Item1–CoverPage
FormADVPart2A
InvestmentAdviserBrochure
AssetStrategies,Inc.
80W.AvonRoad
Avon,CT06001
860‐673‐5500
www.assetstrats.com
March2016
ThisBrochureprovidesinformationaboutthequalificationsandbusinesspracticesofAsset
Strategies,Inc.(ASI).IfyouhaveanyquestionsaboutthecontentsofthisBrochure,please
contactDiannE.McChesney,ExecutiveVicePresidentandChiefComplianceOfficer,at860‐
673‐5500 or at [email protected]. The information in this Brochure has not been
approvedorverifiedbytheUnitedStatesSecuritiesandExchangeCommissionorbyany
statesecuritiesauthority.
Asset Strategies, Inc. is a registered investment adviser. Registration of an Investment
Adviserdoesnotimplyanylevelofskillortraining.
AdditionalinformationaboutAssetStrategies,Inc.isalsoavailableontheSEC’swebsiteat
www.adviserinfo.sec.gov. You may search this site using a unique identifying number,
knownasaCRDnumber,AssetStrategies,Inc.’sCRDNumberis119661.
i Item2–MaterialChanges
InthisItemofAssetStrategies,Inc.’s(ASIortheFirm)FormADV2,theFirmisrequiredto
discuss any material changes that have been made to Form ADV since the last Annual
Amendment,datedMarch5,2015.
SincethelastADVAnnualAmendmentfiling,theFirmhasthefollowingmaterialchangesto
report:
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ConnieBrezik,PresidentandChiefComplianceOfficerisnolongerwiththeFirm.
Diann E. McChesney has been appointed as Executive Vice President and Chief
ComplianceOfficer,and
AlanM.RothsteinwasappointedasPresidentoftheFirm.
WewillprovideyouwithanewBrochureasnecessarybasedonchangesornewinformation,
atanytime,withoutcharge.
OurBrochureisavailableonourwebsitewww.assetstrats.comfreeofcharge.OurBrochure
mayalsoberequestedbycontactingDiannE.McChesney,ExecutiveVicePresidentandChief
ComplianceOfficer,at860‐673‐[email protected].
ii Item3‐TableofContents
Item1–CoverPage .................................................................................................................................... i Item2–MaterialChanges ....................................................................................................................... ii Item3‐TableofContents ........................................................................................................................ iii Item4–AdvisoryBusiness ..................................................................................................................... 1 Item5–FeesandCompensation ............................................................................................................ 3 Item6–Performance‐BasedFeesandSide‐By‐SideManagement ................................................. 6 Item7–TypesofClients .......................................................................................................................... 6 Item8–MethodsofAnalysis,InvestmentStrategiesandRiskofLoss .......................................... 6 Item9–DisciplinaryInformation ......................................................................................................... 8 Item10–OtherFinancialIndustryActivitiesandAffiliations ......................................................... 8 Item11–CodeofEthics ........................................................................................................................... 9 Item12–BrokeragePractices .............................................................................................................. 11 Item13–ReviewofAccounts ............................................................................................................... 12 Item14–ClientReferralsandOtherCompensation ....................................................................... 13 Item15–Custody .................................................................................................................................... 13 Item16–InvestmentDiscretion .......................................................................................................... 13 Item17–VotingClientSecurities ........................................................................................................ 14 Item18–FinancialInformation ........................................................................................................... 14 iii Item4–AdvisoryBusiness
AssetStrategies,Inc.(ASIortheFirm)isafee‐onlyinvestmentmanagementandfinancial
planningfirmfoundedin2002.ASIisownedbyAlanM.Rothstein,CPA,PFS(President)and
DiannE.McChesney,ExecutiveVicePresidentandChiefComplianceOfficer.
AssetManagementServices
ASIprovidesassetmanagementservicescustomizedtotheindividualneedsofeachclient.
