Firm Brochure and Form ADV Part 2A
Revised March 2015
This brochure provides information about the qualifications and business practices of Wagner Wealth Management. If you have any questions about the contents of this brochure, please contact us at 303-394-9600 or firstname.lastname@example.org. 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.
Additional information about Wagner Wealth Management (CRD # 109937) also is available on the SEC’s website at www.adviserinfo.sec.gov.
Material Changes (Item 2)
Material Changes since the Last Update
There are no material changes to report since the previous release of our brochure dated March 2014.
Advisory Business (Item 4)
Wagner Wealth Management ("WWM") provides financial planning and investment management advice. Financial planning may include advice on tax, estate, college, retirement and insurance planning. Investment management services include asset allocation recommendations and investment selection advice regarding exchange listed securities, foreign issuers, certificates of deposit, index funds, options, insurance contracts and mutual fund shares. We also advise qualified clients regarding private placement offerings. Advice and recommendations are tailored to the individual needs of our clients. Clients may impose restrictions on investing in certain securities.
The company has been in business since January 1996 and is privately owned. Gary Wagner is the principal owner of the company. As of December 31, 2014, WWM managed $447,922,000. All assets managed are on a discretionary basis.
Fees and Compensation (Item 5)
WWM collects fees for advisory services by charging clients a percentage of assets under management as follows:
The First $1,000,000
Assets from $1,000,001 - $2,000,000
Assets from $2,000,001 - $5,000,000
Assets Above $5,000,001
Financial Planning is included in the asset management fee. For clients who don’t pay an asset management fee, we bill for our time on an hourly basis or via a quarterly retainer. Hourly charges are $175-$250 per hour for professional time. Fees are negotiable.
All asset management fees are payable in advance and deducted directly from client’s accounts unless otherwise specified. WWM reserves the right to negotiate with clients, friends and family. Clients may also be grandfathered to previous fee schedules. In addition to paying WWM’s fee, client's assets will be subject to fees and costs charged by mutual funds, separate account managers, private placement sponsors and custodians.
If a client relationship is terminated, fees will be refunded immediately to the client on a pro rata basis. Fees are calculated on a calendar quarterly basis and will be calculated based on the portfolio valuation the last market day of the month prior to the beginning of each calendar quarter. Quarters will begin on the first day of January, April, July, and October. The management fee for additional deposits to an existing portfolio will be based on the number of calendar days the assets are under management during the applicable quarter.
The Investment Advisory Agreement may be terminated by either us or you by submitting written notice. If we receive notice of termination within five (5) business days of the signing of the Investment Advisory Agreement, services will be terminated without penalty (i.e., no fees are due). After the initial five (5) business days, fees will be due, based on the number of days of services provided prior to receipt of such notice. Termination of services will not affect the liabilities or obligations of the parties arising out of transactions initiated prior to termination. All written notices of termination under the Investment Advisory Agreement shall be delivered by hand, first class mail, e-mail, facsimile transmission, or by certified mail to the addresses set forth in the Investment Advisory Agreement.
Clients may purchase investment products through other brokers or agents that are not affiliated with WWM.
We do not charge performance-based fees, which are fees based on a share of capital gains on or capital appreciation of client assets.
Types of Clients (Item 7)
WWM provides services to individuals, investment companies, pension and profit sharing plans, trusts, estates, charitable organizations, corporations, and other business entities. Our minimum account size is $1,000,000.
Method of Analysis, Investment Strategies and Risk of Loss (Item 8)
Our analysis of investments is fundamental. We rely on a combination of research materials from third parties and direct research with investment sponsors to conduct our analysis. Our investment strategy is generally to purchase investments for the long term based on an asset allocation appropriate for the client. Asset classes considered include exchange listed securities, foreign issuers, certificates of deposit, index funds, options, insurance contracts and mutual fund shares. We also advise qualified clients regarding private placement offerings. Investments in any security are not suitable for all investors and may involve a high degree of risk, including loss of investment.
Investment advisors are required to disclose legal or disciplinary events material to a client’s evaluation. Neither WWM nor any supervised person has been involved in any activities resulting in any legal or disciplinary events.
