PEOPLE S SECURITIES, INC. DISCLOSURE BROCHURE

Transcription

1 PEOPLE S SECURITIES, INC. DISCLOSURE BROCHURE Dated 09/29/2017 Contact: Brian Delman, Chief Compliance Officer 565 Fifth Avenue, 27th Floor New York, New York ITEM 1: COVER PAGE This Brochure provides information about the qualifications and business practices of People s Securities, Inc. ( PSI ) regarding services offered through its financial advisers ( PSI FAs ). If you have any questions about the contents of this Brochure, please contact us at or psi.compliance.dept@peoples.com. The information in this Brochure has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority. Additional information about People s Securities, Inc. is also available on the SEC s website at References herein to People s Securities, Inc. as a registered investment adviser or any reference to being registered does not imply any level of skill or training. People s Securities, Inc. Form ADV, Part 2A

2 ITEM 2: MATERIAL CHANGES As this is an interim amendment to PSI s Brochure, material changes since PSI s last annual amendment, dated March 31, 2017, have not been provided. Material changes contained in this Brochure will be detailed in PSI s next annual amendment and will then be distributed to all existing advisory clients in April ITEM 3: TABLE OF CONTENTS ITEM 1: COVER PAGE... 1 ITEM 2: MATERIAL CHANGES... 2 ITEM 4: ADVISORY BUSINESS... 3 ITEM 5: FEES AND COMPENSATION... 9 ITEM 6: PERFORMANCE BASED FEES AND SIDE BY SIDE MANAGEMENT ITEM 7: TYPES OF CLIENTS ITEM 8: METHODS OF ANALYSIS, INVESTMENT STRATEGIES, AND RISK OF LOSS ITEM 9: DISCIPLINARY INFORMATION ITEM 10: OTHER FINANCIAL INDUSTRY ACTIVITIES AND AFFILIATIONS ITEM 11: CODE OF ETHICS, PARTICIPATION OR INTEREST IN CLIENT TRANSACTIONS AND PERSONAL TRADING ITEM 12: BROKERAGE PRACTICES ITEM 13: REVIEW OF ACCOUNTS ITEM 14: CLIENT REFERRALS AND OTHER COMPENSATION ITEM 15: CUSTODY ITEM 16: INVESTMENT DISCRETION ITEM 17: VOTING CLIENT SECURITIES ITEM 18: FINANCIAL INFORMATION People s Securities, Inc. Form ADV, Part 2A Page 2

3 ITEM 4: ADVISORY BUSINESS A. People s Securities, Inc. ( PSI ), is a Connecticut corporation that was formed in July PSI is a whollyowned subsidiary of People s United Bank, N.A. ( People s United ), which is owned by People s United Financial Inc., a publicly reporting company. PSI has been registered with the United States Securities and Exchange Commission ( SEC ) as an investment adviser since May 2004, and, prior to that time, PSI was registered with the State of Connecticut as an investment adviser since January PSI is registered with several states as a life and health insurance agency. PSI is capable of selling life and health insurance to customers. Many of PSI s management, employees and investment adviser representatives are appointed with insurance carriers to sell insurance products. The firm primarily sells life insurance, various annuity products and long term care insurance to individual customers. PSI has been continuously registered with the SEC as a broker dealer since June 1983, and is a member of the Financial Industry Regulatory Authority, Inc. ( FINRA ). As a FINRA member and an SEC registered brokerdealer, PSI is engaged in the purchase and sale of securities to public customers such as individuals, pension and profit sharing plans, and corporate, trust, estate and retirement accounts. However, PSI does not act as broker dealer or custodian for any advisory account for which it provides services as an investment adviser. B. PSI offers investment advisory services through one or more programs to its investment advisory clients. PSI does not act as broker dealer or custodian for any advisory account for which it provides services as an investment adviser. PSI FAs use Gerstein Fisher, a division of People s Securities, Inc., or unaffiliated sub advisors to manage multiple client accounts using standardized portfolios that primarily contain open end mutual funds, exchange traded funds, and, regarding the unaffiliated sub advisors, select equity portfolios. Neither PSI nor any of its associated persons exercises discretion regarding specific transactions in these portfolios. Rather, PSI delegates its responsibility for selecting particular securities transactions in these portfolios to one or more managers which provide these services. These programs are more fully described below and are collectively called PSI s Managed Advisory Portfolio Programs. All or a portion of a client s assets may be allocated to one or more of the following Managed Advisory Portfolio Programs. Gerstein Fisher Managed Solutions Gerstein Fisher believes that often, a simpler financial product, with focused options, helps clients center on making clear choices and smarter investment decisions. Gerstein Fisher Managed Solutions ( GFMS ) is designed with this in mind. In consultation with a PSI Financial Adviser ( FA ), the client and FA will agree on an investment model constructed by Gerstein Fisher, the investment manager and sponsor of GFMS. The investment strategies in GFMS primarily contain a diversified portfolio of mutual funds, exchange traded funds or both (collectively, Funds ). Clients inform their FA who in turn advise Gerstein Fisher of clients financial circumstances, investment objectives and risk tolerances. GFMS then recommends and builds a portfolio of Funds based on the information provided (the Allocation ). Clients are free to accept GFMS s Allocation or reject the recommendation and not participate in GFMS. GFMS will not support client requests to buy or sell an individual investment, whether such investment is part of, or outside of the Allocation. When clients deposit to or withdraw money from their account, they are requesting that GFMS purchase or sell shares of available Funds within their account, in quantities that correspond to their Allocation. Similarly, when clients and/or their FA request an adjustment to the Allocation, GFMS will buy and sell shares of the Funds to reach the desired Allocation. GFMS rebalances client portfolios People s Securities, Inc. Form ADV, Part 2A Page 3

