Summit Financial Group, Inc. Form ADV Part 2A Firm Brochure

Transcription

1 Item 1 Cver Page Summit Financial Grup, Inc. Frm ADV Part 2A Firm Brchure 595 Suth Federal Highway Suite 500 Bca Ratn, FL Tll Free: (800) Fax: (561) June 22, 2016 This brchure prvides infrmatin abut the qualificatins and business practices f Summit Financial Grup, Inc. ( SFG/we/us/ur ). If yu have any questins abut the cntents f this brchure, please cntact us at (800) The infrmatin in this brchure has nt been apprved r verified by the United States Securities and Exchange Cmmissin ( SEC ) r by any state securities authrity. Additinal infrmatin abut SFG is als available n the SEC s website at SFG s searchable IARD/CRD number is SFG is a registered investment adviser with the SEC. Our registratin as an investment adviser des nt imply any particular level f skill r training. 1

2 Item 2 Material Changes Only material changes t this brchure are t be mentined in this sectin. The last annual update t this brchure was n March 30, On May 23, 2016, the parent cmpany f Summit Financial Grup, Inc., RCS Capital Crpratin ( RCS ), had a change in wnership and a name change. As a result f this change, RCS is n lnger a publicly held crpratin. Instead, RCS is a privately held crpratin wned by a grup f cmpanies. The RCS name has changed t Aretec Grup, Inc. As f February 2016, SFG is n lnger affiliated with J.P. Turner and Cmpany, LLC r J.P. Turner Capital Management, LLC. As f January 2016, SFG is n lnger affiliated with Realty Capital Securities, LLC. In December 2015, Summit Brkerage Services, Inc. ( SBS ), SFG s affiliated brker/dealer, withut admitting r denying the allegatins, entered int an Acceptance, Waiver and Cnsent that was accepted by the Financial Industry Regulatry Authrity ( FINRA ). Thrugh this Acceptance, Waiver and Cnsent, SBS accepted FINRA s findings that Registered Representatives f SBS made unsuitable recmmendatins t custmers t purchase nn traditinal exchange traded funds. SBS was censured, fined in the amunt f $250,000, and was directed t pay $9,556.84, plus interest, t the affected custmers. We have amended ur Variable Prduct Advisry Management prgram t allw fr Investment Advisr Representatives t prvide this service n a discretinary basis. We have further amended the prgram t allw fr Investment Advisr Representatives t charge the client up t 1.50% annually when they prvide this service. When we materially update this brchure, we will either send ur clients a cpy, r ffer t send ur clients a cpy. If yu wuld like anther cpy f this brchure, yu may dwnlad it frm the SEC s investment adviser public disclsure website at r cntact us at (800)

3 Item 3 Table f Cntents Item 2 Material Changes.2 Item 3 Table f Cntents 3 Item 4 Advisry Business 4 Item 5 Fees and Cmpensatin.9 Item 6 Perfrmance Based Fees and Side By Side Management..22 Item 7 Types f Clients.. 23 Item 8 Methds f Analysis, Investment Strategies and Risk f Lss..23 Item 9 Disciplinary Infrmatin..25 Item 10 Other Financial Industry Activities and Affiliatins...25 Item 11 Cde f Ethics, Participatin r Interest in Client Transactins and Persnal Trading. 27 Item 12 Brkerage Practices.28 Item 13 Review f Accunts..29 Item 14 Client Referrals and Other Cmpensatin 31 Item 15 Custdy.32 Item 16 Investment Discretin...33 Item 17 Vting Client Securities.33 Item 18 Financial Infrmatin.33 3

4 Item 4 Advisry Business The Cmpany SFG is a registered investment advisr based in Bca Ratn, Flrida, and incrprated under the laws f the state f Flrida. Funded in 1995, SFG prvides investment advice and prtfli management services n a cntinuing basis which may include but are nt limited t the review f client investment bjectives and gals, recmmending asset allcatin strategies f managed assets amng cash, stcks, mutual funds, exchange traded funds, bnds and/r ther investments, and/r preparing written investment strategies/financial plans. SFG prvides investment advisry and ther financial services thrugh its Investment Advisr Representatives ("IARs") t individuals wh establish an advisry relatinship with SFG. These services are available t bth retail clients (fr example, smaller accunts f individuals, individual retirement accunts ( IRAs ), trusts and emplyee benefit plans) and institutinal clients (fr example, crprate pensin plans, charitable rganizatins, crpratins and fundatins). In additin, sme prgrams will prvide fr the selectin f specific securities t help meet the client s stated investment bjectives r identifying, evaluating, and hiring independent, unaffiliated mney management firms n behalf f clients. SFG is a whlly wned subsidiary f Summit Brkerage Services, Inc. ( SBS ) which is a whlly wned subsidiary f Summit Financial Services Grup, Inc. ( SFSG ). On Nvember 18, 2013, it was annunced that SFSG had entered int an agreement t be acquired by RCS Capital Crpratin ( RCS ). As f June 11, 2014, that transactin was cmpleted, and SFSG became a whlly wned subsidiary f RCS. On May 23, 2016, RCS had a change in wnership and a name change. As a result f this change, RCS is n lnger a publicly held crpratin. Instead, RCS is a privately held crpratin wned by a grup f cmpanies. The RCS name has changed t Aretec Grup, Inc., ( Aretec ). SBS is SFG s affiliated intrducing brker dealer. SBS clears thrugh Pershing, LLC (a subsidiary f The Bank f New Yrk Melln Crpratin and referred t hereinafter as Pershing ) as well as First Clearing Crrespndent Services (an affiliate f Wells Farg & Cmpany and referred t hereinafter as FCC ). SBS is registered with the SEC and varius state jurisdictins and is a member f the Financial Industry Regulatry Authrity ( FINRA"), Municipal Securities Rulemaking Bard ( MSRB ), and the Securities Investrs Prtectin Crpratin ("SIPC"). SBS als prvides a full range f investment services including stcks, crprate bnds, municipal bnds, gvernment bnds, ptins, mutual funds, variable annuities, real estate investment trusts and ther investment and insurance prducts. SBS effects securities transactins fr cmpensatin fr clients in its capacity as a brker dealer. The capacity in which SBS acts, the executin price f the security and ther pertinent infrmatin will be disclsed t the client via trade cnfirmatin. Prspective clients are hereby advised that lwer fees fr cmparable services may be available frm ther surces. SFG and its agents will seek t ensure that they d nt persnally benefit frm the shrt term market effects f its investment recmmendatins. Frm time t time, related persns may purchase securities that are als acquired n behalf f clients and are placed in their accunts. T prevent cnflicts f interest, all emplyees f SFG must agree t abide by SFG s Cde f Ethics which impses restrictins n the purchase r sale f securities frm their wn accunts and the accunts f certain ther affiliated persns. 4

5 Advisry Services Offered An SFG IAR will meet with yu t determine which advisry service(s) (if any) may be right fr yu. The IAR will be respnsible fr perfrming due diligence n yur financial situatin including btaining the necessary infrmatin related t yur financial situatin, yur risk tlerance and yur investment gals and bjectives. Yur investment needs shuld influence yur decisin whether t pen an advisry r a brkerage accunt. An advisry accunt is likely mre suitable if yu are lking fr a lng term investment strategy, quarterly perfrmance reprting, and an nging relatinship with yur IAR. If it is determined that an advisry service(s) is/are apprpriate fr yu, the IAR will cmplete the prper paperwrk with yu, and prvide yu with the firm brchure (this dcument, therwise called Frm ADV Part 2A), as well as his/her brchure supplement (als knwn as the Frm ADV Part 2B), which cntains certain relevant infrmatin related t his/her prfessinal and educatinal backgrund. We strngly urge yu t carefully review these dcuments prir t entering int an advisry relatinship with yur IAR. The advisry services which may be ffered t yu include the fllwing. Financial Planning An SFG IAR may create a cmprehensive r a mdular (fcused n a specific area r areas) written financial plan fr yu. After gathering the necessary infrmatin, yur IAR can use this infrmatin t generate a written financial plan which may cver a variety f tpics including retirement planning, investment planning, cash flw analysis, cllege funding, asset allcatin (in sme cases including asset allcatin within a qualified plan), gift giving including charitable gift giving, special family needs, survivr incme needs, disability incme needs, lng term care needs, ther insurance needs and estate planning. This is nt an nging service, and it is cnsidered cmplete with the delivery f the written financial plan t yu. Yu will need t sign anther agreement with yur IAR if yu wish t have a new r additinal written financial plan created. Cnsulting Prgram An SFG IAR may cnsult with yu regarding a number f pertinent financial tpics such as investment planning, retirement planning, insurance planning, charitable gift giving, asset allcatin and estate planning. In the curse f that cnsultatin, yur IAR may (at yur directin) als wrk clsely with yur attrney, yur CPA, r ther f yur prfessinal advisrs. Cnsulting services may vary greatly in depth and scpe and may be ffered n an accunt(s), and/r a variety f different situatins r circumstances which relate t yur financial picture. Therefre, depending upn yur situatin, the amunt f time necessary t prvide this service may als vary greatly frm client t client. Cnsulting services are available n a ne time basis r as a mre cntinuus service (e.g., in sme cases yu may pay an annual retainer fr yur IAR s cnsulting services), and this will be clearly utlined in the agreement yu sign with yur IAR. Investment Management Prgrams Our IARs are able t select frm a variety f investment management prgrams. Details regarding the varius investment management prgrams we have available are belw. 5