Throughpersonaldiscussions,ASIassiststheclientindevelopinggoalsandobjectives.ASI
thendevelopsaclient’spersonalinvestmentpolicy,createsaportfoliobasedonthatpolicy
andgivescontinuousinvestmentadvicetotheclient.Assetmanagementisguidedbythe
statedobjectivesoftheclient(e.g.,growth,income,capitalpreservation.)
Attheinceptionofanaccountanyindividualsecuritiesheldbytheclientwillbeconsidered
intheassetallocationfortheclient;however,ASIdoesnotchargeafeeonthoseassetsand
willonlyactonanon‐discretionarybasistobuyorsellthosesecurities.
ASImanagesaportfolioconsistingofoneorallofthefollowing:
 Cash and cash equivalents, including money market funds and short term bank
certificatesofdeposit
 Fixedincome(bondmutualfunds,exchangetradedfunds,individualbonds,and/or
certificatesofdeposits)whichmayincludeU.S.governmentandagency,municipal,
international,inflationprotectedandcorporatebonds
 U.S. large and mid/small growth and value equities (stock mutual funds, exchange
tradedfundsand/orindividualstocks)
 Internationallargeandmid/smallgrowthandvalueequitiesandemergingmarkets
equities(stockmutualfunds,exchangetradedfundsand/orindividualstocks)
 RealAssets(REITs,REITand/orRealAssetmutualfundsorexchangetradedfunds)
 Alternatestrategymutualfunds(forexample,long‐shortfunds).
ASIallocatestheclient’sassetsamongselectedinvestmentsinaccordancewiththeclient’s
InvestmentPolicyStatement(IPS).Portfolioweightingamongassetclassesandinvestments
isdeterminedbyeachclient’sindividualneedsandcircumstances.
ASIdevelopsacustomizedIPSforeachclient.Wedesignandmanageeachclient’sportfolio
based on the IPS. The IPS includes a target asset allocation, and it is reviewed with and
signedbytheclient.
1 ASIalsoconsidersthetaximpactofinvestmentdecisionsindesigningandmanagingclient
portfolios.Investmenttaxstrategiescaninclude:
 Taxdeferralandoraccelerationofincome
 Placing investments into taxable v. tax‐deferred accounts based on the income tax
treatmentofthesecuritiesandtheincomethatthesesecuritiespay
 Harvestingcapitalgainsandlosses
 Planningformutualfunddistributionsintaxableaccounts.
ASIrebalancesportfoliosbacktotargetassetallocationswhenappropriate.Cashflowand
incometaxconsiderationsarefactorsindeterminingrebalancingactivity.
FinancialPlanning
Personal financial planning includes informal consultations, segmented plans and
comprehensiveplans.Theplanningprocessinvolvesinterviewswiththeclient,areviewof
pertinentdocumentsandaplanbasedontheclient’sgoalsandobjectives.
Acomprehensiveplanconsistsofthefollowingwhereapplicable:
 Clarifyingandprioritizinggoals
 Cashmanagement
 Retirementplanning
 Educationplanning
 Riskmanagement
 Incometaxplanning
 Estatetaxplanning
 Investmentplanning
 Periodicupdates
ASIgathersinformationfromnewclientsthroughpersonalinterviewsand,insomecases,
theclientcompletesaquestionnaire.Informationgatheredincludesaclient’sfuturegoals,
currentfinancialsituation,andattitudestowardsrisk.Allinformationsuppliedbytheclient,
includinganysupplementaldocuments,isreviewedandanalyzed.
Financialplanningwillofteninvolveateamapproachincludingprofessionaladviserssuch
asinsuranceagents,attorneysandCPAs.Theclienthascompletediscretiontoimplement
someoralloftheplan’srecommendations.
2 Sub‐advisers
Incertaincircumstances,ASImayrecommendotherinvestmentadvisers(sub‐adviser)to
manageaportionofaclient’sportfolio,primarilyfixedincomesecurities.Thesub‐advisor
willchargetheclientfortheportionoftheportfoliotheyaremanaging;thisfeemaybein
additiontothemanagementfeechargedbyASI.ASIdoesnotreceiveanycompensationfor
sub‐advisedportfolios.
