop, it is anticipated that the fee will be paid by the engagement sponsor, such as an employer or association. Fees for these events are typically a fixed fee for the cost of workshop materials or location rental fees, as well as time involved in preparation and delivery of the presentation. Fees are negotiated with the sponsor in advance of the presentation and are stated in the client agreement executed by EWM and the sponsoring entity.
Client Payment of Fees
Fees may be paid by check or draft or charge from a US‐based financial institution or via electronic transaction services from a qualified, unaffiliated processor. Cash, money orders or similar forms of payment are not accepted. Hourly and fixed fees are generally due upon receipt of firm invoice.
Termination of Services
Either party may terminate the financial planning and/or investment advisory agreement at any time, which will typically be in writing. Should the Client verbally notify EWM of the termination and, if in two business days following this notification the Client’s written notice has not been received, EWM will make a written notice of the termination in firm records and send the Client a termination notice as a substitute. EWM will not be responsible for future financial planning or investment advice upon receipt of a termination notice.
If EWM’s ADV Part 2A disclosure brochure was not delivered to the Client at least 48 hours prior to entering into the engagement agreement, Clients have a legal right to terminate the engagement without penalty within five (5) business days after entering into the contract. Should the Client terminate the engagement after this period, Client may be assessed fees for services rendered and/or the preparation of Client’s plan on a prorated basis per the firm’s stated hourly rate within the Client’s agreement for services incurred from either (a) as a new client, the date of the engagement to the date of the firm’s receipt of written notice of termination, or (b) for retainer engagements, the last billing period to the date of the firm’s receipt of written notice of termination. In either case, EWM will promptly return any prepaid, unearned amount upon receipt of a written termination notice via a check from the firm’s account at a US‐based financial institution.
External Compensation for the Sale of Securities to Clients
EWM is engaged for fee‐only services and will not charge or receive a commission or mark‐up on Client securities transactions, nor will a commission be paid to EWM for purchase of a securities holding that EWM may recommend to a Client. EWM does not receive “trailer” or SEC Rule 12b‐1 fees from an investment company (such as a mutual fund) that may be recommended to the Client. Fees charged by issuers are detailed in prospectuses or product descriptions and the Client is encouraged to read these documents before investing.
EWM does not charge any performance-based fees (fees based on a share of capital gains on or capital appreciation of the assets of a client). All fees are calculated as described above and are not charged on the basis of income or capital gains or capital appreciation of the funds or any portion of the funds of an advisory client.
EWM provides services to individuals, including high net worth individuals, trusts, qualified retirement plans, charitable organizations and businesses.
EWM has no minimum account size requirements.
Passive Investment Management
We primarily practice passive investment management. Passive investing involves building portfolios that are comprised of various distinct asset classes. The asset classes are weighted in a manner to achieve a desired relationship between correlation, risk and return. Funds that passively capture the returns of the desired asset classes are placed in the portfolio. The funds that are used to build passive portfolios are typically index mutual funds or exchange traded funds.
Passive investment management is characterized by low portfolio expenses (i.e. the funds inside the portfolio have low internal costs), minimal trading costs (due to infrequent trading activity), and relative tax efficiency (because the funds inside the portfolio are tax efficient and turnover inside the portfolio is minimal).
In contrast, active management involves a single manager or managers who employ some method, strategy or technique to construct a portfolio that is intended to generate returns that are greater than the broader market or a designated benchmark. Academic research indicates most active managers underperform the market.
Material Risks Involved:
All investing strategies we offer involve risk and may result in a loss of your original investment which you should be prepared to bear. Many of these risks apply equally to stocks, bonds, 10 commodities and any other investment or security. Material risks associated with our investment strategies are listed below.
Market risk involves the possibility that an investment’s current market value will fall because of a general market decline, reducing the value of the investment regardless of the operational success of the issuer’s operations or its financial condition.
The Adviser’s investment strategies and/or investment techniques may not work as intended.
Small and Medium Cap Company Risk:
Securities of companies with small and medium market capitalizations are often more volatile and less liquid than investments in larger companies. Small and medium cap companies may face a greater risk of business failure, which could increase the volatility of the client’s portfolio.
Interest Rate Risk:
Bond (fixed income) prices generally fall when interest rates rise, and the value may fall below par value or the principal investment. The opposite is also generally true: bond prices generally rise when interest rates fall. In general, fixed income securities with longer maturities are more sensitive to these price changes. Most other investments are also sensitive to the level and direction of interest rates.