6 IAR Managed Prgrams Yur IAR will assist yu in the creatin f a prtfli with yur investment needs and bjectives in mind. Yu will have the ability t invest in a variety f securities including stcks, bnds, mutual funds, exchange traded funds, r ther securities. These accunts may be discretinary r nn discretinary. Third Party Mney Management Prgrams SFG is able t ffer yu access t a number f institutinal class mney managers wh will manage yur accunt(s) n a discretinary basis. Managed Mutual Fund and Exchange Traded Fund Accunts Managed mutual fund and exchange traded fund accunts ffer a variety f prtflis made up f multiple mutual funds and/r exchange traded funds in the frm f predetermined asset allcatin mdels. Thrugh these mdels, yu are able t receive nging prfessinal prtfli management as well as autmatic rebalancing at regular intervals (e.g., quarterly) in rder fr yur accunt t remain in line with yur investment bjectives. Separately Managed Accunts A Separately Managed Accunt ffers nging prfessinal management and the pprtunity t build a custmized prtfli f individually wned actively managed securities. Variable Prduct Advisry Management Prgram An SFG IAR may ffer yu investment management services n the subaccunt allcatins within a variable prduct yu wn, such as a variable annuity r a variable universal life insurance plicy. This service is designed t prvide yu with nging management f the subaccunt allcatins within yur variable prduct. This service may be prvided t yu directly by yur IAR n either a discretinary r nn discretinary basis, and this will be detailed in yur advisry agreement. Yur IAR may use his/her wn analysis, research methds, investment style/strategy and nging management philsphy when prviding this investment management service t yu. This variable prduct advisry management prgram may als be prvided t yu thrugh a third party mney manager yur IAR recmmends t yu. Such third party mney managers are respnsible fr all investment selectins made within the subaccunts which are available within yur variable prduct. The methds f analysis, surces f infrmatin and investment strategies used by each third party mney manager will vary. We strngly encurage yu t read the third party mney manager s disclsure brchure, Frm ADV Part 2A, and any ther pertinent disclsure dcument(s) yu receive prir t entering int an agreement with a third party mney manager. Third party mney managers will exercise discretin ver yur variable prduct subaccunt allcatins, meaning that the third party mney manager will nt request r need yur prir cnsent in rder t change the subaccunt allcatins within yur variable prduct. 6

7 Seminars Frm time t time, ur IARs may present financial r investment related seminars in an effrt t educate their clients and/r the general investing public. The seminar materials and any handuts prvided may either be prepared by an IAR r by an unaffiliated publisher r distributr f investment seminar materials. The materials presented at the seminars and the seminars in general are intended t be purely educatinal in nature. Neither the infrmatin discussed at seminars, nr the infrmatin cntained in the seminar materials r any handuts which may be distributed are intended as specific investment advice. We d nt purprt that any infrmatin prvided t yu during the curse f a seminar will be apprpriate fr yur situatin, r will help yu t meet yur financial gals r bjectives. Yur attendance at a seminar des nt require yu t cmplete an advisry agreement with ur IAR. If yu attend a seminar, yu are ur client fr purpses f the seminar nly. Yu cease t be ur client fllwing the cnclusin f the seminar unless yu subsequently engage us t prvide additinal advisry services thrugh the executin f an advisry agreement. Retirement Plan Advisry Prgram Our IARs may ffer cnsulting and advisry services fr emplyer spnsred retirement plans in accrdance with the Emplyee Retirement Incme Security Act ( ERISA ). These services are prvided n a nn discretinary basis and the retirement plan spnsr retains full discretinary authrity ver the assets f the retirement plan. The services prvided are either ERISA fiduciary services r ERISA nn fiduciary services. When delivering ERISA fiduciary services, SFG will perfrm thse services fr the retirement plan as a fiduciary under ERISA Sectin 3(21)(A)(ii) and will act in gd faith and with the degree f diligence, care and skill that a prudent persn rendering similar services wuld exercise under similar circumstances. When prviding any ERISA fiduciary services, SFG will slely be making recmmendatins t the retirement plan spnsr and the retirement plan spnsr retains full discretinary authrity r cntrl ver assets f the plan. The services which may be prvided are generally set frth belw. Plan Spnsr Fiduciary Services Recmmendatins t establish r revise the plan s Investment Plicy Statement Recmmendatins t select and mnitr the designated investment alternatives Recmmendatins t select and mnitr qualified default investment alternatives Recmmendatins t allcate and rebalance mdel asset allcatin prtflis Recmmendatins t select and mnitr investment managers Plan Spnsr Nn Fiduciary Services Assistance with a plan fiduciary s vendr management (service prvider selectin/review) Assistance with a plan fiduciary s gvernance and cmmittee review Determining plan bjectives and ptins available thrugh the plan Reviewing retirement plan cmmittee structure and requirements 7

8 Reviewing participant educatin and cmmunicatin strategy Develping requirements fr respnding t participant requests fr additinal infrmatin Develping and maintaining a fiduciary audit file Attending peridic meetings with the plan cmmittee Assistance with plan fiduciaries vendr management Reviewing fees and services Prviding peridic benchmarking f fees and services Generating and evaluating service prvider requests fr prpsals and requests fr infrmatin Supprt with cntract negtiatin Service prvider transitin and/r plan cnversin Investment educatin fr plan fiduciaries Help with the retirement plan s investment plicy statement Assessment f verall investment structure f the retirement plan Review f the retirement plan s investment ptins Review f the qualified designated investment alternative Search fr and review f investment managers Plan Participant Nn Fiduciary Services Emplyee investment educatin and cmmunicatin which may include Prviding grup enrllment and investment educatin meetings Prviding fee specific educatin Answering individual plan participants questins Prviding peridic updates upn request r thrugh a frmat such as a newsletter Assisting participants with retirement readiness cnsultatins In prviding retirement plan services, SFG s IARs may establish client relatinships with participants f the varius retirement plans t whm they prvide advisry services. Such relatinships may develp in varius ways, and if the IAR is engaged t prvide advisry services utside f the scpe f the advisry agreement executed with the retirement plan spnsr, it may be necessary fr that participant t execute an advisry agreement with the IAR n an individual basis. Assets Under Management As f February 29, 2016, we had apprximately $348,618,738 in discretinary assets under management and $1,322,255,095 in nn discretinary assets under management. Discretinary assets under management are thse fr which we have an nging respnsibility t select and make securities recmmendatins which are in line with yur financial needs and bjectives and then effect thse securities transactins withut first cnsulting yu. Nn discretinary assets under management are thse fr which we have an nging respnsibility t select and make securities recmmendatins which are in line with yur financial needs and bjectives and then effect thse securities transactins nly after cnsulting with yu t infrm yu f the transactin(s) and btaining yur apprval t mve frward. 8

9 Item 5 Fees and Cmpensatin We charge fees fr ur advisry services and thse fees vary amng the different types f advisry services we ffer. Mre detail n the fees assciated with each type f advisry service is prvided belw. The specific fees assciated with yur individual advisry service will be detailed in the advisry agreement yu cmplete with yur IAR. Yu shuld carefully review that dcument prir t signing it. Financial Planning There are tw different methds fr yu t be billed fr financial planning, and this is true whether yu are t receive a cmprehensive financial plan r a mdular financial plan. Yu may be billed in the frm f a flat fee, r yu may be billed at an hurly rate. A flat fee billing fr a written financial plan will typically range frm $200 t $10,000. Hurly billing will typically nt exceed $400 per hur. These fee ranges are general parameters, and may nt apply in every case. The fees are negtiable between yu and yur IAR, and will usually depend upn the cmplexity f the financial plan yu require. The details f yur fee arrangement will be clearly utlined in the advisry agreement yu sign with yur IAR at the time yu engage his/her services. When yu sign the agreement, yu will be expected t pay either all r a prtin f the fee. If yu pay nly a prtin f the fee upfrnt, the remainder f the fee must be paid at the time that the written financial plan is delivered t yu. Yu have five business days frm the date yu sign the advisry agreement t change yur mind and terminate the advisry agreement unless yu have already received the written financial plan within the first five days, in which case the agreement cannt be terminated as it wuld be cnsidered cmplete. If the advisry agreement is terminated within five business days f the date yu signed it, the entirety f the fees yu have paid will be refunded t yu, again, unless yu had already received the written financial plan. If yu terminate the advisry agreement after five business days, we will prrate the fees yu have paid and nly the prrated, r unearned, prtin f the fee will be returned t yu. Terminatin f the advisry agreement and the return f any r all fees which yu paid will mean that yu will nt receive the written financial plan. Yur IAR may perate in varius capacities including, but nt limited t, as an IAR ffering yu varius advisry services, as a Registered Representative recmmending the purchase r sale f securities r ther investment prducts, r as an Insurance Agent recmmending the purchase f insurance prducts. Yur IAR, as part f yur financial plan, may make recmmendatins regarding securities and ther investment r insurance prducts. As such, a cnflict f interest exists in the cmpensatin yur IAR receives fr services ffered thrugh the financial planning prgram and the cmpensatin yur IAR receives as a Registered Representative r Insurance Agent n the purchase r sale f securities and ther investment r insurance prducts. In an effrt t reduce this cnflict f interest, if yur IAR recmmends securities r ther investment r insurance prducts thrugh the Financial Planning prgram, yu have the ptin t purchase r sell such securities, investment, r insurance prducts thrugh ther brkers r agents wh are nt affiliated with us. Yu als have the ptin nt t purchase r sell these investments at all. 9