TaxPreparationServices
Incertaincircumstances,ASIwillprepareindividualandcorporatetaxreturnsonbehalfof
clients.Inaddition,ASImayprovideclientswithconsultingservicesontax‐relatedmatters.
TailoredRelationships
ASItailorsinvestmentadvisoryservicestotheindividualneedsoftheclient.ASIclientsare
allowed to impose restrictions on the investments in their account. Clients have the
opportunitytoplacereasonablerestrictionsonthetypesofinvestmentswhicharemadeon
theclient’sbehalf.Clientsretainindividualownershipofallsecurities.
WrapFeePrograms
ASIdoesnotparticipateinaWrapFeeProgram.
ClientAssets
ASI manages $116,739,721 as of December 31, 2015. All assets are managed on a
discretionarybasis.
Item5–FeesandCompensation
ASI services are provided on a fee only basis. ASI does not sell financial products or accept
commissionsoranyothercompensationfromoutsidesources.
FeesforAssetManagementServices:
Fees for asset management services will be charged based on a percentage of assets
undermanagement,accordingtothefollowingschedule:
3 Assetsundermanagement
First$500,000
Annualfee(%)
Notmorethan:
1.10%
Next$500,000
1.00%
Next$1million‐$5million
0.90%to0.70%
Assetsover$5million
0.70%to0.40%
Feesarenegotiableundercertaincircumstances.
ASI will provide a specific fee schedule to each client. Fees for individual accounts for
members of the same family (defined as spouses/partners and dependent children, and
trustsforthebenefitofsuchfamilymembers),arebasedonthetotalaccountbalanceofall
familyaccounts.
Feesarecomputedandbilledquarterly,inadvance,andarebaseduponthefairmarketvalue
(includingcash),oftheclient’saccountonthelastdayoftheprecedingcalendarquarter.
Investmentadvisoryagreementsareeffectiveforoneyearbeginningthedatethecontractis
signed and shall be automatically renewed for successive one‐year terms. A client
agreement may be canceled at any time, by either party, for any reason upon receipt of
written notice. Upon termination of any account, any prepaid, unearned fees will be
promptlyrefunded.
FeesforFinancialPlanningServices:
ASIestimatesandquotesfinancialplanningfeespriortoclientsengagingourservices.In
determiningfeesASIconsiders:
 Timeandeffortinvolved
 Complexityoftheissuesinvolved
 Involvementofotherprofessionaladvisors
 Extracostssuchasorganizingclientdataandtravel
 Timeconstraintsimposedbytheclient’ssituation.
Fiftypercent(50%)ofthequotedfinancialplanningfeewillbedueuponsigningacontract
with our firm. Fees typically start at $1,000, but may be more depending upon the
complexityoftheplan.Thebalanceofthefeewillnormallybebilledasworkiscompleted.
ASIwillneverholdclientfundsgreaterthan$1,200formorethansixmonthsinadvance.
4 Provided that all information needed to prepare the financial plan has been promptly
providedbytheclient,afinancialplanwillusuallybepresentedtotheclientwithin90days
ofthecontractdate.
Incertainlimitedcircumstances,aclientmaypayforpersonalfinancialplanningserviceson
anhourlybasisorbyretainer.Hourlyclientsarecurrentlybilledat$250perhourasservices
arerendered.
TaxPreparationServices
Taxpreparationservicefeesmaybechargedonafixedfeebasisandmayrangefrom$600
to$12,000dependingonthecomplexityofthereturn.Feesarebilled$1,200atthebeginning
oftheengagementwiththebalancedueuponcompletionoftheproject.Feesmayalsobe
chargedonanhourlybasisof$300perhourandaredueuponthecompletionoftheproject.
Sub‐advisers
AsdescribedinItem4,ASIdoesnotreceivecompensationforsub‐advisedportfolios.IfASI
engagesasub‐adviserontheclient’sbehalf,anyadvisoryfeesfortheservicesofthesub‐
adviserwillbeseparatefromASI’sfees.Forexample,ASImayengageamanagertoruna
client’smunicipalbondinvestments,andthatmanager’sfeeswillbeinadditiontoASI’sfees.