Other Financial Industry Activities and Affiliations (Item 10)
Julie Goodrum, Director of Operations with WWM, serves on the Schwab Advisor Services Technology, Operations and Service Advisory Board (the “Board”). As described under Item 12 of this Form ADV, WWM may recommend that clients establish brokerage accounts with Charles Schwab & Co., Inc. (“Schwab”) to maintain custody of the clients’ assets and effect trades for their accounts. The Board consists of approximately 20 representatives of independent investment advisory firms who have been invited by Schwab management to participate in meetings and discussions of Schwab Advisor Services’ services for independent investment advisory firms and their clients. Board members serve for up to a three-year term. Ms. Goodrum’s term ends January 2016. Board members enter nondisclosure agreements with Schwab under which they agree not to disclose confidential information shared with them. This information generally does not include material nonpublic information about the Charles Schwab Corporation, whose common stock is listed for trading on the New York Stock Exchange and the NASDAQ stock market (symbol SCHW). The Board meets in person approximately twice per year and has periodic conference calls scheduled as needed. Board members are not compensated by Schwab for their service, but Schwab may pay for or reimburse Board members’ travel, lodging, meals and other incidental expenses incurred in attending Board meetings.
WWM has no other business activities other than those described above. WWM has a brokerage agreement with Schwab that allows WWM to take a limited power of attorney to exercise discretion on client accounts at Schwab. Pursuant to the agreement, fees owed to Schwab by clients are paid directly to Schwab. WWM fees are usually paid by deducting the fees directly from Schwab accounts. WWM is not a general partner in any partnership WWM recommends.
Code of Ethics, Participation or Interest in Client Transactions and Personal Trading (Item 11)
WWM has adopted a Code of Ethics that sets forth standards of conduct and required compliance with federal securities laws. A copy of our Code of Ethics is available to any client or prospective client upon request.
WWM and its member and employees may buy or sell securities and mutual funds that WWM recommends to clients. WWM and its members and employees may also invest in private investments that WWM recommends to clients. Purchases of securities for WWM and its members and employees are limited to 1% of the total shares outstanding in the security.
Brokerage Practices (Item 12)
WWM does not maintain custody of your assets that we manage or advise to although we may be deemed to have custody of your assets if you give us authority to withdraw 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. We recommend that our clients use Schwab, a FINRA-registered broker-dealer, member SIPC, as the qualified custodian. WWM is independently owned and operated and not affiliated with Schwab. Schwab will hold your assets in a brokerage account and buy and sell securities when we/you instruct them to. While we recommend that you use Schwab as custodian/broker, you will decide whether to do so and open your account with Schwab by entering into an account agreement directly with them. Even though your account is maintained at Schwab, we can still use other brokers to execute trades for your account, as described in the next paragraph.
We seek to recommend a custodian/broker who will hold your assets and execute transactions on terms that are overall most advantageous when compared to other available providers and their services. We consider a wide range of factors, including, among others, these:
· combination of transaction execution services along with asset custody services (generally without a separate fee for custody)
· capability to execute, clear and settle trades (buy and sell securities for your account)
· capabilities to facilitate transfers and payments to and from accounts (wire transfers, check requests, bill payment, etc.)
· breadth of investment products made available (stocks, bonds, mutual funds, exchange traded funds (ETFs), etc.)
· availability of investment research and tools that assist us in making investment decisions
· quality of services
· competitiveness of the price of those services (commission rates, margin interest rates, other fees, etc.) and willingness to negotiate them
· reputation, financial strength and stability of the provider
· their prior service to us and our other clients
WWM receives economic benefit from Schwab in the form of discounts for services Schwab provides to WWM. Schwab provides services to WWM with respect to WWM's portfolio management software, educational publications, educational conferences and events, and technology, compliance, legal and practice management consulting. WWM's receipt of these discounts is not a factor in determining whether Schwab is selected as the custodian/broker for clients.
Review of Accounts (Item 13)
Written performance reports will be provided to clients quarterly. Each account is reviewed by an advisor on a quarterly basis. Other factors that trigger a review of an account are a client meeting, client request, deposit of cash, or a performance review of a position held in an account.