10 Cnsulting Prgram There are tw different methds fr yu t be billed fr the cnsulting prgram. Yu may be billed in the frm f a flat fee, r yu may be billed at an hurly rate. A flat fee billing fr cnsulting services will typically range frm $200 t $10,000. Hurly billing will typically nt exceed $400 per hur. These fee ranges are general parameters, and may nt apply in every case. The fees are negtiable between yu and yur IAR and will usually depend upn the cmplexity f the cnsulting services yu require. In either circumstance, the details f yur fee arrangement will be clearly utlined in the advisry agreement yu sign with yur IAR at the time yu engage his/her services. The fee agreed upn by yu and yur IAR will be due upn the signing f the advisry agreement. If yu terminate yur cnsulting prgram advisry agreement, fees may be refunded. Hwever, this will depend n yur unique situatin because f the varied nature f hw cnsulting services may be prvided. If yu terminate yur agreement, we will review yur situatin, and the apprpriate amunt f unearned fees yu have paid will be returned t yu. Yur IAR may perate in varius capacities including, but nt limited t, as an IAR ffering yu varius advisry services, as a Registered Representative recmmending the purchase r sale f securities prducts, r as an Insurance Agent recmmending the purchase f insurance prducts. Yur IAR, as part f yur cnsulting prgram, may recmmend securities and ther investment r insurance prducts. As such, a cnflict f interest exists in the cmpensatin yur IAR receives fr services ffered thrugh the cnsulting prgram and the cmpensatin yur IAR receives as a Registered Representative r Insurance Agent n the purchase r sale f securities and ther investment r insurance prducts. In an effrt t reduce this cnflict f interest, if yur IAR recmmends securities r ther investment r insurance prducts in the cnsulting prgram, yu have the ptin t purchase r sell such securities, investments, r insurance prducts thrugh ther brkers r agents wh are nt affiliated with us. Yu als have the ptin nt t purchase r sell these investments at all. Seminars If yu attend a seminar, there may be a fee assciated with yur attendance. This fee may r may nt include take hme material(s)/bklet(s) which yu may keep. If there is a fee, yu will be made aware f it in advance f yur attendance, and it will typically be a fixed fee nt t exceed $100 per persn. The IAR wh presents the seminar is able t determine whether a fee will be charged, and if s, hw much that fee will be (with apprval frm SFG). Investment Management Prgrams The fees fr ur investment management prgrams are negtiable (typically within established ranges) between yu and yur IAR. This will result in accunts f similar type and make up being charged different fees. The fees are t be paid quarterly in advance. In mst cases, these fees will be deducted directly frm yur accunt. Hwever, with SFG s prir apprval, yu may have the ptin t pay yur advisry fees frm a different accunt r by check. If yu have apprval t pay yur advisry fees frm anther accunt r by check, the fees must still be paid by yu by the payment due date. 10

11 Our affiliated brker dealer, SBS, receives ther cmpensatin related t varius securities held within yur advisry accunt, which are separate frm the advisry fees yu pay us. This includes 12b 1 fees. This is addressed in mre detail in the Other Cmpensatin prtin f this sectin. This creates a cnflict f interest. It gives ur IARs incentive t recmmend securities and ther investment prducts t yu rather than fcusing slely n yur needs. We address this cnflict f interest by ffering n lad and lad waived mutual funds within ur advisry prgrams. This means that IARs will nt receive any cmmissins fr buying and selling these mutual funds fr yu within the investment management prgrams. Sme f the prducts yu may invest in within yur advisry accunt charge fees and expenses which are described in detail in the prduct s prspectus. Please refer t the applicable prspectus fr each prduct yu invest in r cnsult yur IAR fr details regarding the applicable prduct related fees and expenses. Further, there may be additinal fees as applicable such as margin interest fees, IRA custdy fees, distributin fees, service r clearing charges r ther similar administrative fees which will increase the cst t yu. Please refer t Item 12, Brkerage Practices, where these matters are discussed in greater detail. Yu shuld als cnsult yur IAR fr further infrmatin regarding the additinal fees that may apply t yur accunt. If yu terminate yur advisry relatinship in accrdance with the terms f yur advisry agreement, we will n lnger prvide yu with investment advice. If assets remain in yur accunt, we will fllw yur instructins in rder t clse the accunt. If advisry fees are charged in advance, yu will be entitled t a prrated refund f the pre paid advisry fee. This refund will be based n the number f days remaining in the quarter. If yur IAR leaves SFG, we will terminate the advisry accunt n yur behalf since yu will n lnger have an IAR assigned t yur accunt. We will nt make any changes t the assets held within the accunt; rather, we will simply terminate the advisry relatinship s that yu are n lnger paying an advisry fee. At that pint, yu may decide what yu wuld like t d with the assets within the accunt, and any trades placed will be charged an apprpriate cmmissin since the accunt is n lnger feebased. See belw fr imprtant details specific t the varius prgrams. Mre infrmatin n each f the investment management prgrams is available in ur Frm ADV Part 2A, Appendix 1, als knwn as the Wrap Fee Prgram Brchure. Investment Management Prgrams available n the FCC Platfrm FCC has a number f prgrams frm which t chse, ranging frm prgrams managed by varius third party mney managers at Wells Farg Advisrs, by ther third party mney managers, prgrams which are directed by yu, the client, r prgrams which are directed by yur IAR. FundSurce is a discretinary mutual fund advisry prgram allwing access t multiple ptimal blend prtflis managed by Wells Farg Advisrs Manager Strategy Grup r by Russell Investments. The fees are negtiable between yu and yur IAR, but generally adhere t the ranges listed belw, which are tiered and represented in annualized terms. The minimum accunt size is $25,

12 Accunt Size Client Fee Range First $0 $99, % 1.75% Next $100,000 $249, % 1.75% Next $250,000 $499, % 1.50% Next $500,000 $999, % 1.50% $1,000,000 and ver Negtiable Diversified Managed Allcatins is a discretinary separately managed accunt prgram managed by Wells Farg Advisrs LLC and third party mney managers. The fees are negtiable between yu and yur IAR, but generally adhere t the ranges listed belw, which are tiered and represented in annualized terms. The minimum accunt size ranges frm $150,000 t $1,000,000 depending upn hw many managers are selected. Accunt Size Client Fee Range First $0 $99, % 2.75% Next $100,000 $249, % 2.75% Next $250,000 $499, % 2.50% Next $500,000 $999, % 2.50% $1,000,000 and ver 1.00% 2.00% Wells Farg Cmpass is a discretinary prgram prfessinally managed by Wells Farg Advisrs Manager Strategy Grup. The fees are negtiable between yu and yur IAR, but generally adhere t the ranges listed belw, which are tiered and represented in annualized terms. The minimum accunt size fr this prgram may range frm $50,000 t $200,000 depending upn the type f accunt selected. Accunt Size Client Fee Range Asset Allcatin r Individual Equities Fixed Incme First $0 $99, % 2.50% 1.00% 1.50% Next $100,000 $249, % 2.50% 1.00% 1.50% Next $250,000 $499, % 2.00% 1.00% 1.25% Next $500,000 $999, % 2.00% 1.00% 1.25% Over $1,000, % 1.50% 0.50% 1.00% Masters is a discretinary prfessinally managed separate accunt. The fees are negtiable between yu and yur IAR, but generally adhere t the ranges listed belw, which are tiered and represented in annualized terms. The minimum accunt size is $100,000. Accunt Size Client Fee Range Equity & Balanced Fixed Incme First $0 $99, % 2.75% 1.25% 1.50% Next $100,000 $249, % 2.75% 1.25% 1.50% Next $250,000 $499, % 2.50% 1.00% 1.25% Next $500,000 $999, % 2.50% 1.00% 1.25% 12

13 Next $1,000, % 2.00% 0.50% 1.00% Over $2,000,000 Negtiable Negtiable Private Advisr Netwrk is a discretinary prfessinally managed separate accunt. The fees are negtiable between yu and yur IAR, but generally adhere t the ranges listed belw, which are tiered and represented in annualized terms. The minimum fee fr this accunt type is $375 per quarter ($1,500 per year). The minimum accunt size is $100,000. Accunt Size Client Fee Range First $0 $99, % 3.00% Next $100,000 $249, % 3.00% Next $250,000 $499, % 2.50% Next $500,000 $999, % 2.50% $1,000,000 and ver 1.00% 2.50% Allcatin Advisrs is a discretinary advisry prgram managed by Wells Farg Advisrs Advisry Service Grup r its Investment Strategy Cmmittee, r by Laffer Investments r Ibbtsn Assciates. This prgram is cmprised primarily f exchange traded funds. The fees are negtiable between yu and yur IAR, but generally adhere t the ranges listed belw, which are tiered and represented in annualized terms. The minimum accunt size fr this prgram may range frm $25,000 t $50,000 depending upn the type f accunt selected. Accunt Size Client Fee Range Tactical Strategic First $0 $99, % 2.50% 1.25% 1.75% Next $100,000 $249, % 2.50% 1.25% 1.75% Next $250,000 $499, % 2.00% 0.75% 1.00% Next $500,000 $999, % 2.00% 0.75% 1.00% $1,000,000 and ver 1.00% 1.50% 0.50% 0.75% Custm Chice is a nn discretinary mutual fund advisry prgram. The fees are negtiable between yu and yur IAR, but generally adhere t the ranges listed belw, which are tiered and represented in annualized terms. The minimum accunt size is $25,000. Accunt Size Client Fee Range First $0 $99, % 1.75% Next $100,000 $249, % 1.75% Next $250,000 $499, % 1.50% Next $500,000 $999, % 1.50% $1,000,000 and ver 1.00% 1.15% Pathways is a discretinary mutual fund prgram based n Russell Investments blends. It is managed by Wells Farg Advisrs and Russell Investments. The fees are negtiable between yu and yur IAR, but generally adhere t the ranges 13