GeneralInformationonFeesandCompensation
In certain circumstances, fees, account minimums and payment terms are negotiable
depending on client’s unique situation – such as the size of the aggregate related party
portfolio size, family holdings, low cost basis securities, or certain passively advised
investmentsandpre‐existingrelationshipswithclients.Certainclientsmaypaymoreorless
thanothersdependingontheamountofassets,typeofportfolio,orthetimeinvolved,the
degree of responsibility assumed, complexity of the engagement, special skills needed to
solveproblems,theapplicationofexperienceandknowledgeoftheclient’ssituation.
ASI’sfeesareexclusiveofbrokeragecommissions,transactionfees,andotherrelatedcosts
and expenses which shall be incurred by the client. For example, some mutual fund
transactions may produce a transaction charge which will be deducted from the client’s
account. Similarly, trades through broker‐dealers may create other transaction charges
whichwillalsobedeductedfromtheclient’saccount.Somecustodiansmaychargecustodial
feeswhichwillbedeductedfromtheclient’saccount.
Mutualfundsandexchangetradedfundsalsochargeinternalmanagementfees,whichare
disclosedinafund’sprospectus.Suchcharges,feesandcommissionsareexclusiveofandin
5 additiontoASI’sfee,andASIshallnotreceiveanyportionofthesecommissions,fees,and
charges.
Item6–Performance‐BasedFeesandSide‐By‐SideManagement
ASIdoesnotchargeanyperformance‐basedfees(feesbasedonashareofcapitalgainsor
capitalappreciationoftheassetsofaclient).
Item7–TypesofClients
ASI provides portfolio management services to individuals, high net worth individuals,
trusts, corporate pension and profit‐sharing plans, and corporations and other
organizations.
Thereisnominimumaccountsizerequiredforthisservice.Aspreviouslynoted,feesare
negotiableundercertaincircumstances.
Item8–MethodsofAnalysis,InvestmentStrategiesandRiskofLoss
MethodsofAnalysisandInvestmentStrategies
ASI’sadviceisbasedonlong‐terminvestmentstrategieswhichincorporatetheprinciplesof
modernportfoliotheory.Ourapproachisanchoredinthebeliefthatinvestors’returnsare
determined primarily by asset allocation decisions. Academic research suggests that the
decisiononhowaportfolioisallocatedamongdifferentassetclasseswillhavefargreater
impactonportfolioperformancethansecurityselectionandmarkettiming.
ASImanagesportfoliosconsistingofindividualequities,bonds,noloadand/orload‐waived
mutualfunds,exchangetradedfundsandotherinvestmentproducts.ASI’soverallsecurities
analysisisbasedonavarietyofsources:
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Commerciallyavailablesoftwareprograms
Securityratingservices
Meetings with managers and representatives of mutual funds and separately
managedaccountsinwhichweinvest
General market and financial information provided by financial newspapers,
periodicalsandissuer‐providedinformation
Outsideconsultantstoprovideexpertiseasneeded.
Mutualfundsareselectedbasedonthefollowingcriteria,amongotherfactors:
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Fund’sinvestmentobjectives
Fund’smanagementstyleandphilosophy
Performancehistory
Trackrecordofthefund’smanager
Feesincurredbyinvestors.
RiskofLoss
Investinginsecuritiesinvolvesriskoflossthatclientsshouldbepreparedtobear.
ASIisafiduciaryforitsclients.Asafiduciary,ASIhasadutyofutmostgoodfaithtoactsolely
inthebestinterestsofeachofourclients.Weuseourbestjudgmentandgoodfaitheffortin
providing financial advisory services. We cannot, however, guarantee that an account will
achieveaparticularlevelofperformanceorthatitwillbeprofitableovertime.
Financial research has demonstrated that risk is reduced by diversifying among types of
investments held in a portfolio and by holding equity assets over longer periods of time.
Thereisagreaterriskthataclient’sgoalsandobjectiveswillnotbemetiftheclient’smoney
isinvestedforashorterperiodoftime.
