Item 4 – Advisory Business
Wealth Management Group, Inc. (“WMG”) is an investment advisor registered with the state of Ohio, Division of Securities pursuant to the Investment Advisors Act of 1940. WMG has provided advisory services as a registered investment advisor since 1991. Note that registration as an investment advisor with the Ohio Division of securities does not imply a certain level of skill or training. WMG is 100% owned by Michael G. Griesmeyer and is a privately held company.
WMG ‘s advisory services are made available to clients through individuals associated with WMG as investment advisor representatives (“IARs”). For more information about the IAR providing advisory services, client should refer to the Brochure Supplement for the IAR. The Brochure Supplement is a separate document that is provided by the IAR along with this Brochure before or at the time client engages the IAR. If client did not receive Brochure Supplement for the IAR, the client should contact the IAR or WMG at [email protected].
Types of Advisory Services
WMG offers various types of advisory services and programs, including asset management services, wrap fee programs, mutual fund asset allocation services, financial planning services, retirement plan consulting services, 401K plan management services, and investment research. This Brochure provides information about WMG and the following types of advisory services that WMG provides: financial planning and hourly consulting services, mutual fund asset allocation, retirement plan consulting services, 401K plan management services, and investment research.
WMG provides information in a separate disclosure brochure for its Wrap Fee program.
Financial Planning Services
As part of WMG’s financial planning services, WMG, through its IARs, provides personal financial planning tailored to the individual needs of the client. These services may include, as selected by the client on the financial planning agreement, information and re-commendations regarding tax planning, investment planning, retirement planning, estate needs, business needs, education planning, life and disability insurance needs, long term care needs and cash flow/budget planning. The services take into account information collected from the client such as financial status, investment objectives and tax status, among other data. The IAR delivers to the client a written financial plan. With the exception of the multi-year program described below, the engagement terminates upon delivery of the written plan.
In some cases, client may elect to receive financial planning services for a period of up to three years. The services provided through the multi-year program include the following.
- Year One. Clients receive a written financial plan from the IAR reflecting the categories of planning services selected on the financial planning agreement. Clients also may participate in periodic financial planning-related consultations with the IAR during the first year in order to monitor the status of the financial plan versus recommendations included in the plan.
- Years Two and/or Three. Clients receive financial planning-related consulting services from the IAR, either in person or by telephone, regarding the categories of planning selected for the respective period. Clients may or may not receive a written financial plan or written summary of the specific planning areas during years two and/or three of the multi-year program.
WMG and IAR will not have any discretionary investment authority when offering financial planning. If the client elects to engage the IAR through the multi-year program, the planning services may include recommendations only as to general types of investment products or securities that may be appropriate for client to consider, and will not include recommendations regarding specific investments or securities.
Investment Management Services
WMG, through its IARs, may also provide ongoing management of a client’s investment assets such as brokerage assets or self directed retirement assets. These services will be offered through an agreement between WMG, the IAR, and the client. In connection with such services, IAR will obtain the necessary financial data from the client, assist the client in setting an appropriate investment objective for the account(s), and provide investment advice with respect to the assets in the account(s) based on the investment objective selected. Clients may impose reasonable restrictions on investing in certain securities or a group of securities. IAR will typically have discretionary authority to trade the client’s account(s) directly at the custodian.
WMG makes available advisory services and programs of third party investment advisors. Under these third party asset management programs (TAMP), WMG, through its IARs, provides ongoing investment advice to clients that is tiered to the individual needs of the client. As part of these TAMP services, the IAR typically obtains the necessary financial data from the client, assist the client in determining the suitability of the program, assist the client in setting an appropriate investment objective, and assist the client in opening an account with the TAMP. In addition, the IAR may assist the client in selecting a third party portfolio management firm to provide discretionary asset management services. It is the third party investment advisor ( and not the IAR) that has client authority to purchase and sell securities on a discretionary or non-discretionary basis pursuant to investment objective chosen by the client. This authorization will be set out in the TAMP client agreement. The Brochure for the particular TAMP will explain whether clients may impose restrictions on investing in certain securities or types of securities.