Client Referrals and Other Compensation (Item 14)
WWM receives client referrals from Schwab through WWM’s participation in the Schwab Advisor Network (“the Service”). The Service is designed to help investors find an independent investment advisor. Schwab is a broker-dealer independent of and unaffiliated with WWM. Schwab does not supervise WWM and has no responsibility for WWM’s management of clients’ portfolios or WWM’s other advice or services. WWM pays Schwab fees to receive client referrals through the Service. WWM’s participation in the Service may raise potential conflicts of interest described below.
WWM pays Schwab a Participation Fee on all referred clients’ accounts that are maintained in custody at Schwab and a Non-Schwab Custody Fee on all accounts that are maintained at, or transferred to, another custodian. The Participation Fee paid by WWM is a percentage of the value of the assets in the client’s account. WWM pays Schwab the Participation Fee for so long as the referred client’s account remains in custody at Schwab. The Participation Fee is billed to WWM quarterly and may be increased, decreased or waived by Schwab from time to time. The Participation Fee is paid by WWM and not by the client. WWM has agreed not to charge clients referred through the Service fees or costs greater than the fees or costs WWM charges clients with similar portfolios who were not referred through the Service.
WWM generally pays Schwab a Non-Schwab Custody Fee if custody of a referred client’s account is not maintained by, or assets in the account are transferred from Schwab. This Fee does not apply if the client was solely responsible for the decision not to maintain custody at Schwab. The Non-Schwab Custody Fee is a one-time payment equal to a percentage of the assets placed with a custodian other than Schwab. The Non-Schwab Custody Fee is higher than the Participation Fees WWM generally would pay in a single year. Thus, WWM will have an incentive to recommend that client accounts be held in custody at Schwab.
The Participation and Non-Schwab Custody Fees will be based on assets in accounts of WWM’s clients who were referred by Schwab and those referred clients’ family members living in the same household. Thus, WWM will have incentives to encourage household members of clients referred through the Service to maintain custody of their accounts and execute transactions at Schwab and to instruct Schwab to debit WWM’s fees directly from the accounts.
For accounts of WWM’s clients maintained in custody at Schwab, Schwab will not charge the client separately for custody but will receive compensation from WWM’s clients in the form of commissions or other transaction-related compensation on securities trades executed through Schwab. Schwab also will receive a fee (generally lower than the applicable commission on trades it executes) for clearance and settlement of trades executed through broker-dealers other than Schwab. Schwab’s fees for trades executed at other broker-dealers are in addition to the other broker-dealer’s fees. Thus, WWM may have an incentive to cause trades to be executed through Schwab rather than another broker-dealer. WWM nevertheless, acknowledges its duty to seek best execution of trades for client accounts. Trades for client accounts held in custody at Schwab may be executed through a different broker-dealer than trades for WWM’s other clients. Thus, trades for accounts custodied at Schwab may be executed at different times and different prices than trades for other accounts that are executed at other broker-dealers. WWM receives no compensation from any entity other than Schwab for a client referral.
Custody (Item 15)
We do not have custody of client assets except to the extent that clients may authorize us to debit fees directly from their accounts. In that case, the client must provide written authorization permitting the custodian to debit our fees from the client’s account. The custodian will send quarterly statements to clients. Each time a fee is directly deducted from a client’s account, we will concurrently (i) send an invoice to the custodian specifying the amount of the fee and (ii) send an invoice to the client specifying and itemizing the fee, including the formula used to calculate the fee, the amount of assets under management upon which the fee is based, and the time period covered by the fee. Clients are urged to compare the custodian’s statements and our invoices. If any inconsistencies are found, clients should contact us immediately.
Investment Discretion (Item 16)
WWM has authority to determine, without client consent, investments to be bought or sold and the commission rates to be paid to the broker. WWM obtains consent from all clients regarding asset allocation prior to purchasing investments for clients. Certain investments require additional written client consent, including private limited partnerships.
Voting Client Securities (Item 17)
Clients may select when opening a Schwab account, whether the client or WWM will vote proxies for the client's securities. If the client chooses to have WWM vote the proxies, WWM will do so in the client's best interest, without regard to WWM's interest. Clients may obtain information on how their proxies were voted by making an oral or written request to WWM. A copy of WWM’s proxy voting policies and procedures is available upon request.
Financial Information (Item 18)
WWM does not have custody of client funds and does not require prepayment of more than $500 in fees six or more months in advance. Per applicable rules, WWM does not attach a balance sheet to this form.