Thevaluesofinvestmentassetsfluctuateandthepossibilityoflossdoesexist.Generally,
seekinghigherreturnsinvolvesacceptinggreatervolatilityandrisk.
“Down”marketsandportfoliolossesarepossible,andaclientshouldbepreparedtotolerate
thisriskinordertomeetlong‐termobjectives.
Theinvestorshouldbepreparedtobearthefollowinginvestmentrisksofloss:
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Interest‐rateRisk:Fluctuationsininterestratesmaycauseinvestmentpricesto
fluctuate.Forexample,wheninterestratesrise,yieldsonexistingbondsbecome
lessattractive,causingtheirmarketvaluestodecline.
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MarketRisk:Thepriceofasecurity,bond,ormutualfundmaydropinreaction
totangibleandintangibleeventsandconditions.Thistypeofriskiscausedby
externalfactorsindependentofasecurity’sparticularunderlyingcircumstances.
Forexample,political,economicandsocialconditionsmaytriggermarketevents.
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InflationRisk:Whenanytypeofinflationispresent,adollarnextyearwillnot
buyasmuchasadollartoday,becausepurchasingpoweriserodingattherateof
inflation.
7 
CurrencyRisk:Overseasinvestmentsaresubjecttofluctuationsinthevalueof
thedollaragainstthecurrencyoftheinvestment’soriginatingcountry.Thisis
alsoreferredtoasexchangeraterisk.
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ReinvestmentRisk:Thisistheriskthatfutureproceedsfrominvestmentsmay
havetobereinvestedatapotentiallylowerrateofreturn(i.e.interestrate).This
primarilyrelatestofixedincomesecurities.
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Business Risk: These risks are associated with a particular industry or a
particular company within an industry. For example, oil‐drilling companies
depend on finding oil and then refining it, a lengthy process, before they can
generate a profit. They carry a higher risk of profitability than an electric
company,whichgeneratesitsincomefromasteadystreamofcustomerswhobuy
electricitynomatterwhattheeconomicenvironmentislike.
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LiquidityRisk:Liquidityistheabilitytoreadilyconvertaninvestmentintocash.
Generally,assetsaremoreliquidifmanytradersareinterestedinastandardized
product.Forexample,TreasuryBillsarehighlyliquid,whilerealestateproperties
(i.e.Non‐tradedREITsandotheralternativeinvestments)arenot.
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FinancialRisk:Excessiveborrowingtofinanceabusiness’operationsincreases
the risk of profitability, because the company must meet the terms of its
obligationsingoodtimesandbad.Duringperiodsoffinancialstress,theinability
to meet loan obligations may result in bankruptcy and/or a declining market
value.
Performanceresultscannotbeguaranteedandhistoricalperformancemaynotbeindicative
offutureperformance.
Item9–DisciplinaryInformation
Registeredinvestmentadvisersarerequiredtodiscloseallmaterialfactsregardinganylegal
ordisciplinaryeventsthatwouldbematerialtoyourevaluationofASIortheintegrityof
ASI’smanagement.ASIhasnosuchinformationtodisclose.
Item10–OtherFinancialIndustryActivitiesandAffiliations
ASIisnotregisteredasabroker‐dealer,andnoneofitsmanagementpersonsareregistered
representativesofabroker‐dealer.
8 NeitherASInoranyofitsmanagementpersonsisregisteredas(orassociatedwith)afutures
commissionsmerchant,commoditypooloperator,oracommoditytradingadvisor.
AlanM.Rothsteinisacertifiedpublicaccountant.Mr.Rothsteinprovidestaxpreparation
services toclients ofASI. Tax preparation services areofferedthrough ASI and charged
separatelyfrominvestmentadvisoryservices.
AlanM.RothsteinisthepresidentofRothstein&Company,LLC,whichperformssurprise
examsforregisteredinvestmentadvisers.