WMG currently offers advisory services with SEI, Lockwood, Manning and Napier, AssetMark, ManagersChoice, Loring, and Ward Advisor Services. Clients should refer to the Brochure, client agreement, and other account paperwork for more detailed information about the services available.
Hourly Consulting Services
As part of WMG’s financial planning services, WMG, through its IARs, provides consulting services on an hourly basis. These services may include, as selected by the client on the financial planning agreement, advice regarding tax planning, investment planning, retirement planning, estate planning, business planning, education planning, life and disability insurance planning, long term care planning and cash flow/budget planning. The services take into account information collected from the client such as financial status, investment objectives and tax status, among other data. The IAR may or may not deliver to the client a written financial analysis or report as part of the services. The IAR tailors the hourly consulting services to the individual needs of the client based on the goals and objectives chosen by the client. The engagement terminates upon final consultation with the client.
WMG and IAR do not have any discretionary investment authority when offering hourly consulting services. The IAR makes recommendations as to general types of investment products or securities that may be appropriate for client to consider, and may also provide recommendations regarding specific investments or securities.
Mutual Fund Allocation Program
WMG, through its IARs, offers clients a ongoing mutual fund allocation program. Under this program, clients authorize WMG and IARs to select or develop an asset allocation strategy appropriate for the client by discussing the various levels of risk and helping the client complete a client questionnaire which details the client’s annual income, net worth, investment experience and long term goals and objectives. The frequency of rebalancing is also selected by the client in the mutual fund allocation agreement.
Retirement Plan and Consulting Services
WMG, through its IARs, offers retirement plan consulting services to clients. These services may include, but are not limited to, plan design, plan type, investment options or choices, and plan review.
401K Plan Management Services
Additionally, WMG through its IARs, offers individual 401K account management services to clients. These services, as selected by the client in the 401K management agreement, outline the level of account management provided including, but not limited to, whether investment advice is discretionary or nondiscretionary, whether client authorizes IAR direct access to their account, or any other authorizations or limitations.
WMG’s makes available investment research materials which includes recommendations on asset allocation, mutual funds, ETFs, and individual stocks. When WMG provides investment research, WMG
makes no analysis of and does not consider clients’ individual circumstances or objectives, and does not tailor any model asset allocation to any specific client’s needs, circumstances or objectives.
Item 5 – Fees and Compensation
Financial Planning and Hourly Consulting Services
For these services, the fee is negotiate between the IAR and client and the amount of the fee is as stated in the client agreement. WMG and the IAR share in the fee. For financial planning, clients pay either on an hourly basis or a per plan basis (flat rate fee). The hourly charge is a maximum of $400 per hour and the flat rate fee ranges from $100 to $15,000. On a case-by-case basis, WMG also may charge a higher fee depending upon the complexity of the plan. The client may elect to pay the fee upon execution of the client agreement, upon delivery of the written financial plan, or a combination of up front and in arrears. Fees for services provided in years two and three of the multi-year program are due at the time services are rendered.
For hourly consulting services, clients pay and hourly charge, up to a maximum of $400 per hour as negotiated between the IAR and client. The client may elect to pay the fee upon execution of the client agreement or at the time of consultation with the IAR.
Clients should understand that the financial planning or hourly consulting fee client negotiates with IAR may be higher than the fees charged by other investment advisors for similar services. This is the case, in particular, if the fee is at or near the maximum fees set out above. The IAR is responsible for determining the fee to charge each client based upon factors such as total amount of assets involved in the relationship, the complexity of the planning services, and the number and range of supplementary advisory and client-related services to be provided. Clients should consider the level and complexity of the planning services to be provided when negotiating the fee with IAR.
Clients pay the financial planning fee by check made payable to Wealth Management Group, Inc.