14 listed belw, which are tiered and represented in annualized terms. The minimum accunt size is $25,000. Accunt Size Client Fee Range First $0 $99, % 1.75% Next $100,000 $249, % 1.75% Next $250,000 $499, % 1.50% Next $500,000 $999, % 1.50% $1,000,000 and ver 1.00% 1.15% Asset Advisr is a nn discretinary asset based investment advisry prgram. The fees are negtiable between yu and yur IAR, but generally adhere t the ranges listed belw, which are tiered and represented in annualized terms. The minimum accunt size is $50,000. Accunt Size Client Fee Range First $0 $99, % 3.00% Next $100,000 $249, % 3.00% Next $250,000 $499, % 2.50% Next $500,000 $999, % 2.50% $1,000,000 and ver 1.00% 1.75% Private Investment Management ( PIM ) is a discretinary prgram in which the IAR is the prtfli manager. The fees are negtiable between yu and yur IAR, but generally adhere t the ranges listed belw, which are tiered and represented in annualized terms. The minimum accunt size is $50,000. Accunt Size Client Fee Range First $0 $99, % 3.00% Next $100,000 $249, % 3.00% Next $250,000 $499, % 2.50% Next $500,000 $999, % 2.50% $1,000,000 and ver 1.00% 1.75% Investment Management Prgrams Available n the Pershing Platfrm Pershing has a number f prgrams frm which t chse, ranging frm prgrams which are directed by the client, prgrams which are directed by the IAR, prgrams which are managed by Pershing s subsidiary, Lckwd Advisrs ( Lckwd ), as well as by anther third party mney manager, Envestnet, Inc. ( Envestnet ). Sme f the fllwing accunts may ffer the Perfrmance Link service which prvides the ability t include any f yur accunts that are custdied at Pershing in a single, cnslidated perfrmance reprt. There is a separate and additinal fee fr the Perfrmance Link service, shuld yu elect t have it. The fllwing tiered schedule will be used fr the Perfrmance Link service, regardless f the advisry accunt type: 14

15 Per Accunt Size in Basis Pints ( bps ) 1 First $500,000 3 bps (0.03%) Next $500,000 2 bps (0.02%) Over $1,000,000 1 bp (0.01%) 1 The minimum fee fr the Perfrmance Link service is $35.00 per quarter and the maximum is $62.50 per quarter. Adviser Investment Management ( AIM ) is a platfrm which gives yur IAR discretin t manage yur accunt. The fees are negtiable between yu and yur IAR, but generally adhere t the ranges listed belw, which are tiered and represented in annualized terms. The minimum accunt size is $25,000. Perfrmance reprting and clearing charges are included in this fee. Adviser Investment Management Plus ( AIM Plus ) is a platfrm which mirrrs AIM with ne slight variatin yu will be billed a ticket charge fr each transactin. The fee fr this accunt is negtiable between yu and yur IAR, but generally adhere t the ranges listed belw, which are tiered and represented in annualized terms. Perfrmance reprting and clearing charges are included in this fee. The fee schedule immediately belw will be used fr participatin in bth the AIM and AIM Plus prgrams. Nrmally, the client fee is negtiated with the IAR; ther accunt and servicing fees are nn negtiable. Accunt Size Client Fee Range 1 First $500, % 3.00% Next $500, % 3.00% $1,000,000 2 and ver 1.00% 2.50% 1 In additin t these fees, a Perfrmance Link fee will be charged fr the feebased accunts linked t transactin accunts. 2 Cntact yur IAR fr the fee range n amunts significantly in excess f $1,000,000. Summit Elite ( Elite ) and Summit Elite Plus ( Elite Plus ) may be either a discretinary r nn discretinary custmized advisry prgram. The minimum investment amunt fr each f these accunts is $50,000. Each Elite and Elite Plus accunt is charged (i) an accunt service fee, ranging frm 0.03% t 0.05% based n the accunt size (this is in additin t the annual fee paid by the client), (ii) an annual administrative fee equal t $ (that may be paid by either the IAR r the client), and (iii) a per transactin charge pursuant t a set schedule. The difference between Elite and Elite Plus is wh pays the pertransactin charge. In Elite, the per transactin charge is paid by the IAR, while in Elite Plus the per transactin charge is paid by the client. The fees are negtiable between yu and yur IAR, but generally adhere t the ranges listed belw, which are tiered and represented in annualized terms. 15

16 Accunt Size Client Fee Range 1 First $250, % 3.00% Next $750, % 3.00% Next $4,000, % 2.50% $5,000,000 2 and ver 1.00% 2.00% 1 In additin t these fees, a Perfrmance Link fee will be charged fr the feebased accunts linked t transactin accunts. 2 Cntact yur IAR fr pricing n amunts significantly in excess f $5,000,000. BNY Melln Asset Management Select is a discretinary mutual fund asset allcatin prgram. This prgram allws yu and yur IAR t select frm ne f three different asset allcatin mdels: cnservative grwth, mderate grwth r lng term grwth. These mdels are prvided and managed by MBSC Securities Crpratin ( MBSC ), a subsidiary f The Dreyfus Crpratin, which is a whlly wned subsidiary f The Bank f New Yrk Melln. Befre MBSC makes a change t the structure f a particular mdel, they will present the prpsed change(s) t SFG; hwever, SFG and yur IAR may nt ntify yu in advance f the mdel change(s). If there is a mdel change, we strngly encurage yu t discuss this with yur IAR t determine whether the mdel change(s) may be apprpriate fr yu, whether yu wuld like t switch t anther mdel within the prgram, r whether yu wuld like t exit the prgram cmpletely. Fees fr this prgram range between 0.60% 2.00% in annualized terms, and these fees are negtiable between yu and yur IAR. Lckwd Separately Managed Accunt encmpasses ver 100 mney managers with ver 300 ptins with traditinal asset classes. The fees are negtiable between yu and yur IAR, but generally adhere t the ranges listed belw, which are tiered and represented in annualized terms. The minimum accunt size is $100,000 per manager. Accunt Size Client Fee Range First $500, % 3.00% Next $500, % 3.00% $1,000,000 1 and ver 1.25% 2.50% 1 Cntact yur IAR fr pricing n amunts significantly in excess f $1,000,000. The prgram fees immediately abve include the Lckwd advisry fee, mney manager fee, clearing fees and custdy fees. Lckwd Investment Strategies ffers a spectrum f a bradly diversified prtflis cmprised f multiple asset classes including mutual funds, exchange traded funds, alternative investments and individual securities. The fees are negtiable between yu and yur IAR, but generally adhere t the ranges listed belw, which are tiered and represented in annualized terms. The minimum 16

17 accunt size is $250,000. Lckwd Asset Allcatin Prtflis is a discretinary, multi disciplined unified managed accunt managed by Lckwd Capital. There are five mdels available with traditinal asset classes (tax sensitive versins f each f these mdels is available) and fur mdels with nn traditinal asset classes. The fees are negtiable between yu and yur IAR, but generally adhere t the ranges listed belw, which are tiered and represented in annualized terms. The minimum accunt size is $50,000 and prtflis generally hld frm 5 t 15 securities. The fllwing schedule will be used fr participatin in bth the Lckwd Investment Strategies and the Lckwd Asset Allcatin Prtflis prgrams. Accunt Size Client Fee Range 1 First $500, % 3.00% Next $500, % 3.00% Next $4,000, % 2.50% Next $5,000, % 2.00% $10,000,000 2 and ver 0.50% 2.00% 1 In additin t the fees listed, a Perfrmance Link fee will be charged fr the feebased accunts linked t transactin accunts. 2 Cntact yur IAR fr pricing n amunts significantly in excess f $10,000,000. The prgram fees immediately abve include the Lckwd advisry fee, mney manager fee, clearing fees and custdy fees. Lckwd AdvisrFLEX Prtflis is a managed accunt slutin prviding flexibility t create a custm with a chice f three different bjectives based strategies and sixteen mdels with traditinal and nn traditinal asset classes. The fees are negtiable between yu and yur IAR, but generally adhere t the ranges listed belw, which are tiered and represented in annualized terms. The minimum accunt size is $50,000. Accunt Size Client Fee Range First $500, % 2.00% Next $500, % 2.00% $1,000,000 and ver 0.50% 1.50% The prgram fees include the Lckwd advisry fee, the mney manager fee, clearing fees and custdy fees. Envestnet Separate Accunts Managed Accunt Slutin prvides individual investrs with direct access t leading investment managers. The fees are negtiable between yu and yur IAR, but generally adhere t the ranges listed belw, 17