AlanM.Rothstein,President,isashareholderofNationalAdvisorHoldings,Inc.(“NAH”),a
Delaware corporation organized in August of 1999. Our principals hold less than 1.0%
interest,intheaggregate,oftheoutstandingstockofNAH.NAHhasformedafederaltrust
company known as National Advisors Trust Company (“NATC”). NATC provides trust
servicestoclientsofinvestmentadvisoryfirms,suchasASI,acrosstheUnitedStates.
BecauseprincipalsofASIhaveaninterestinNAH,andthereforeindirectlyhaveaninterest
inNATC,feesearnedbyNATCwillaccruetothebenefitofsuchprincipalsandthuscreatea
conflict of interest. Clients of ASI, however, are under no obligation to utilize the trust
servicesprovidedbyNATC.
ASImayselectsub‐advisorsforitsclients.ASIdoesnotreceiveanycompensationforthe
selectionofsub‐advisors.
Item11–CodeofEthics
ASIhasadoptedaCodeofEthics(Code)thatsetsforththehighethicalstandardsthatASI
requiresofitsemployees,includingcompliancewithapplicablefederalsecuritieslaws.As
afiduciary,ASIhasadutyofutmostgoodfaithtoactsolelyinthebestinterestsofeachof
ourclients.Ourclientsentrustuswiththeirfunds,whichinturnplacesahighstandardon
ourconductandintegrity.Ourfiduciarydutycompelsallemployeestoactwiththeutmost
integrityinallofourdealings.
TheCode’skeyprovisionsinclude:
 StatementofGeneralPrinciples
 PolicyonandreportingofPersonalSecuritiesTransactions
 AprohibitiononInsiderTrading
 Restrictionsontheacceptanceofsignificantgifts
 Procedurestodetectanddetermisconductandviolations
9 
Requirementtomaintainconfidentialityofclientinformation
Employees are also expected not to divulge information regarding ASI’s securities
recommendationsorclientsecuritiesholdingstoanyindividualoutsideofthefirmexcept
asrequiredinthenormalconductofbusiness(forexample,communicationswithbrokers
andcustodians).
EmployeesmustacknowledgethetermsoftheCodeatleastannually.Anyindividualnotin
compliancewithASI’sCodemaybesubjecttotermination.
Clients and prospective clients can obtain a copy of ASI’s Code by contacting Diann E.
McChesney,ExecutiveVicePresidentandChiefComplianceOfficerat860.673.5500.
ParticipationorInterestinClientTransactions–PersonalSecuritiesTransactions
ASIanditsemployeesmaybuyorsellsecuritiesidenticaltothoserecommendedtoclients
for their personal accounts. The Code, described above, is designed to assure that the
personal securities transactions, activities and interests of the employees of ASI will not
interferewith(i)makingdecisionsinthebestinterestofclientsand(ii)implementingsuch
decisionswhile,atthesametime,allowingemployeestoinvestfortheirownaccounts.Under
the Code certain classes of securities, primarily mutual funds, have been designated as
exempttransactions,baseduponadeterminationthatthesewouldmateriallynotinterfere
withthebestinterestofASI’sclients.Inaddition,theCoderequirespre‐clearanceofmany
transactions. Nonetheless, because the Code in some circumstances would permit
employeestoinvestinthesamesecuritiesasclients,thereisapossibilitythatemployees
mightbenefitfrommarketactivitybyaclientinasecurityheldbyanemployee.Employee
trading is continually monitored under the Code, and designed to reasonably prevent
conflictsofinterestbetweenASIanditsclients.
Participation or Interest in Client Transactions—Financial Interest and
Principal/AgencyCross
NeitherASInoritsemployeesdonotrecommendtoclients,orbuyorsellforclientaccounts,
securitiesinwhichtheyhaveamaterialfinancialinterest.ItisASI’spolicythattheFirmwill
notaffectanyprincipaloragencycrosssecuritiestransactionsforclientaccounts.ASIwill
alsonotcrosstradesbetweenclientaccounts.
10 Item12–BrokeragePractices
ResearchandOtherSoftDollarBenefits
ASIdoesnotreceiveformalsoftdollarbenefitsotherthanexecutionfrombroker/dealersin
connectionwithclientsecuritiestransactions.