For financial planning and hourly consulting services, the client may terminate the client agreement without penalty (full refund) within five days of execution. After the five day period, the client may terminate the client agreement at any time, and may request a refund of unearned fees, if any, based on the time and effort completed prior to termination of the agreement. The client agreement terminates upon delivery of the plan, or up to three years after execution of the client agreement for the multi-year program, for financial planning, and upon final consultation with the client for hourly consulting. No refunds will be made after completion of the plan or delivery of the consulting services, except when the number of actual hours is less than the estimated number of hours quoted in the client agreement.
Investment Management Services
For investment management services including third party management services clients pay an advisory fee, which is negotiated between the IAR and client and is set out in the client agreement. The advisory fee is typically based on the value of the assets under management as valued by the custodian of the assets for the account and will vary by program. The advisory fee typically will be deducted from the account by the custodian and paid quarterly in arrears or in advance. The client agreement will explain how clients can obtain a refund of any pre-paid fee if the agreement is terminated before the end or a billing cycle.
For third party management services the fee is typically negotiated among the TAMP, IAR and the client. This fee is often paid directly to the TAMP, who in turn pays a portion to WMG. The TAMP agreement will explain how clients can obtain a refund of any pre-paid fee if the agreement is terminated before the end of a billing period.
Mutual Fund Allocation Program
For this service, the fee is negotiated between the IAR and client on an annual flat rate basis, ranging from $300 to $2000 per year, and is stated in the client agreement. WMG and IAR share in the fee. The client may elect to pay the fee upon execution of the agreement or on a quarterly basis via check made payable to Wealth Management Group, Inc. The client may terminate the agreement without penalty (full refund) within five days of execution. After the five day period, the client may terminate the client agreement at any time, and may request a refund of any unearned fees, if any, based on the time and effort completed prior to termination.
Retirement Plan and Consulting Services
For these services, the fee is negotiated between the IAR and client on an hourly basis, at a maximum of $400 per hour, with the amount being stated in the client agreement. WMG and the IAR share in the fee. The client may elect to pay the fee upon execution of the agreement or at the time of the consultation with a check payable to Wealth Management Group, Inc. The client may terminate the agreement without penalty (full refund) within five days of execution. After the five day period, the client may terminate the client agreement at any time, and may request a refund of any unearned fees, if any, based on the time and effort completed prior to termination.
401K Plan Management Services
For these services, the fee is negotiated between the IAR and client on an annual flat rate basis, ranging from $300 to $2000 per year, and is stated in the client agreement. WMG and IAR share in the fee. The client may elect to pay the fee upon execution of the agreement or on a quarterly basis via check made payable to Wealth Management Group, Inc. The client may terminate the agreement without penalty (full refund) within five days of execution. After the five day period, the client may terminate the client agreement at any time, and may request a refund of any unearned fees, if any, based on the time and effort completed prior to termination.
Investment Research Services
WMG generally does not charge a separate fee for its Investment Research. This service is typically included with the other services it provides.
WMG’s fees are exclusive of brokerage commissions, transaction fees, and other related costs and expenses which shall be incurred by the client. Clients may incur certain charges imposed by custodians, brokers, third party investment and other third parties such as fees charged by managers, custodial fees, 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. Mutual funds and exchanged traded funds also charge internal management fees, which are disclosed in a fund’s prospectus. Such charges, fess, and commissions are exclusive of and in addition to WMG’s fee, and WMG shall not receive any portion of these commissions, fees, and costs.
Item 12 further describes the factors that WMG considers in selecting or recommending broker-dealers for client transactions and determining the reasonableness of their compensation (e.g., commissions).
Item 6 – Performance-Based Fees and Side-By-Side Management
WMG and its IARs do not charge or accept any performance-based fees (fees based on a share of capital gains on or capital appreciation of the assets of a client).
Item 7 – Types of Clients
WMG’s advisory services are available to individuals, including high net worth individuals, corporate pension and profit-sharing plans, Taft-Hartley plans, charitable institutions, foundations, endowments, municipalities, registered mutual funds, private investment funds, trust programs, sovereign funds, foreign funds such as UCITs and SICAVs, corporations, and other U.S. and international institutions.