18 which are tiered and represented in annualized terms. This accunt type carries a minimum annual accunt fee f $150 if a mutual fund prtfli is utilized, r $350 if an equity and balanced prtfli r a fixed incme prtfli is utilized. The minimum accunt sizes are as fllws. Mutual fund prtflis typically require $2,500 per fund. The minimum accunt size is $100,000 (per manager) if an equity and balanced prtfli is utilized, r $250,000 (per manager) if a fixed incme prtfli is utilized. Accunt Size Client Fee Range 1 First $250, % 3.00% Next $750, % 3.00% Next $1,000, % 2.50% Next $3,000, % 2.50% Next $5,000, % 2.50% $10,000,000 and ver 1.00% 2.50% 1 In additin t the fees listed, a Perfrmance Link Fee will be charged fr feebased accunts linked t transactin accunts. Unified Managed Accunt allws advisrs t build custmized prtfli mdels using a wide variety f asset classes and t manage multiple client accunts fllwing each mdel. This investment strategy delivers the benefits f cmbining traditinal separately managed accunts, mutual funds, and exchange traded funds in a single diversified prtfli. The minimum accunt size is $150,000 per mdel allcatin. The fees are negtiable between yu and yur IAR, but generally adhere t the ranges listed belw, which are tiered and represented in annualized terms. Accunt Size Client Fee Range First $250, % 3.00% Next $250, % 3.00% Next $500, % 3.00% Next $1,000, % 3.00% Next $3,000, % 2.50% Next $5,000, % 2.50% $10,000,000 and ver 1.00% 2.50% Multi Manager Accunt cmbines the investment expertise f tw r mre glbally prminent asset managers int a single prtfli. This investment strategy delivers the benefits f a traditinal separately managed accunt in a single diversified prtfli. The minimum accunt size is $250,000 (sme minimums may be higher). The fees are negtiable between yu and yur IAR, but generally adhere t the ranges listed belw, which are tiered and represented in annualized terms. Accunt Size Client Fee Range 1 First $500, % 3.00% Next $500, % 3.00% 18

19 Next $1,000, % 3.00% $2,000,000 and ver 1.20% 2.50% 1 In additin t the fees listed, a Perfrmance Link Fee will be charged fr feebased accunts linked t transactin accunts. Advisr as Prtfli Manager is a slutin which allws the client and the IAR t direct the prtfli. These mdel prtflis are cnstructed and rebalanced directly by the IAR using the Envestnet web based platfrm. The minimum accunt size is $10,000. The fees are negtiable between yu and yur IAR, but generally adhere t the ranges listed belw, which are tiered and represented in annualized terms. Accunt Size Client Fee Range 1 First $1,000, % 3.00% Next $1,000, % 2.50% Next $3,000, % 2.50% $5,000,000 and ver 1.00% 2.50% 1 In additin t the fees listed, a Perfrmance Link Fee will be charged fr feebased accunts linked t transactin accunts. Mutual Fund Wrap & Exchange Traded Fund Prtflis is a slutin that includes a ttal f nine mutual fund and/r exchange traded fund prgrams amng varius prtflis and managers including Envestnet, PMC, and Singer Partners LLC. The fees are negtiable between yu and yur IAR, and are tiered. Generally, the fees will adhere t a range f 1.00% 3.00% (in annualized terms). Investment Management Prgrams using a Third Party Mney Manager utside the FCC r Pershing Platfrms Fr fees and expenses relative t a third party mney manager fr a prgram nt available n the FCC r Pershing platfrms, please refer t the respective third party mney manager s disclsure brchure. Neither SFG nr ur IARs establish the fees charged by the third party mney managers t whm we refer business. Yu will pay advisry fees directly t the third party mney manager and they in turn cmpensate SFG in the frm f a slicitr s fee. We will then pay the apprpriate amunt f that fee t yur IAR. At the time yur accunt is established, yu will receive a slicitr s disclsure statement which describes in greater detail the fee that the third party mney manager pays t SFG. Third party mney managers will typically require that clients authrize autmatic fee deductin frm the advisry accunt. Yu shuld carefully review the third party mney manager s disclsure brchure fr mre infrmatin regarding the applicable fees and terminatin prcesses. Third party mney managers will manage yur accunt n a discretinary basis, s they will place trades in yur accunt withut yur cnsent. 19

20 Variable Prduct Advisry Prgrams If yu engage yur IAR t prvide advice relative t yur variable prduct, yu will pay a fee fr this service. This advisry fee is separate and in additin t the internal csts inherent in yur variable prduct, and will be calculated as a percentage f yur variable prduct accunt value, including any cash r cash equivalent psitin(s). When this service is prvided t yu directly by yur IAR, the advisry fee is nt t exceed 1.50% per year. The advisry fee yu will be charged will be clearly utlined in the advisry agreement yu sign with yur IAR. Again, this advisry fee des nt include thse fees and expenses charged by the variable prduct issuer such as mrtality and expense, administrative charges, prduct rider r enhancement charges, r variable subaccunt perating expenses. Fr mre infrmatin regarding these fees and expenses, please refer t yur variable prduct accunt paperwrk and prspectus(es). When this service is prvided by a third party mney manager yur IAR recmmends t yu, the fee will vary depending upn the third party mney manager selected. Neither SFG nr yur IAR cntrls the fees charged by any third party mney manager. If yu terminate this type f advisry agreement, yur assets will remain under the custdy f the issuing insurance cmpany; hwever, yu will n lnger receive investment management services n yur variable prduct. If this service was being prvided directly by yur IAR, we will review yur situatin and refund any fees due t yu. This refund will be dne n a prrated basis. If yur variable prduct investment management services are thrugh a third party mney manager, please refer t the terminatin prvisins, and if applicable, fee refund prvisins in the third party mney manager s advisry service agreement and/r Frm ADV Part 2A disclsure brchure. Neither SFG nr yur IAR cntrls the terminatin prvisins r the fee refund prcess (if applicable) f a third party mney manager. Due t the cmmissin payments assciated with certain variable prducts, a cnflict f interest may exist in the services ffered t yu in SFG s Variable Prduct Advisry Prgram. Variable prducts may be sld t yu thrugh SBS (SFG s affiliated brker dealer) and its IARs as Registered Representatives f SBS. In such cases, the spnsr cmpanies f these variable prducts will pay a cmmissin t SBS, a prtin f which is shared with yur Registered Representative. If yu subscribe t SFG s Variable Prduct Advisry Prgram, yur IAR receives tw frms f cmpensatin: (1) the cmmissin assciated with the sale f the variable prduct (assuming yur IAR als sld the variable prduct t yu), and (2) the advisry fees paid fr the investment management services ffered under this prgram. In an effrt t mitigate this cnflict f interest, SFG will nt allw its IARs t charge a fee fr this service fr a perid f tw years fllwing when he/she sld the variable prduct t yu (regardless f whether the prduct was sld thrugh SBS). If yur IAR did nt sell the variable prduct t yu, this tw year waiting perid may r may nt apply. Further, an exceptin t this tw year waiting perid may apply when a n lad r lad waived variable annuity is utilized. Retirement Plan Advisry Prgram The fees assciated with the services available thrugh the retirement plan advisry prgram will be negtiated between the IAR and the retirement plan spnsr. These fees may be charged as a percentage f ttal assets held within the retirement plan, via an hurly rate, r by a flat fee. The details f the fees and hw they will be paid (whether by the retirement plan s recrd 20

21 keeper directly frm the retirement plan s assets, accunts r investments, r whether it will be billed t the retirement plan spnsr) will be clearly utlined in the retirement plan cnsulting agreement executed between the IAR and the retirement plan spnsr. If the fee charged is t be based n the percentage f ttal assets held within the retirement plan, the initial fee will be prrated based upn the number f days remaining in the initial quarterly perid frm the date f executin f the retirement plan cnsulting agreement and upn the market value f the retirement plan assets at the clse f business n the last business day f the initial quarterly perid. Thereafter, the quarterly prtin f any annual asset based fees will be based upn the market value f the plan assets at the clse f business n the last business day f the previus calendar quarter (withut adjustment fr anticipated withdrawals by plan participants r beneficiaries r ther anticipated r scheduled transfers r distributins f assets). If the retirement plan cnsulting agreement is terminated prir t the end f a quarter, SFG will be entitled t a quarterly fee, prrated fr the number f days in the quarter prir t the effective date f terminatin, and fr asset based fees, based n the market value f the plan assets at the clse f business n the effective date f terminatin. Retirement plan spnsrs wh receive advisry services frm SFG may pay mre r less than a client might therwise pay if purchasing these services separately r thrugh anther service prvider. There are several factrs that determine whether the csts wuld be mre r less, including, but nt limited t, the size f the plan, the specific investments made by the plan, the number f lcatins f participants, the services ffered by anther service prvider, and the actual csts f services purchased elsewhere. All fees paid t SFG fr these services are separate and distinct frm the fees and expenses charged by mutual funds, variable annuities and exchange traded funds t their sharehlders. These fees and expenses are described in each investment s prspectus. These fees will typically include a management fee, ther expenses, and pssible distributin fees. If the investment als impses sales charges, a client may pay an initial r deferred sales charge. The service prvided by SFG may, amng ther things, assist the client in determining which investments are mst apprpriate t each client's financial cnditin and bjectives and t prvide ther administrative assistance as selected by the client. Accrdingly, the client shuld review bth the fees charged by the funds, the fund manager, the plan s ther service prviders and the fees charged by SFG in rder t fully understand the ttal amunt f fees t be paid and t evaluate the services being prvided. Other Cmpensatin The varius fee structures f the investment management prgrams are designed t be cmprehensive in nature unless the client has designated the ptin f the wrap fee plus a charge fr each transactin. SBS may participate, bth directly and indirectly, in ther cmpensatin as a result f its brker dealer activities. Fr yur infrmatin, they are set ut generally hereafter. 21