Legal or Legislative Risk:
Legislative changes or Court rulings may impact the value of investments, or the securities’ claim on the issuer’s assets and finances.
Inflation may erode the buying-power of your investment portfolio, even if the dollar value of your investments remains the same.
Risks Associated with Securities:
Apart from the general risks outlined above which apply to all types of investments, specific securities may have other risks.
Commercial Paper is, in most cases, an unsecured promissory note that is issued with a maturity of 270 days or less. Being unsecured the risk to the investor is that the issuer may default.
Common stocks may go up and down in price quite dramatically, and in the event of an issuer’s bankruptcy or restructuring could lose all value. A slower-growth or recessionary economic environment could have an adverse effect on the price of all stocks.
Corporate Bonds are debt securities to borrow money. Generally, issuers pay investors periodic interest and repay the amount borrowed either periodically during the life of the security and/or at maturity. Alternatively, investors can purchase other debt securities, such as zero coupon bonds, which do not pay current interest, but rather are priced at a discount from their face values and their values accrete over time to face value at maturity. The market prices of debt securities fluctuate depending on such factors as interest rates, credit quality, and maturity. In general, market prices of debt 11 securities decline when interest rates rise and increase when interest rates fall. The longer the time to a bond’s maturity, the greater its interest rate risk.
Bank Obligations including bonds and certificates of deposit may be vulnerable to setbacks or panics in the banking industry. Banks and other financial institutions are greatly affected by interest rates and may be adversely affected by downturns in the U.S. and foreign economies or changes in banking regulations.
Municipal Bonds are debt obligations generally issued to obtain funds for various public purposes, including the construction of public facilities. Municipal bonds pay a lower rate of return than most other types of bonds. However, because of a municipal bond’s tax-favored status, investors should compare the relative after-tax return to the after-tax return of other bonds, depending on the investor’s tax bracket. Investing in municipal bonds carries the same general risks as investing in bonds in general. Those risks include interest rate risk, reinvestment risk, inflation risk, market risk, call or redemption risk, credit risk, and liquidity and valuation risk.
Exchange Traded Funds prices may vary significantly from the Net Asset Value due to market conditions. Certain Exchange Traded Funds may not track underlying benchmarks as expected.
Investment Companies Risk: When a client invests in open end mutual funds or ETFs, the client indirectly bears its proportionate share of any fees and expenses payable directly by those funds. Therefore, the client will incur higher expenses, many of which may be duplicative. In addition, the client’s overall portfolio may be affected by losses of an underlying fund and the level of risk arising from the investment practices of an underlying fund (such as the use of derivatives). ETFs are also subject to the following risks: (i) an ETF’s shares may trade at a market price that is above or below their net asset value; (ii) the ETF may employ an investment strategy that utilizes high leverage ratios; or (iii) trading of an ETF’s shares may be halted if the listing exchange’s officials deem such action appropriate, the shares are de-listed from the exchange, or the activation of market-wide “circuit breakers” (which are tied to large decreases in stock prices) halts stock trading generally. The Adviser has no control over the risks taken by the underlying funds in which client’s invest.
For clients choosing to utilize Betterment Securities for investment management, please read the additional agreement and disclosure documents separately provided to you. These documents include important information including potential investment products that may be utilized for sub-advisory services. Products may, but will not necessarily, include any of the following: exchange traded index funds, mutual funds, other similar equity index funds, stocks, bonds, real estate investment trusts, master limited partnerships, money market funds, U.S. treasury funds, cash sweep accounts, and other liquid cash and cash-like vehicles.
Registered investment advisers are required to disclose all material facts regarding any legal or disciplinary events that would be material to your evaluation of EWM or the integrity of EWM’s management. EWM has no information applicable to this Item.
All material conflicts of interest under CCR Section 260.238(k) are disclosed regarding the investment adviser, its representatives or any of its employees, which could be reasonably expected to impair the rendering of unbiased and objective advice.
Mr. Christopher Girbés -Pierce is the sole member of Enlightened Wealth Management, LLC. He is not registered, and does not have an application pending to register, as a broker-dealer or a registered representative of a broker-dealer. Further, Mr. Girbés -Pierce is not registered, and does not have an application pending to register, as a futures commission merchant, commodity pool operator, a commodity trading advisor, or an associated person of the foregoing entities.