WMG does not require a minimum asset amount for any of its advisory services.
Item 8 – Methods of Analysis, Investment Strategies and Risk of Loss
The IAR has access to various research reports and model allocation portfolios to which he or she may refer in determining investment advice IAR provides to clients. The IAR chooses his or her own research methods, investment style and management philosophy. It is important to note that “Investing in securities involves risk of loss that clients should be prepared to bear.”
WMG makes recommendations regarding asset allocation, mutual funds and ETFs. IARs may or may not follow these recommendations in providing investment advice. WMG also constructs asset allocation model portfolios. In constructing these models, WMG uses the following investment strategies: Income, Growth with Income, Growth, and Aggressive Growth.
- Income The Income investment strategy seeks to promote capital preservation while providing stable income, any growth of capital is not a consideration. The strategy limits investment to fixed income offerings deemed suitable for such strategy. This strategy is for investors seeking stable income only.
- Growth with Income The Growth with Income strategy seeks to promote some
growth of capital but with an emphasis on stable income. The strategy emphasizes
Fixed income offerings and some equities or REIT’s deemed suitable for such strategy. This strategy is for investors seeking some growth of capital but need income as well.
- Growth The Growth strategy seeks to promote growth of capital with no emphasis on income. The strategy emphasizes equity offerings and some REIT’s deemed suitable for such strategy. This strategy is for investors seeking growth of capital and need no income.
- Aggressive Growth The Aggressive Growth strategy seeks to promote aggressive growth of capital, with little regard for risk. The strategy emphasizes growth oriented equities and distressed assets. This strategy is for investors seeking aggressive growth of capital and high risk.
Types of Investments and Risks
Depending on the type of service being provided, WMG and IARs can recommend different types of securities, including mutual funds, unit investment trusts (UITs), closed end funds, EFTs, collective investment trusts, variable annuity subaccounts, equities, fixed income securities, options, hedge funds, managed futures, and structured products. Investing in securities involves the risk or loss that clients should be prepared to bear. Described below are some of risks associated with investing and with some types of investments that an IAR may recommend depending on the service provided.
- Market Risk. This is the risk that the value of securities owned by an investor may go up or down, sometimes rapidly or unpredictably, due to factors affecting securities markets generally or particular industries.
- Interest Rate Risk. This is the risk that fixed income securities will decline in value because of an increase in interest rates; a bond or fixed income fund with a longer duration will be more sensitive to changes in interest rates than a bond or bond fund with a shorter duration.
- Credit Risk. This is the risk that an investor could lose money if the issuer or guarantor of a fixed income security is unable or unwilling to meet its financial obligations.
Alternative Strategy Mutual Funds. Certain mutual funds invest primarily in alternative investments and/or strategies. Investing in alternative investments and/or strategies may not be suitable for all investors and involves special risks, such as risks associated with commodities, real estate, leverage, selling securities short, the use of derivatives, potential adverse market forces, regulatory changes and potential illiquidity. There are special risks associated with mutual funds that invest principally in real estate securities, such as sensitivity to changes in real estate values and interest rates and price volatility because of the fund’s concentration in the real estate industry. These types of funds tend to have higher expense ratios than more traditional mutual funds. They also tend to be newer and have less of a track record or performance history.
- Closed-End Funds. Client should be aware that closed-end funds may not be readily marketable. In an effort to provide investor liquidity, the funds may offer to repurchase a certain percentage of shares at net asset value on a periodic basis. Thus, clients may be unable to liquidate all or a portion of their shares in these types of funds.