22 Mutual Fund Charges. T the extent that mutual funds are selected t fill cmpnents f the verall investment strategy, SFG endeavrs t purchase such mutual fund shares at net asset value, n lad r lad waived. Thus, the client will nt be subject t any initial distributin cst (frnt end sales charge) r redemptin fee (back end sales charge), if any, that might nrmally be incurred upn the purchase r sale f mutual fund shares. Hwever, SBS receives 12b 1 fees frm the issuers f such mutual funds, and this will be in additin t the advisry fee yu pay t SFG. Cash and Mney Market Funds. Certain mney market, municipal mney market and gvernment mney market funds pay SBS, in its capacity as a brker dealer, a distributin fee. This cmpensatin is in additin t ther fees received frm client accunts. The IARs may als receive additinal cmpensatin based n client accunt balances being held in certain mney market funds. Cash balances arising frm the sales f securities, redemptin f debt securities, dividend and interest payments and funds received frm clients are generally invested autmatically n a daily basis. When securities are sld, the funds (less any charges) are generally credited n the first business day after trade date. Due t the freging practices, SFG realizes sme ecnmic benefit because f the delay in investing these funds. Directed Brkerage. SFG directs that its affiliate, SBS, handle transactins as necessary fr the investment implementatin f any prgrams used. SBS receives cmpensatin fr handling such transactins. SFG believes that using SBS t handle necessary transactins is bth beneficial and cst efficient t the client. While nt a requirement f participating as a registered investment advisr, investment manager r sub manager fr clients f SFG r any prgrams ffered, sme registered investment advisrs, investment managers and sub advisrs utilized by SFG may have ther advisry clients wh custdy assets thrugh SFG with the custdian. As a result f such relatinship, SFG may receive fees based n transactins executed in such accunts. Item 6 Perfrmance Based Fees and Side By Side Management SFG des nt charge perfrmance based fees r participate in side by side management. Perfrmancebased fees are fees that are based n a share f capital gains r appreciatin f yur assets. Side byside management refers t the practice f managing accunts that are charged perfrmance based fees while at the same time managing accunts that are nt charged perfrmance based fees. Our fees are calculated as described in Item 5, Fees and Cmpensatin, and are nt charged n the basis f perfrmance f yur accunt. 22

23 Item 7 Types f Clients SFG ffers investment advisry services t many different types f clients including individuals, pensin, prfit sharing and ther emplyer spnsred plans, trusts, estates, charitable rganizatins, crpratins, and ther business entities. In general, a minimum f $25,000 is required t pen and maintain an investment management accunt. At ur discretin, we may waive the minimum accunt size. Fr example, we may waive the minimum if yu appear t have significant ptential fr increasing the amunt f yur assets managed in accunts held at SFG. Where apprpriate, we may als cnsider accunt values fr yur minr children, yur spuse, and ther types f related accunts in an effrt t meet the stated minimum. Item 8 Methds f Analysis, Investment Strategies, and Risk f Lss When emplying varius methds f analysis and investment strategies, yur IAR will incrprate yur needs and investment bjectives, as well as yur time hrizn and risk tlerance. Yur IAR is nt bund t specific methds f analysis r investment strategies fr the management f investment prtflis, but rather, as previusly stated, he/she will cnsider yur unique situatin and all infrmatin gathered at the accunt pening, as well as changes t yur financial picture ver time. The methds f analysis and investment strategies utilized may have unique and significant tax implicatins. Regardless f yur accunt size r any ther factrs, we strngly recmmend that yu cntinuusly cnsult with a tax prfessinal prir t and thrughut the investing f yur assets. Methds f Analysis In analyzing securities, we may use a wide array f available infrmatin btained frm varius surces we believe t be reliable. These surces may include the fllwing. Reputable financial publicatins Research materials prepared by ther cmpanies Annual reprts Prspectuses and varius ther SEC filings Cmpany press releases Other research material prvided t SFG (and/r its affiliates) by its varius business partners Investment Strategies Examples f methdlgies that ur investment strategies may incrprate include the fllwing. There is n guarantee that ut investment strategies will ensure a prfit r prtect against lss. Asset Allcatin this is a brad term used t define the prcess f selecting a mix f asset classes and the efficient allcatin f capital t thse asset classes by matching rates f return t a specified and quantifiable tlerance fr risk. There is n guarantee that asset allcatin (regardless f the type) will ensure a prfit r prtect against lss. 23

24 Strategic Asset Allcatin this is a type f asset allcatin that calls fr setting target allcatins and peridically rebalancing yur prtfli back t thse targets. Tactical Asset Allcatin this is a type f asset allcatin that allws fr a range f percentages in each asset class. Thus, it is pssible that a slight frm f market timing may take place since there culd be a mve tward the higher end f the range when a particular asset class is expected t d well, and t the lwer end f the range when the utlk fr that asset class is bleak. Diversificatin this is a methd t assist in reducing risk by investing in a variety f different asset classes that typically d nt mve up and dwn in perfect synchrny. There is n guarantee that diversificatin will ensure a prfit r prtect against lss. Dllar Cst Averaging this is the technique f buying a fixed dllar amunt f securities at regularly scheduled intervals, regardless f the price per share. This shuld gradually, ver time, decrease the average share price f the security. Dllar cst averaging lessens the risk f investing a large amunt in a single investment at the wrng time. Hwever, there is n guarantee that dllar cst averaging will ensure a prfit r prtect against lss. Technical Analysis this invlves studying past price patterns and trends in the financial markets in an attempt t predict the directin f the verall market and/r specific stcks r sectrs. There is n guarantee that technical analysis will ensure a prfit r prtect against lss. Lng Term Purchase this is a securities purchase with the expectatin that the value f thse securities will grw ver a relatively lng perid f time, generally greater than ne year, and as lng as ten years r mre. There is n guarantee that hlding a security fr the lng term will be prfitable r that it will nt result in a lss. Shrt Term Purchase this is a securities purchase with the expectatin that the security will be sld within a relatively shrt perid f time, generally less than ne year, in an effrt t take advantage f the security s shrt term price fluctuatins. There is n guarantee that hlding a security fr the shrt term will be prfitable r that it will nt result in a lss. Margin Transactins this is a transactin in which the investr brrws mney t purchase a security, in which case the security serves as cllateral n the lan. Investing n margin carries additinal risk. Yur accunt must be reviewed and apprved fr this type f activity prir t engaging in it, and the review prcess will include an evaluatin f yur current financial picture as well as yur verall investment experience. Only certain investment management accunts are eligible fr investing n margin. Applicable margin interest applies, and mre infrmatin will be prvided t yu if and when yu intend t engage in this type f transactin. Risk f Lss Investing in securities invlves risk f lss that yu shuld be prepared t bear. We d nt represent r guarantee that ur services, methds f analysis r investment strategies can r will predict future results, successfully identify market tps r bttms, r insulate clients frm lsses due t market 24

25 crrectins r declines. We cannt ffer any guarantees r prmises that yur financial gals and bjectives will be met r that yur accunt(s) will appreciate in value. Past perfrmance is in n way an indicatr r predictr f future results. Item 9 Disciplinary Infrmatin In December 2015, Summit Brkerage Services, Inc. ( SBS ), SFG s affiliated brker/dealer, withut admitting r denying the allegatins, entered int an Acceptance, Waiver and Cnsent that was accepted by the Financial Industry Regulatry Authrity ( FINRA ). Thrugh this Acceptance, Waiver and Cnsent, SBS accepted FINRA s findings that Registered Representatives f SBS made unsuitable recmmendatins t custmers t purchase nn traditinal exchange traded funds. SBS was censured, fined in the amunt f $250,000, and was directed t pay $9,556.84, plus interest, t the affected custmers. In July 2011, the Pennsylvania Securities Cmmissin accepted SFG s Offer f Settlement in which we prpsed a settlement f an alleged vilatin f the Pennsylvania Securities Act f Withut admitting r denying the allegatins, we agreed t pay an administrative penalty f $21,500 fr failing t register ne IAR in the Cmmnwealth f Pennsylvania. We further agreed t cmply with the Pennsylvania Securities Act f 1972, in particular Sectin 301 theref. Item 10 Other Financial Industry Activities and Affiliatins Management persns at SFG are als management persns f SBS, and each carries ne r mre f the fllwing licenses: FINRA Series 7 General Securities Representative FINRA Series 9 General Securities Sales Supervisr Optins Mdule FINRA Series 24 General Securities Principal FINRA Series 4 Optins Principal FINRA Series 27 Financial and Operatinal Principal FINRA Series 53 Municipal Securities Principal FINRA Series 55 Limited Representative Equity Trader FINRA Series 63 Unifrm Securities Agent State Law Exam NASAA* Series 65 Investment Advisrs Law Exam NASAA* Series 66 Unifrm Cmbined State Law Examinatin *NASAA stands fr Nrth American Securities Administratrs Assciatin. As previusly disclsed under Item 4, Advisry Business, SFG is a whlly wned subsidiary f SBS, which is a whlly wned subsidiary f Summit Financial Services Grup, Inc., which is a whlly wned subsidiary f Aretec. Als as previusly disclsed, SBS is SFG s brker dealer affiliate. Our IARs are als Registered Representatives ( RRs ) f SBS and will recmmend SBS t clients fr 25