Recommendations or Selections of Other Investment Advisers:
As referenced in Item 4 of this brochure, EWM may recommend clients to Independent Managers to manage their accounts. In the event that we recommend an Independent Manager, please note that we do not share in their advisory fee. Our fee is separate and in addition to their compensation (as noted in Item 5) and will be described to the Client prior to engagement. Clients are not obligated, contractually or otherwise, to use the services of any Independent Manager we recommend. Additionally, EWM will only recommend an Independent Manager who is properly licensed or registered as an investment adviser.
EWM has adopted a Code of Ethics expressing the firm’s commitment to ethical conduct. EWM’s Code of Ethics describes the firm’s fiduciary duties and responsibilities to clients and sets forth EWM’s practice of supervising the personal securities transactions of employees with access to client information. Individuals associated with EWM may buy or sell securities for their personal accounts identical or different than those recommended to clients. It is the expressed policy of EWM that no person employed by the firm shall prefer his or her own interest to that of an advisory client or make personal investment decisions based on investment decisions of advisory clients.
To supervise compliance with its Code of Ethics, EWM requires that anyone associated with this advisory practice with access to advisory recommendations provide annual securities holding reports and quarterly transaction reports to the firm’s principal. EWM also requires such access persons to receive approval from the Chief Compliance Officer prior to investing in any IPOs or private placements (limited offerings).
EWM’s Code of Ethics further includes the firm’s policy prohibiting the use of material non-public information and protecting the confidentiality of client information. EWM requires that all individuals must act in accordance with all applicable Federal and State regulations governing registered investment advisory practices. Any individual not in observance of the above may be subject to discipline.
EWM will provide a complete copy of its Code of Ethics to any client or prospective client upon request.
EWM does not recommend, buy or sell for client accounts securities in which it, or a related person, has a beneficial or a material financial interest. There are no conflicts for EWM with regard to this issue.
It is EWM’s policy that the firm will not affect any principal or agency cross securities transactions for client accounts. EWM will also not cross trades between client accounts. Principal transactions are generally defined as transactions where an adviser, acting as principal for its own account or the account of an affiliated broker-dealer, buys from or sells any security to any advisory client. A principal transaction may also be deemed to have occurred if a security is crossed between an affiliated hedge fund and another client account. An agency cross transaction is defined as a transaction where a person acts as an investment adviser in relation to a transaction in which the investment adviser, or any person controlled by or under common control with the investment adviser, acts as broker for both the advisory client and for another person on the other side of the transaction. Agency cross transactions may arise where an adviser is dually registered as a broker-dealer or has an affiliated broker-dealer.
EWM does not have any affiliation with Broker-Dealers. Specific custodian recommendations are made to Client based on their need for such services. We recommend custodians based on the reputation and services provided by the firm.
- Research and Other Soft-Dollar Benefits
We currently do not receive soft dollar benefits.
- Brokerage for Client Referrals
We receive no referrals from a broker-dealer or third party in exchange for using that broker-dealer or third party.
- Clients Directing Which Broker/Dealer/Custodian to Use
We do recommend specific custodians for clients to use, however, clients may custody their assets at a custodian of their choice. Clients may also direct us to use a specific broker-dealer to execute transactions. By allowing clients to choose a specific custodian, we may be unable to achieve most favorable execution of client transaction and this may cost clients money over using a lower-cost custodian.
The Custodian and Brokers We Use
EWM does not maintain custody of your assets that we manage, although we may be deemed to have custody of your assets if you give us authority to withdraw advisory fees from your account (see Item 15—Custody, below). Your assets must be maintained in an account at a “qualified custodian,” generally a broker-dealer or bank.