- Exchange-Traded Funds (ETFs). ETFs are typically investment companies that are legally classified as open end mutual funds or UITs. However, they differ from traditional mutual funds, in particular, in that ETF shares are listed on a securities exchange. Shares can be bought and sold throughout the trading day like shares of other publicly-traded companies. ETF shares may trade at a discount or premium to their net asset value. This difference between the bid price and the ask price is often referred to as the “spread.” The spread varies over time based on the ETF’s trading volume and market liquidity, and is generally lower if the ETF has a lot of trading volume and market liquidity and higher if the ETF has little trading volume and market Liquidity.
- Exchange-Traded Notes (ETNs). An ETN is a senior unsecured debt obligation designed to track the total return of an underlying market index or other benchmark. ETNs may be linked to a variety of assets, for example, commodity futures, foreign currencies and equities. ETNs are similar to ETFs in that they are listed on an exchange and can typically be bought or sold throughout the trading day. However, an ETN is not a mutual fund and does not have a net asset value: the ETN trades at the prevailing market price. Some of the more common risks of an ETN are as follows. The repayment of the principal, interest (if any), and the payment of any returns at maturity or upon redemption are dependent upon the ETN issuer’s ability to pay. In addition, the trading price of the ETN in the secondary market may be adversely impacted if the issuer’s credit rating is downgraded. The index or asset class for performance replication in an ETN may or may not be concentrated in a specific sector, asset class or country and may therefore carry specific risks. ETNs may be closed and liquidated at the discretion of the issuing company.
- Leverage and Inverse ETFs, ETNs and Mutual Funds. Leveraged ETFs, ETNs, and mutual funds, sometimes labeled “ultra” or “2x” for example, are designed to provide a multiple of the underlying index’s return, typically on a daily basis. Inverse products are designed to provide the opposite of the return of the underlying index, typically on a daily basis. These products are different from and can be riskier that traditional ETFs, ETNs, and mutual funds. Although these products are designed t provide returns that generally correspond to the underlying index, they may not be able to exactly replicated the performance of the index because of fund expenses and other factors. This is referred to as tracking error. Continual re-setting of returns within the product may add to the underlying costs and increase the tracking error. As a result, this may prevent these products from achieving their investment objective. In addition, compounding of the returns can produce a divergence from the underlying index over time, in particular for leveraged products. In highly volatile markets with large positive and negative swings, return distortions are magnified over time. Because of these distortions, these products should be actively monitored, as frequently as daily, and may not be appropriate as an intermediate or long-term holding. To accomplish their objectives, these products use a range of strategies, including swaps, futures contracts and other derivatives. These products may not be diversified and can be based on commodities or currencies. These products may have higher expense ratios and be less tax-efficient than more traditional ETFs, ETNs, and mutual funds.
- Options. Certain types of option trading are permitted in order to generate income or hedge a security held in the program account: namely, the selling (writing) of covered call options or the purchasing of put options on a security held in the program account. Client should be aware that the use of options involves additional risks. The risks of covered call writing include the potential for the market to rise sharply. In such case, the security may be called away and the program account will no longer hold the security. The risk of buying long puts is limited to the loss of the premium paid for the purchase of the put if the option is not exercised or otherwise sold by the program account.
- Structure Products. Structured products are securities derived from another asset. Such as a security or a basket of securities, an index, a commodity, a debt issuance, or a foreign currency. Structured products frequently limit the upside participation in the referenced asset. Structured products are senior unsecured debt of the issuing bank and subject to the credit risk associated with that issuer. This credit risk exists whether or not the investment held in the account offers principal protection. The creditworthiness of the issuer does not affect or enhance the likely performance of the investment other that the ability of the issuer to meet its obligations. Any payments due at maturity are dependent on the issuer’s ability to pay. In addition, the trading price of the security in the secondary market, if there is one, may be adversely impacted if the issuer’s credit rating is downgraded. Some structured products offer full protection of the principal invested, others offer only partial or no protection. Investors may be sacrificing a higher yield to obtain the principal guarantee. In addition, the principal guarantee relates nominal principal and does not offer inflation protection. An investor in a structured product never has a claim on the underlying investment, whether a security, zero coupon bond, or option. There may be little or no secondary market for the securities and information regarding independent market pricing for the securities may be limited. This is true even if the product has a ticker symbol or has been approved for listing on an exchange. Tax treatment of structured products may be different from other investments held in the account (e.g., income may be taxed as ordinary income even though payment is not received until maturity). Structured CD’s that are insured by the FDIC are subject to applicable FDIC limits.