26 brkerage services, which may include varius insurance prducts. These dually registered individuals are subject t applicable industry rules that restrict them frm cnducting securities transactins away frm SBS unless SBS prvides the individual with written authrizatin t d s. Therefre, these individuals are generally limited t cnducting securities transactins thrugh SBS. It may be the case that transactin csts and/r custdial fees charged thrugh SBS are higher than ther brker dealers charge fr the same types f transactins. If transactins are executed thrugh SBS, these duallyregistered individuals (in their separate capacity as RRs f SBS) earn cmmissin based cmpensatin as a result f placing the recmmended securities transactins thrugh SBS. This cmmissin based cmpensatin is separate and in additin t the fees yu pay fr the advisry services yu receive frm yur IAR thrugh SFG. This presents a material cnflict f interest because yur IAR may have an incentive t effect securities transactins fr the purpse f generating cmmissin rather than basing his/her recmmendatins slely n yur needs and bjectives. We mitigate this cnflict f interest by mnitring the apprpriateness f the recmmendatins yur IAR/RR makes t yu. Yu may utilize the brker dealer f yur chice, and yu have n bligatin t purchase r sell securities thrugh SBS. Hwever, if yu d nt use SBS, we may nt be able t accept yur accunt and therefre, yu may nt be able t wrk with ur dually registered individual (IAR/RR) n yur accunt. Belw we have laid ut the rganizatin f Summit Financial Services Grup, Inc., and all f its affiliates. Aretec as the Parent Cmpany f SFSG and Indirect Owner f SFG Aretec Grup, Inc. Summit Financial Services Grup, Inc. (Parent Cmpany) 1 Summit Brkerage Services, Inc. ( SBS ) 2 Summit Financial Grup, Inc. 3 ( SFG ) 3 Summit Hlding Grup, Inc. ( SHG ) 4 SBS Insurance Agency f Flrida, Inc. ( SBS f FL ) 5 SBS f Califrnia Insurance Agency, Inc. ( SBSC ) SBSI Insurance Agency f Texas, Inc. ( SBSI ) Summit Capital Grup, Inc. 6 1 Financial services hlding cmpany 2 Operating subsidiary that: (a) prvides a brad range f securities brkerage and investment services t primarily individual investrs; (b) sells insurance prducts thrugh its subsidiary, SBS f FL (and SBS f FL s subsidiaries, SBSC and SBSI); and (c) prvides asset management and ther investment advisry services thrugh its subsidiary, SFG 3 Engaged in the business f asset management and ther investment advisry services 4 Inactive subsidiary 5 SBS f FL and its listed subsidiaries are engaged in the business f selling insurance prducts, predminantly fixed and variable annuities and life insurance. 6 Engaged in the business f investment banking As previusly described in Item 4, Advisry Business, we have cntracts with varius third party mney managers wh are als registered investment advisrs that ffer fee based advisry prgrams. These third party mney managers are nt affiliated with us; hwever, they pay us a prtin f the fees yu pay t them, and a prtin f what we receive is then paid t yur IAR. This is cnsidered a material 26

27 cnflict f interest as the cst f placing yur assets with ne f these third party mney managers may be higher than placing yur assets in ne f ur available investment management prgrams. Yu are under n bligatin t utilize a third party mney manager yur IAR recmmends. Sme individuals wh are registered representatives f SBS wn and perate their wn independent registered investment advisers which are registered either with the SEC r the apprpriate state jurisdictin(s). In this case, this individual will prvide yu with the disclsure brchure (Frm ADV Part 2A) fr his/her independent registered investment advisr and his/her brchure supplement (Frm ADV Part 2B) as apprpriate. Sme f ur IARs may be registered with SFG and anther independent registered investment advisr. In this case, the IAR will prvide yu with the disclsure brchure (Frm ADV Part 2A) and his/her brchure supplement (Frm ADV Part 2B) fr whichever registered investment advisr yu are engaging, whether SFG r the independent registered investment advisr. The services may be similar, yet are independent f the advisry services ffered t yu by SFG. Item 11 Cde f Ethics, Participatin r Interest in Client Transactins and Persnal Trading SFG s Cde f Ethics includes guidelines fr prfessinal standards f cnduct fr all f ur IARs as well as all hme ffice emplyees (cllectively Assciated Persns ). All Assciated Persns must acknwledge their receipt and understanding f the Cde f Ethics upn assciatin with SFG, and annually thereafter, as well as agree t abide by it. Our gal is t prtect client interests at all times and t demnstrate ur cmmitment t fiduciary duties f hnesty, gd faith and fair dealing. All f SFG s Assciated Persns are expected t strictly adhere t these guidelines. Assciated Persns f SFG are als required t reprt any vilatins f ur Cde f Ethics. Additinally, the firm maintains and enfrces written plicies reasnably designed t prevent the misuse r disseminatin f material, nnpublic infrmatin abut ur clients r client accunts by Assciated Persns f ur firm. SFG and its agents will seek t ensure that Assciated Persns d nt persnally benefit frm the shrtterm market effects f its investment recmmendatins. Frm time t time, Assciated Persns may purchase securities that are als acquired n behalf f clients and are placed in their Managed Accunts. T prevent cnflicts f interest, all emplyees f SFG must agree t abide by SFG s Cde f Ethics which impses restrictins n the purchase r sale f securities frm their wn accunts and the accunts f certain ther Assciated Persns. The Cde f Ethics requires that all trades made by Assciated Persns f SFG wh make recmmendatins r participate in the determinatin f which recmmendatins shall be made, will require review fr all securities transactins by the designated persn respnsible (except transactins in investment cmpany securities and/r ther exempt transactins). SFG will als maintain quarterly r mnthly reprts n all persnal securities transactins, except transactins in investment cmpany securities and/r ther exempt transactins. Further, the Cde f Ethics impses certain plicies and prcedures cncerning the misuse f material nn public infrmatin that are designed t reasnably prevent insider trading by any fficer, partner, r ther Assciated Persn f SFG. SFG s Cde f Ethics is available t yu upn request. Yu may btain a cpy f ur Cde f Ethics by cntacting ur Cmpliance Department at (800)

28 Item 12 Brkerage Practices We recmmend the brkerage services f SBS. As previusly explained in Item 4, Advisry Business, SBS is an intrducing brker dealer which clears its transactins thrugh bth Pershing and FCC. SBS is registered with the SEC and state jurisdictins and is a member f FINRA and SIPC. SBS prvides a full range f brkerage services in stcks, crprate bnds, municipal bnds, gvernment bnds, ptins, mutual funds, variable annuities, real estate investment trusts and ther investment and insurance prducts. SFG believes that this recmmended brker dealer and its custdians prvide quality executin services fr cmpetitive prices t ur clients. Price is nt the sle factr cnsidered in evaluating best executin. SFG als cnsiders the quality f the brkerage services prvided by the recmmended brker dealer, including the firm s reputatin, executin capabilities, cmmissin rates, and respnsiveness t clients. Clients and prspective clients are hereby advised that lwer fees fr cmparable services may be available frm ther surces. Brkerage fr Client Referrals We d nt receive client referrals frm brker dealers in exchange fr cash r ther cmpensatin, such as brkerage services r research. Directed Brkerage Nt all registered investment advisrs require their clients t direct their brkerage transactins t a specific brker dealer. Hwever, ur IARs are als RRs f SBS and will recmmend SBS t clients fr brkerage services, which may include varius insurance prducts. These dually registered individuals are subject t applicable industry rules that restrict them frm cnducting securities transactins away frm SBS unless SBS prvides the individual with written authrizatin t d s. Therefre, these individuals are generally limited t cnducting securities transactins thrugh SBS. It may be the case that that transactin csts and/r custdial fees charged thrugh SBS are higher than ther brkerdealers charge fr the same types f transactins. If transactins are executed thugh SBS, these duallyregistered individuals (in their separate capacity as RRs f SBS) earn cmmissin based cmpensatin as a result f placing the recmmended securities transactins thrugh SBS. This cmmissin based cmpensatin is separate and in additin t the fees yu pay fr the advisry services yu receive frm yur IAR thrugh SFG. Further, an IAR, when apprpriate, may recmmend that a retirement plan spnsr use a certain retirement plan platfrm r service prvider (such as a recrd keeper, administratr r brker dealer). That recmmendatin may include using ur affiliate, SBS, t serve as brker dealer in cnnectin with the sale f securities r insurance prducts t the retirement plan. These instances present a material cnflicts f interest because yur IAR may have an incentive t effect securities transactins fr the purpse f generating cmmissin rather than basing his/her recmmendatins slely n yur needs and bjectives. We mitigate this cnflict f interest by mnitring the apprpriateness f the recmmendatins yur IAR/RR makes t yu. Yu may utilize the brker dealer f yur chice, and yu have n bligatin t purchase r sell securities thrugh SBS. 28

29 Hwever, if yu d nt use SBS, we may nt be able t accept yur accunt and therefre, yu may nt be able t wrk with ur dually registered individual (IAR/RR) n yur accunt. Blck Trades We may cmbine multiple rders fr shares f the same securities purchased fr advisry accunts we manage (this practice is cmmnly referred t as blck trading ). We will then distribute a prtin f the shares t participating accunts in a fair and equitable manner. The distributin f the shares purchased is typically prprtinate t the size f the accunt, but it is nt based n accunt perfrmance r the amunt r structure f management fees. Subject t ur discretin regarding factual and market cnditins, when we cmbine rders, each participating accunt pays an average price per share fr all transactins and pays a prprtinate share f all transactin csts. Accunts wned by ur firm r Assciated Persns f ur firm may participate in blck trading with yur accunts; hwever, these individuals will nt be given preferential treatment f any kind. Financial Planning and the Cnsulting Prgram Yur IAR will generally recmmend that yu use SBS t implement any applicable recmmendatins made in yur financial plan r thrughut the curse f the cnsulting prcess. Hwever, yu are under n bligatin t d s. When yur IAR cnducts a securities transactin thrugh SBS n yur behalf, he/she may earn cmmissin based cmpensatin as a result f executing the recmmended securities transactin(s). This cmmissin based cmpensatin is separate and in additin t the fees yu pay fr the advisry services yu receive frm yur IAR thrugh SFG. This presents a material cnflict f interest because yur IAR may have an incentive t effect securities transactins fr the purpse f generating cmmissin rather than basing his/her recmmendatins slely n yur needs and bjectives. We mitigate this cnflict f interest by mnitring the apprpriateness f the recmmendatins yur IAR/RR makes t yu. Yu may utilize the brker dealer f yur chice, and yu have n bligatin t purchase r sell securities thrugh SBS. Hwever, if yu d nt use SBS, we may nt be able t accept yur accunt and therefre, yu may nt be able t wrk with ur dually registered individual (IAR/RR) n yur accunt. Item 13 Review f Accunts We review ur investment advisry accunts n a peridic basis. These reviews are described in greater detail belw. Investment Management Prgram Reviews The IAR servicing yur accunt(s) will cnduct peridic reviews f yur accunt(s). IARs may meet with clients as frequently as is agreed upn r as is requested by the client r IAR. In mst cases, a meeting f sme kind will ccur at least annually. Yur IAR must extend t yu the pprtunity t discuss yur accunt(s) n at least an annual basis. At this meeting, r at ther times as apprpriate, yu shuld infrm yur IAR f any material changes t yur financial situatin, gals and bjectives. Yur IAR shuld then nte thse updates and advise yu 29