EWM participates in the TD Ameritrade Institutional, Division of TD Ameritrade, Inc., member FINRA/SIPC. institutional customer program and may recommend TD Ameritrade to clients for custody and brokerage services. There is no direct link between EWM’s participation in the program and the investment advice it gives to its clients, although EWM receives economic benefits through its participation in the program that are typically not available to TD Ameritrade retail investors. These benefits include the following products and services (provided without cost or at a discount): receipt of duplicate client statements and confirmations; research related products and tools; consulting services; access to a trading desk serving EWM participants; access to block trading (which provides the ability to aggregate securities transactions for execution and then allocate the appropriate shares to client accounts); the ability to have advisory fees deducted directly from client accounts; access to an electronic communications network for client order entry and account information; access to mutual funds with no transaction fees and to certain institutional money managers; and discounts on compliance, marketing, research, technology, and practice management products or services provided to EWM by third party vendors. TD Ameritrade may also have paid for business consulting and professional services received by EWM’s related persons. Some of the products and services made available by TD Ameritrade through the program may benefit EWM but may not benefit its client accounts. These products or services may assist EWM in managing and administering client accounts, including accounts not maintained at TD Ameritrade. Other services made available by TD Ameritrade are intended to help EWM manage and further develop its business enterprise. The benefits received by EWM or its personnel through participation in the program do not depend on the amount of brokerage transactions directed to TD Ameritrade. As part of its fiduciary duties to clients, EWM endeavors at all times to put the interests of its clients first. Clients should be aware, however, that the receipt of economic benefits by EWM or its related persons in and of itself creates a potential conflict of interest and may indirectly influence EWM’s choice of TD Ameritrade for custody and brokerage services.
We may also recommend that our clients use MTG, LLC dba Betterment Securities (“Betterment Securities”), a registered broker-dealer, member SIPC, as the qualified custodian. We are independently owned and operated and are not affiliated with Betterment Securities. Betterment Securities will hold your assets in a brokerage account and buy and sell securities when we and/or you instruct them to. While we may recommend that you use Betterment Securities as custodian/broker, you will decide whether to do so and will open your account with Betterment Securities by entering into an account agreement directly with them. We do not open the account for you, although we may assist you in doing so. If you do not wish to place your assets with Betterment Securities, then we cannot manage your account on Betterment for Advisors (defined below).
Your Brokerage and Custody Costs
For our clients’ accounts that Betterment Securities maintains, Betterment Securities does not charge you separately for custody/brokerage services, but is compensated as part of the Betterment for Advisors (defined below) platform fee, which is charged for a suite of platform services, including custody, brokerage, and sub-advisory services provided by Betterment and access to the Betterment for Advisors platform. The platform fee is an asset-based fee charged as a percentage of assets in your Betterment account. Clients utilizing the Betterment for Advisors platform may pay a higher aggregate fee than if the investment management, brokerage and other platform services are purchased separately. Nonetheless, for those Clients participating in the Betterment for Advisors platform, we have determined that having Betterment Securities execute trades is consistent with our duty to seek “best execution” of your trades. Best execution means the most favorable terms for a transaction based on all relevant factors, including those listed above (see “How we select brokers/custodians”).
Services Available to Us via Betterment for Advisors
Betterment Securities serves as broker-dealer to Betterment for Advisors, an investment and advice platform serving independent investment advisory firms like us (“Betterment for Advisors”). Betterment for Advisors also makes available various support services which may not be available to Betterment’s retail customers. Some of those services help us manage or administer our clients’ accounts, while others help us manage and grow our business. Betterment for Advisors’ support services are generally available on an unsolicited basis (we don’t have to request them) and at no charge to us. Following is a more detailed description of Betterment for Advisors’ support services:
- SERVICES THAT BENEFIT YOU. Betterment for Advisors includes access to a globally diversified, low-cost portfolio of ETFs, execution of securities transactions, and custody of client assets through Betterment Securities. In addition, a series of model portfolios created by third-party providers are also available on the platform. Betterment Securities’ services described in this paragraph generally benefit you and your account.
- SERVICES THAT MAY NOT DIRECTLY BENEFIT YOU. Betterment for Advisors 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, such as software and technology that may:
- Assist with back-office functions, recordkeeping, and client reporting of our clients’ accounts.
- Provide access to client account data (such as duplicate trade confirmations and account statements).
- Provide pricing and other market data.
- Assist with back-office functions, recordkeeping, and client reporting.
- SERVICES THAT GENERALLY BENEFIT ONLY US. By using Betterment for Advisors, we will be offered other services intended to help us manage and further develop our business enterprise. These services include:
- Educational conferences and events.
- Consulting on technology, compliance, legal, and business needs.
- Publications and conferences on practice management and business succession.