- High-Yield Debt. High-yield debt is issued by companies or municipalities that do not qualify for “investment grade” ratings by one or more rating agencies. The below investment grade designation is based on the rating agency’s opinion of an issuer that has a greater risk to repay both principal and interest and a greater risk of default than those issuers rated investment grade. High yield debt carries greater risk that investment grade debt. There is the risk that the potential deterioration of an issuer’s financial health and subsequent downgrade in its rating will result in a decline in market values or default. Because of the potential inability of an issuer to make interest and principal interest payments, an investor may receive back less than originally invested. There is aloes the risk that the bond’s market value will decline as interest rates rise and that an investor will not be able to liquidate a bond before maturity.
- Hedge Funds and Managed Futures. Hedge and managed futures funds may be purchased by clients meeting certain qualification standards. Investing in these funds involves additional risks including, but not limited to, the risk of investment loss due to the use of leveraging and other speculative investment practices and the lack of liquidity and performance volatility. In addition, these funds are not required to provide periodic pricing or valuation information to investors and may involve complex tax structures and delays in distributing important tax information. Client should be aware that these funds are not liquid as there is no secondary trading market available. At the absolute discretion of the issuer of the fund, there may be certain repurchase offers made from time to time. However, there is no guarantee that the client will be able to redeem the fund during the repurchase offer.
- Business Development Companies (BDCs). BDCs are typically closed-end investment companies. Some BDCs primarily invest in the corporate debt and equity of private companies and may offer attractive yields generated through high credit risk exposures amplified through leverage. As with other high-yield investments, such as floating rate/leveraged loan funds, private REITs and limited partnerships, investors are exposed to significant market, credit and liquidity risks. In addition, fueled by the availability of low-cost financing, BDCs run the risk of over-leveraging their relatively illiquid portfolios. Due to the illiquid nature of non-traded BDCs, investors’ exit opportunities may be limited only to periodic share repurchases by the BDC at high discounts.
- Variable Annuities. If client purchases a variable annuity that is part of the program, client will receive a prospectus and should rely solely on the discloser contained in the prospectus with respect to the terms and conditions of the variable annuity. Client should also be aware that certain rider purchased with a variable annuity may limit the investment options and the ability to manage the subaccounts.
- Company Stock. If company stock is available as an investment option to client in a retirement plan, and if client chooses to invest in company stock, client should understand the risks associated with holding company stock in a retirement plan. These risks may include, but are not necessarily limited to, lack of liquidity, over-dependency on client’s employer, and less flexibility to change the allocation of plan assets. Client should pay careful consideration to the benefits of a diversified portfolio. Although diversification is not a guarantee against loss, it can be an effective strategy to help manage investment risk.
Item 9 – Disciplinary Information
Registered investment advisers are required to disclose all material facts regarding any legal or disciplinary events that would be material to your evaluation of WMG or the integrity of WMG’s management. WMG has no information applicable to this Item.
Item 10 – Other Financial Industry Activities and Affiliations
WMG is affiliated with LPL Financial, a broker-dealer registered with FINRA and the SEC. LPL acts as custodian for WMG investment management clients and all of WMG IARs are licensed representatives of LPL. WMG does not receive any compensation, other than the fees it charges its clients, because of this affiliation.
IARs, as registered representatives of LPL Financial, may offer securities and receive normal and customary commissions as a result of securities transactions. This presents a conflict of interest to the extent that IARs recommend that a client invest in a security which results in a commission being paid to him.