30 regarding any adjustment(s) which may be necessary t yur accunt(s). Accunts are managed n a cntinuus basis and are reviewed at several intervals. Accunts are apprved by an apprpriate designated supervisry principal ( DSP ). Trades are reviewed by an apprpriate DSP t identify issues r activity which may require further research and/r actin. Statements are prvided t the client frm the custdian at least quarterly if there was n activity within the accunt, and mnthly if there was activity. Additinally, clients may receive a quarterly perfrmance reprt. Cnfirmatins f all buys and sells will be sent t the client by the applicable custdian unless the client pts t suppress cnfirmatins, where this ptin is made available. We strngly urge yu t carefully review yur statements and transactin cnfirmatins and immediately cntact yur IAR with any questins, issues r ptential discrepancies. Financial Planning Reviews DSPs review all agreements fr financial plans befre the agreement is apprved. This review will include, amng ther things, the types f issues the financial plan is intended t address, the fee t be charged fr the financial plan and the client s current financial situatin. Frm time t time, the DSP may request a cpy f the written financial plan nce it is created by the IAR (and pssibly after it is delivered t yu) s that a review f the financial plan itself may be cnducted. This review may entail an evaluatin f the cmprehensiveness f the financial plan, a review f the type f infrmatin that was gathered frm the client and cnsidered in the creatin f the financial plan, whether the financial plan addressed the intended issues, and any recmmendatin(s) which may be made within the financial plan. Any issues identified as a result f this type f review will be prmptly and apprpriately addressed. After yu receive yur written financial plan frm yur IAR, yu will nt receive any further written reprts frm us r yur IAR. Cnsulting Prgram Reviews DSPs review all agreements fr the cnsulting prgram befre the agreement is apprved. This review will include, amng ther things, the types f issues which are t be addressed thrughut the curse f the cnsulting prgram, the fee t be charged fr the cnsulting prgram services and the client s current financial situatin. The DSP may request additinal infrmatin frm yur IAR regarding the service t be prvided t yu thrugh ur cnsulting prgram. Typically, this request will be fr further detail n the services t be prvided, including hw yur unique situatin warrants the need fr cnsulting services. Any issues identified as a result f this type f review will be prmptly and apprpriately addressed. With the executin f an agreement fr cnsulting services, yu may r may nt receive any written reprt(s) frm us r yur IAR. This will depend upn the nature f the cnsulting services t be prvided t yu. Once the terms f yur cnsulting prgram agreement have 30

31 been fulfilled, yu will nt receive any written reprts frm us r yur IAR. Third Party Mney Manager Reviews Accunts that d nt receive ur cntinuus management, such as accunts managed by third party mney managers, are nly reviewed by SFG at accunt pening. Hwever, yur IAR will still cnduct peridic reviews f yur accunt and mnitr its perfrmance. Additinally, please refer t yur applicable third party mney manager s disclsure brchure fr infrmatin related t the third party mney manager s review f its accunts. Yu will receive accunt statements, transactin cnfirmatins (unless suppressed) and/r perfrmance reprts frm yur applicable third party mney manager. The frequency with which these reprts are issued may vary depending n the third party mney manager being utilized. We strngly urge yu t carefully review any perfrmance reprts yu receive and cmpare them t yur custdial statements. The infrmatin cntained in perfrmance reprts may vary frm yur custdial statement due t accunting prcedures, reprting dates r valuatin methdlgies f certain securities. In the event f any discrepancies, yu shuld rely n the statements prvided by the qualified custdian f yur assets. Retirement Plan Advisry Prgram Reviews Yur IAR will cntact yu at least nce a year t review the services being prvided t the retirement plan. It is imprtant that yu discuss any changes in the retirement plan s demgraphic infrmatin, investment gals, and bjectives with yur IAR. Retirement plans may receive written reprts directly frm the IAR based upn the services being prvided, including any reprts evaluating the perfrmance f retirement plan investment manager(s) r investments. Additinal Advisry Accunt Reviews Additinal mnitring f accunts will be prvided by SFG as fllws. We may review yur advisry accunt(s) when ne f ur auditrs, r ther apprpriate staff member, visits yur IAR s branch ffice lcatin. This visit may be t cnduct a rutine audit, r fr anther reasn as deemed apprpriate. We will als review yur advisry accunt(s) if we receive a cmplaint frm yu regarding yur advisry accunt(s). Item 14 Client Referrals and Other Cmpensatin Slicitr Arrangements On a limited basis, SFG may utilize the services f slicitrs fr client referrals. All such arrangements are cnducted under the terms specified in a slicitatin agreement, which is executed between SFG and the individual acting as slicitr, prir t any such referral taking place. In a case where a slicitr refers a client t us, a prtin f yur advisry fee will be paid t that slicitr. At the time f yur referral, yur slicitr will prvide yu with a dcument 31

32 which disclses the terms f his/her slicitr agreement with us. This dcument will include imprtant infrmatin regarding his/her cmpensatin under the slicitatin agreement. It is imprtant that yu review this dcument carefully. Registratin Arrangements Our IARs are als RRs f SBS and will recmmend SBS t clients fr brkerage services, which may include varius insurance prducts. The amunt f cmmissins fr the sale f these prducts is nt dictated by SFG, but rather by the applicable prduct spnsr. The cmmissins as well as ther sales charges and expenses related t the prduct are disclsed in the prduct s prspectus, which yu will receive at r prir t the time yu purchase the prduct. When yur IAR executes general securities transactin fr yu as an RR f SBS, he/she will receive cmmissins based upn thse transactins. Yu may be able t have these transactins executed elsewhere at a lwer cst t yu. Yu are under n bligatin t execute yur brkerage transactins with SBS. Item 15 Custdy Any registered investment adviser having custdy r access t custmer funds r securities must cmply with certain rules and regulatins designed t prtect the clients assets. Rule 206(4) 2 f the Investment Advisers Act f 1940 details strict requirements gverning registered investment advisers which have custdy ver client securities r funds. Currently, SFG des meet the definitin f having custdy due t the fllwing circumstances: The cmpany directly debits applicable fees frm client accunts; and On a limited basis, sme IARs act as trustee n behalf f their clients; this imputes custdy nt SFG. SFG des nt have physical custdy f any client funds and/r securities. Client funds and securities are held at a bank, brker dealer, r ther independent qualified custdian (in the case f any ERISA retirement plan, the custdian will be selected by the retirement plan spnsr). Yu will receive accunt statements frm the independent, qualified custdian(s) hlding yur funds at least quarterly. The accunt statements frm yur custdian(s) will indicate the amunt f advisry fees deducted frm yur accunt(s) each billing cycle, as well as the ther activity which tk place in yur accunt ver the cvered time perid. Yu shuld carefully review these statements. Frm time t time, yur IAR may prvide yu with a cnslidated statement, perfrmance reprt r ther accunt summary. We strngly urge yu t cmpare any such reprt t the statements yu receive frm yur qualified custdian fr the same time perid and immediately cntact yur IAR if yu nte any discrepancies. 32

33 Item 16 Investment Discretin Our IARs have discretinary authrity ver certain accunts. In rder fr discretinary authrity t be granted, yu must first sign ur discretinary management agreement, a pwer f attrney, and/r a trading authrizatin frm. By chsing t d s, yu grant yur IAR discretin ver the selectin and amunt f securities t be purchased r sld in yur accunt(s), withut btaining yur cnsent r apprval fr the transactin(s). Additinally, third party mney managers will maintain discretinary authrity ver yur accunt. Such authrity wuld be fully disclsed t yu in the third party mney manager s disclsure brchure. SFG and its IARs d nt have discretinary authrity ver any ERISA accunts. Item 17 Vting Client Securities It is generally nt ur plicy t vte prxies. Hwever, with respect t thse accunts fr which it has vting authrity in accrdance with client instructins, and in a manner in which we believe t be in the best interests f ur clients, we may allw prxy vting. In such a case, SFG wuld generally vte in accrdance with the recmmendatins f the issuer's existing management, unless we feel it wuld nt be prudent t d s. Item 18 Financial Infrmatin We have n financial cnditin that is reasnably likely t impair ur ability t meet ur cntractual cmmitments t ur clients, and we have never been the subject f a bankruptcy petitin. Fllwing is the audited balance sheet fr Summit Brkerage Services, Inc., and its subsidiaries, fr fiscal year ending December 31, This balance sheet cnfrms t generally accepted accunting principles, and was audited by an independent public accuntant. 33

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