Our Interest in Betterment Securities’ Services
The availability of these services from Betterment for Advisors benefits us because we do not have to produce or purchase them. In addition, we do not have to pay for Betterment Securities’ services. We may have an incentive to recommend that you maintain your account with Betterment Securities, based on our interest in receiving Betterment for Advisors and Betterment Securities’ services that benefit our business rather than based on your interest in receiving the best value in custody services and the most favorable execution of your transactions. This is a potential conflict of interest. We believe, however, that our selection of Betterment Securities as custodian and broker is in the best interests of our clients. Our selection is primarily supported by the scope, quality, and price of Betterment Securities’ services (see “How we select brokers/custodians”) and not Betterment for Advisors and Betterment Securities’ services that benefit only us or that may not directly benefit you.
Betterment for Advisors Trading Policy
When using the Betterment for Advisors platform, we and you are subject to the trading policies and procedures established by Betterment. These policies and procedures limit our ability to control, among other things, the timing of the execution of certain trades (including in response to withdrawals, deposits, or asset allocation changes) within your account. You should not expect that trading on Betterment is instant, and, accordingly, you should be aware that Betterment does not permit you or us to control the specific time during a day that securities are bought or sold in your account (i.e., to “time the market”). Betterment describes its trading policies in Betterment LLC’s Form ADV Part 2A. As detailed in that document, Betterment generally trades on the same business day as it receives instructions from you or us. However, transactions will be subject to processing delays in certain circumstances. In particular, orders initiated on non-business days and after markets close generally will not transact until the next business day. Betterment also maintains a general approach of not placing securities orders during approximately the first thirty minutes after the opening of any market session. Betterment also generally stops placing orders arising from allocation changes in existing portfolios This language is merely provided as an example, and should not be construed as (and does not constitute) legal advice. The Advisor’s own qualified legal counsel and compliance personnel should review and customize any disclosure language to determine if it is appropriate. approximately thirty minutes before the close of any market session. Betterment continues placing orders associated with deposit and withdrawal requests until market close. Betterment maintains a general approach of not placing orders around the time of scheduled Federal Reserve interest rate announcements. Furthermore, Betterment may delay or manage trading in response to market instability. For further information, please consult Betterment LLC’s Form ADV Part 2A.
Aggregating (Block) Trading for Multiple Client Accounts
Generally, we combine multiple orders for shares of the same securities purchased for advisory accounts we manage (this practice is commonly referred to as “block trading”). We will then distribute a portion of the shares to participating accounts in a fair and equitable manner. The distribution of the shares purchased is typically proportionate to the size of the account, but it is not based on account performance or the amount or structure of management fees. Subject to our discretion, regarding particular circumstances and market conditions, when we combine orders, each participating account pays an average price per share for all transactions and pays a proportionate share of all transaction costs. Accounts owned by our firm or persons associated with our firm may participate in block trading with your accounts; however, they will not be given preferential treatment.
Employee Benefit Plan Services
EWM does not arrange for the execution of securities transactions for plans as a part of this service. Transactions are executed directly through employee plan participation.
Investment Management Services
Account assets are supervised continuously and generally formally reviewed quarterly by Christopher Girbés-Pierce, sole Member of EWM. The review process contains each of the following elements:
- assessing client goals and objectives;
- evaluating the employed strategy(ies);
- monitoring the portfolio(s); and
- addressing the need to rebalance.
Additional account reviews may be triggered by any of the following events:
- a specific client request;
- a change in client goals and objectives;
- an imbalance in a portfolio asset allocation; and
- market/economic conditions.
Financial Planning Services
Financial Planning accounts will be reviewed as contracted for at the inception of the advisory relationship.
Employee Benefit Retirement Plan Services
Plan assets are reviewed on a quarterly basis or as otherwise agreed between the parties, and according to the standards and situations described above for investment management accounts. Plan sponsors are provided with quarterly information and annual performance reviews from EWM. In addition, plan participant education information may also be provided to the Plan Sponsor or Administrator for distribution to the participants of the plan.
We do not directly or indirectly compensate any person who is not advisory personnel for client referrals.
We receive a non-economic benefit from Betterment for Advisors and Betterment Securities in the form of the support products and services it makes available to us and other independent investment advisors whose clients maintain their accounts at Betterment Securities. These products and services, how they benefit us, and the related conflicts of interest are described above (see Item 12—Brokerage Practices). The availability to us of Betterment for Advisors’ and Betterment Securities’ products and services is not based on us giving particular investment advice, such as buying particular securities for our clients.