IARs may also be licensed insurance agents representing various insurance companies. In such capacity, they may offer insurance products and receive normal and customary commissions as a result of such a purchase. This represents a conflict of interest to the extent that they recommend the purchase of an insurance product which results in a commission being paid to them as an insurance agent.
IARs may also be IARs of LPL’s Advisory Firm. In such capacity, the IAR may offer advisory accounts through LPL Financial, the details of which are fully described in LPL Financials Form ADV or ADV Brochure. This represents a conflict of interest to the extent that they recommend a client open an account in which compensation is received as an IAR with LPL Financial.
The primary business of LPL Financial is to provide brokerage and custodial services while the primary business of WMG is to provide advisory services.
Item 11 – Code of Ethics
WMG has adopted a Code of Ethics for all supervised persons of the firm describing its high standard of business conduct, and fiduciary duty to its clients. The Code of Ethics includes provisions relating to the confidentiality of client information, a prohibition on insider trading, a prohibition of rumor mongering, restrictions on the acceptance of significant gifts and the reporting of certain gifts and business entertainment items, and personal securities trading procedures, among other things. All supervised persons at WMG must acknowledge the terms of the Code of Ethics annually, or as amended.
WMG anticipates that, in appropriate circumstances, consistent with clients’ investment objectives, it will cause accounts over which WMG has management authority to effect, and will recommend to investment advisory clients or prospective clients, the purchase or sale of securities in which WMG, its affiliates and/or clients, directly or indirectly, have a position of interest. WMG’s employees and persons associated with WMG are required to follow WMG’s Code of Ethics. Subject to satisfying this policy and applicable laws, officers, directors and employees of WMG and its affiliates may trade for their own accounts in securities which are recommended to and/or purchased for WMG’s clients. The Code of Ethics is designed to assure that the personal securities transactions, activities and interests of the employees of WMG will not interfere with (i) making decisions in the best interest of advisory clients and (ii) implementing such decisions while, at the same time, allowing employees to invest for their own accounts. Under the Code certain classes of securities have been designated as exempt transactions, based upon a determination that these would materially not interfere with the best interest of WMG’s clients. In addition, the Code requires pre-clearance of many transactions, and restricts trading in close proximity to client trading activity. Nonetheless, because the Code of Ethics in some circumstances would permit employees to invest in the same securities as clients, there is a possibility that employees might benefit from market activity by a client in a security held by an employee. Employee trading is continually monitored under the Code of Ethics, and to reasonably prevent conflicts of interest between WMG and its clients.
Certain affiliated accounts may trade in the same securities with client accounts on an aggregated basis when consistent with WMG’s obligation of best execution. In such circumstances, the affiliated and client accounts will share commission costs equally and receive securities at a total average price. WMG will retain records of the trade order (specifying each participating account) and its allocation, which will be completed prior to the entry of the aggregated order. Completed orders will be allocated as specified in the initial trade order. Partially filled orders will be allocated on a pro rata basis. Any exceptions will be explained on the Order.
WMG’s clients or prospective clients may request a copy of the firm’s Code of Ethics by contacting Michael G Griesmeyer.
It is WMG’s policy that the firm will not affect any principal or agency cross securities transactions for client accounts. WMG 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.
Item 12 – Brokerage Practices
WMG does not receive research or other products or services other than execution from a broker-dealer or third party in connection with client securities transactions (“soft dollar benefits”). WMG does not consider, in selecting or recommending broker-dealers, whether WMG or a related person of WMG receives client referrals from a broker-dealer or third party.
For customized advisory services, IARs may aggregate transactions in equity and fixed income securities for a client with other clients to improve the quality of execution. When transactions are so aggregated, the actual prices applicable to the aggregated transactions will be averaged, and the client account will be deemed to have purchased or sold its proportionate share of the securities involved at the average price obtained. IARs may determine not to aggregate transactions, for example, based on the size of the trades, the number of client accounts, the timing of the trades, the liquidity of the securities, and the discretionary or nondiscretionary nature of the trades. If IARs do not aggregate orders, some clients purchasing securities around the same time may receive a less favorable price than other clients. This means that this practice of not aggregating may cost clients more money.