BrokerageforClientReferrals
ASIdoesnotreceiveclientreferralsfrombroker/dealers.
DirectedBrokerage
ASI participates in the Schwab Institutional Services program offered to independent
investmentadvisersbyCharlesSchwab&Co.,Inc.(“Schwab”),aFINRA‐registeredbroker‐
dealer,memberSIPC.ASIalsoparticipatesinaninstitutionalservicesprogramsponsored
by Fidelity Brokerage Services LLC (“FBS”) and National Financial Services LLC (“NFS”),
collectivelyreferredtoas“Fidelity”,alsoFINRA‐registeredbroker‐dealers,membersSIPC.
Whilethereisnodirectlinkagebetweentheinvestmentadvicegivenandparticipationin
theseprograms,economicbenefitsarereceivedwhichwouldnotbereceivedifASIdidnot
giveinvestmentadvicetoclients.Manyoftheseservicesgenerallymaybeusedtoservice
all or a substantial number of ASI’s accounts, including accounts variously maintained at
Schwab,Fidelityand/orNATC.Theseeconomicbenefitsinclude:receiptofduplicateclient
confirmations and bundled duplicate statements electronically; access to a trading desk
serving participants exclusively; access to block trading which provides the ability to
aggregatefixedincomesecuritiestransactionsandthenallocatetheappropriatesharesto
client accounts; ability to have investment advisory fees deducted directly from client
accounts;access,forafee,toanelectroniccommunicationnetworkforclientorderentry
and account information; receipt of compliance information; and access to mutual funds
whichgenerallyrequiresignificantlyhigherminimuminitialinvestmentsoraregenerally
availableonlytoinstitutionalinvestors.ASImayalsoreceiveotherservicesintendedtohelp
manage and further develop ASI’s business enterprise. These services may include
consulting, publications and presentations on practice management, information
technology, regulatory compliance and marketing. The benefits received through
participationintheseprogramsmayormaynotdependupontheamountoftransactions
directedto,oramountofassetscustodiedbySchwab,FidelityandNATC.
AspreviouslydisclosedinItem10,principalsofASIareshareholdersofNationalAdvisor
Holdings,Inc.(“NAH”).NAHhasformedafederaltrustcompanyknownasNationalAdvisors
Trust Company (“NATC”). Advisory clients of ASI in need of custodial services may have
11 NATCrecommendedtothem.ThefeeschargedbyNATCmaybegreaterorlessthanthefees
chargedbyothercustodians.
ASImayrecommendthebrokerageandcustodialservicesofSchwab,Fidelity,orNATC.ASI
reservestherighttodeclineacceptanceofanyclientaccountthatdirectstheuseofabroker‐
dealer other than Schwab, Fidelity or NATC if ASI believes that the broker‐dealer would
adversely affect ASI’s fiduciary duty to the client and/or ability to effectively service the
client’sportfolio.
Trade Aggregation
ASI may block tradesoccasionally when advantageous to clients. Blockingtrades permits
tradingofaggregateblocksofsecuritiescomposedofassetsfrommultipleclients’accounts
solongastransactionscostsaresharedequallyandonaproratedbasisbetweenallaccounts
includedinsuchblock.BlocktradingmayallowASItoexecutetradesinatimelierandmore
equitablemannerandtoreduceoverallcommissionchargestoclients.ASIwillnotbeable
toblocktradesforclientswhodirecttheuseofabrokerotherthanSchwab,FidelityorNATC,
and therefore a disparity in commission charges may exist between the commissions
chargedtootherclients.
Item13–ReviewofAccounts
The accounts within Asset Management Services are continuously monitoredby Diann E.
McChesney,ExecutiveVicePresidentandChiefComplianceOfficer,andAlanM.Rothstein,
President.Additionalreviewsmaybeperformedwhenportfoliosarerebalanced,whennew
fundsareaddedtotheportfolios,whenunexpectedwithdrawalsarerequested,andwhen
portfolios are reviewed for tax efficiency opportunities. Accounts are reviewed in the
contextofeachclient’sstatedinvestmentobjectivesandguidelinesaswellaschangesinthe
client’sindividualcircumstances.