As disclosed under Item 12 above, EWM participates in TD Ameritrade’s institutional customer program and EWM may recommend TD Ameritrade to Clients for custody and brokerage services. There is no direct link between EWM’s participation in the program and the investment advice it gives to its Clients, although EWM receives economic benefits through its participation in the program that are typically not available to TD Ameritrade retail investors. These benefits include the following products and services (provided without cost or at a discount): receipt of duplicate Client statements and confirmations; research related products and tools; consulting services; access to a trading desk serving EWM participants; access to block trading (which provides the ability to aggregate securities transactions for execution and then allocate the appropriate shares to Client accounts); the ability to have advisory fees deducted directly from Client accounts; access to an electronic communications network for Client order entry and account information; access to mutual funds with no transaction fees and to certain institutional money managers; and compliance, marketing, research, technology, and practice management products or services provided to EWM by third party vendors without cost or at a discount. TD Ameritrade may also have paid for business consulting and professional services received by EWM’s related persons. Some of the products and services made available by TD Ameritrade through the program may benefit EWM but may not benefit its Client accounts. These products or services may assist EWM in managing and administering Client accounts, including accounts not maintained at TD Ameritrade. Other services made available by TD Ameritrade are intended to help EWM manage and further develop its business enterprise. The benefits received by EWM or its personnel through participation in the program do not depend on the amount of brokerage transactions directed to TD Ameritrade. As part of its fiduciary duties to clients, EWM endeavors at all times to put the interests of its clients first. Clients should be aware, however, that the receipt of economic benefits by EWM or its related persons in and of itself creates a potential conflict of interest and may indirectly influence the EWM’s choice of TD Ameritrade for custody and brokerage services.
EWM does not accept custody of client funds. Clients should receive at least quarterly statements from the broker dealer, bank or other qualified custodian that holds and maintains client’s investment assets. We urge you to carefully review such statements. For Betterment Securities, your statements will be available for you to review on the activity section of your Betterment for Advisors account portal. You will also receive account statements directly from Betterment Securities at least quarterly at www.bettermentsecurities.com. You should carefully review those statements promptly. Our statements or reports may vary from custodial statements based on accounting procedures, reporting dates, or valuation methodologies of certain securities.
EWM requests that it be provided with written authority to determine which securities and the amounts of securities that are bought or sold. Any limitations on this discretionary authority shall be included in this written authority statement. Clients may change/amend these limitations as required. Such amendments shall be submitted in writing.
When selecting securities and determining amounts, EWM observes the investment policies, limitations and restrictions of the clients for which it advises. Investment guidelines and restrictions must be provided to EWM in writing.
Item 17 – Voting Client Securities
Proxy Voting: As a matter of firm policy and practice, EWM does not have any authority to and does not vote proxies on behalf of advisory clients. Clients retain the responsibility for receiving and voting proxies for any and all securities maintained in client portfolios. Clients will receive applicable proxies directly from the issuer of securities held in clients’ investment portfolios. However, EWM may provide advice to clients regarding the clients’ voting of proxies.
Class Actions, Bankruptcies and Other Legal Proceedings: Clients should note that EWM will neither advise nor act on behalf of the client in legal proceedings involving companies whose securities are held or previously were held in the client’s account(s), including, but not limited to, the filing of “Proofs of Claim” in class action settlements. If desired, clients may direct EWM to transmit copies of class action notices to the client or a third party. Upon such direction, EWM will make commercially reasonable efforts to forward such notices in a timely manner.
Registered investment advisers are required in this Item to provide you with certain financial information or disclosures about EWM’s financial condition. EWM has no financial commitment that impairs its ability to meet contractual and fiduciary commitments to clients, and has not been the subject of a bankruptcy proceeding.
EWM does not require or solicit payment of more than $500 in fees per client, six months or more in advance.
Principal Executive Officers and Management Persons
EWM has one owner, Christopher Girbés-Pierce. The advisory activities for Christopher Girbés-Pierce include providing financial planning and investment advice to clients. The education and business background information for Christopher Girbés-Pierce is supplied on the Form ADV Part 2B Brochure Supplement.
Other Business Activity
The principal of EWM does not have any other business activities.
There is no other applicable information to be reported in this item with regard to performance-based fees as EWM does not charge fees based on a share of capital gains on or the capital appreciation of the assets of a client.
Disciplinary Activity of Management Personnel
Christopher Girbés-Pierce as the principal and management person of EWM has not been involved in events relating to liability in a civil, self-regulatory organization, or administrative proceeding.
Issuer of Securities
Neither EWM nor its management persons has any relationship or arrangement with any issuer of securities.