Clients are under no obligation to implement advisory service recommendations through any particular broker-dealer including LPL Financial. Clients who choose to use a particular broker-dealer, including a client who directs the use of a broker-dealer who also serves as custodian, should consider whether, under this restriction, the commission, execution, clearance and settlement capabilities including order aggregation, are comparable to those otherwise obtainable.
Item 13 – Review of Accounts
For financial planning, with the exception of the multi-year program, the client agreement for financial planning services terminates upon delivery of the plan. However, clients are encourage to update their financial plans annually. Such annual review may be conducted at the election of the client and a new agreement for services between WMG, the client and the IAR will be required. The review may consist of a new personal financial plan if the client’s circumstances and/or goals have changed (updated financial plan). Alternatively, the review may be a comparison of the client’s current assets and goals as stated in the personal financial plan (progress report). For the multi-year program, please refer to Item 4 – Advisory Business for more information.
For all other advisory services IARs review on an ongoing basis client accounts and meet with clients to review such items as account statements, quarterly performance reports, and other information or data related to the client’s account and investment objective.
WMG’s chief compliance officer oversees the process of reviewing accounts.
Item 14 – Client Referrals and Other Compensation
WMG and its IARs do not receive any additional non-cash compensation for its advisory services.
WMG may compensate other persons for client referrals. WMG enters into an agreement with such referral agents and pays them a portion of the advisory fee. The referral agent discloses to the client at the time of the solicitation the arrangement and the compensation to be received by the referral agent.
Item 15 – Custody
Clients should receive at least quarterly statements from the broker dealer, bank or other qualified custodian that holds and maintains client’s investment assets. WMG urges you to carefully review such statements and compare such official custodial records to the account statements that we may provide to you. Our statements may vary from custodial statements based on accounting procedures, reporting dates, or valuation methodologies of certain securities.
Item 16 – Investment Discretion
WMG usually receives discretionary authority from the client at the outset of an advisory relationship to select the identity and amount of securities to be bought or sold. In all cases, however, such discretion is to be exercised in a manner consistent with the stated investment objectives for the particular client account and any other terms of the client agreement.
When selecting securities and determining amounts, WMG observes the investment policies, limitations and restrictions of the clients for which it advises. For registered investment companies, WMG’s authority to trade securities may also be limited by certain federal securities and tax laws that require diversification of investments and favor the holding of investments once made.
Investment guidelines and restrictions must be provided to WMG in writing.
Item 17 – Voting Client Securities
As a matter of firm policy and practice, WMG 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. WMG may provide advice to clients regarding the clients’ voting of proxies.
Item 18 – Financial Information
Registered investment advisers are required in this Item to provide you with certain financial information or disclosures about WMG’s financial condition. WMG 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.
Item 19 – Requirements for State-Registered Advisers
Michael G Griesmeyer, President Wealth Management Group, Inc.
Michael Griesmeyer was born in 1954. He has a B.S. in Business from Wright State University. He is a Certified Financial Planner ® and holds a series 6, 7, 63, and 24 securities license as well as Life, Health, and Variable Life licenses.
He has been in the securities, insurance, and financial planning business since 1986. Founded Wealth Management Group, Inc. in August 1991 and is currently its President, Chief Compliance Officer, and Chief Investment Officer. Has served on the boards of the Dayton Chapter of the Financial Planning Association, the Tipp City Rotary club, and Abbey Credit Union. He is currently a registered representative with LPL Financial. He spends about 75% of his time on his activities with LPL and as a independent insurance agent.
Accompanying this Brochure are Brochure Supplements for IARs of WMG. For more information about the IAR servicing the client, client should refer to the brochure supplement for the IAR, which should have been provided by the IAR along with this brochure at the time client opened the account. If client did not receive a brochure supplement for the IAR, the client should contact the IAR or Wealth Management Group at [email protected].