In addition to the monthly statements and confirmations of transactions that investment
management clients receive from their broker‐dealer, ASI will provide quarterly status
reportsdetailingportfoliopositionsandtheperformance.
FinancialPlanning–ReviewsandReporting
Financialplanningreviewsandupdatesarenotchargedtoclientswhomaintainanassets
undermanagementrelationshipwithASI.
12 For those clients who choose financial planning services only, reviews and reports are
availableforaseparatefee.
Item14–ClientReferralsandOtherCompensation
ASIdoesnotreceiveanyeconomicbenefits(otherthanasdescribedinItem12)fromany
firmorindividualforprovidinginvestmentadvice.
Compensation–ClientReferrals
ASI does not pay or accept referral fees or any form of remuneration from other
professionalswhenaprospectorclientisreferredtothem.
Item15–Custody
ClientsmayauthorizeASI(intheclientagreement)todebitfeesdirectlyfromtheclient’s
accountatthebrokerdealer,bankorotherqualifiedcustodian.Clientinvestmentassetswill
be held with a custodian agreed upon by the client and ASI. The custodian is advised in
writingofthelimitationofASI’saccesstotheaccount.Thecustodiansendsastatementto
theclient,atleastquarterly,indicatingallamountsdisbursedfromtheaccountincludingthe
amountofadvisoryfeespaiddirectlytoASI.
Inaddition,incertaincircumstanceswhereASIhasbroadauthoritytoaccessclientassets
heldatanindependentcustodian,ASIisdeemedtohavecustody. ASIcomplieswiththe
SEC’s Custody Rule, which requires an annual surprise examination conducted by an
independentaccountant.
Clientsreceivequarterlyormorefrequentstatementsfromthebroker‐dealer,bankorother
qualifiedcustodianwhichholdsandmaintainsclient’sinvestmentassets.ASIurgesclients
to carefully review such statements and compare such official custodial records to the
account statements that ASI may provide. ASI statements may vary from custodial
statements based on accounting procedures, reporting dates, and/or valuation
methodologiesofcertainsecurities.
Item16–InvestmentDiscretion
ASIreceivesdiscretionaryauthorityfromtheclientattheoutsetofanadvisoryrelationship.
ASIisauthorizedtoexecutepurchasesandsalesofinvestmentsontheclient’sbehalfatASI’s
owndiscretionwithoutconsultingtheclientregardingeachpurchaseorsale. Inallcases,
13 suchdiscretionisexercisedinamannerconsistentwiththestatedinvestmentobjectivesfor
theclient’sportfolio.
When selecting securities and determining amounts to be invested, ASI observes the
investment policies, limitations and restrictions outlined by the client in the written
InvestmentPolicyStatement.
IfASIhasnotbeengivendiscretionaryauthority,ASIconsultswiththeclientpriortoeach
trade.
Item17–VotingClientSecurities
AsamatterofFirmpolicyandpractice,ASIdoesnothaveanyauthoritytoanddoesnotvote
proxiesonbehalfofadvisoryclients.Clientsretaintheresponsibilityforreceivingandvoting
proxiesforanyandallsecuritiesmaintainedinclientportfolios.
Clients may contact Diann E. McChesney, Executive Vice President and Chief Compliance
Officer,at860.673.5500withquestionsabouttheFirm’sproxyvotingpolicies.
Item18–FinancialInformation
Asaregisteredinvestmentadviser,ASIisrequiredtoprovideclientswithcertainfinancial
informationordisclosuresaboutourfinancialcondition.ASIhasnofinancialcommitment
thatimpairsitsabilitytomeetcontractualandfiduciarycommitmentstoclients.ASIhasnot
beenthesubjectofabankruptcyproceeding.
ASIdoesnotrequireprepaymentoffeesofbothmorethan$1,200perclient,andmorethan
sixmonthsinadvance;andthereforeisnotrequiredtoprovideabalancesheettoclients.
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