4 so that, in the face of fluctuating market prices, each client s portfolio remains controlled to within a narrow range of the Allocation. After the initial consultation, the FA may meet with the client on a periodic basis, typically annually, to discuss the client s investments in GFMS or more frequently upon client request. For further GFMS details, please see the GFMS Form ADV 2A Appendix 1. FAs provide this brochure to clients prior to or concurrent with their enrollment in GFMS. Clients are advised to read it carefully before investing. The above referenced securities portfolio may contain Affiliated Mutual Funds as defined and described below, and investment models of Gerstein Fisher ( Gerstein Fisher Models ) which will typically contain Affiliated Mutual Funds. SEI Investments Management Corporation ( SIMC ) SEI Asset Allocation Program ( Models ) SIMC is an investment advisor registered under the Investment Advisers Act of 1940 ( Advisers Act ) with the SEC. It is an indirect wholly owned subsidiary of SEI Investments Company ( SEI ), a publicly traded diversified financial services firm (NASDAQ: SEIC) headquartered in Oaks, Pennsylvania, a suburb of Philadelphia. SIMC and its predecessor entities were originally incorporated in SEI Asset Allocation Portfolios (also referred to as models ) are mutual fund portfolios. Asset allocation is the central theme of the SEI investment philosophy and the dominant factor in determining total strategy return. Under the Asset Allocation Program, SIMC does not have a direct investment advisory relationship with either the PSI or PSI clients. Instead, PSI serves as the investment advisor for its clients, and is responsible for analyzing, among other things, the client s current financial situation, risk tolerance, time horizon, and asset class preference. As part of the SEI Asset Allocation Program, SIMC develops various Asset Allocation models, each of which seeks to achieve particular investment goals, and are comprised of SEI Funds (for which SIMC serves as advisor). The models are not tailored to accommodate the needs or objectives of specific individuals, but rather the Asset Allocation Program is designed to enable PSI clients to be matched by the PSI with an Asset Allocation model that is consistent with such client s investment goals and objectives. The Asset Allocation models are provided for use by PSI in its determination when developing an investment plan for its clients. Based upon the client s information, PSI and the client select an investment strategy and choose from the available Asset Allocation models. PSI is solely responsible for determining the suitability of the Asset Allocation model for its clients. PSI may use tools made available by SIMC, including SEI s proprietary Proposal Tool, to develop the appropriate asset allocation strategy for the client(s), and SEI may also provide PSI with administrative assistance in developing such proposals. However, it is PSI s responsibility to ensure the suitability of any proposed investment, and SIMC is not providing investment advice to PSI or its clients with respect to such proposals. Within the Asset Allocation Program, SIMC may periodically adjust the target allocations among the Funds in a model or may add or subtract SEI Funds from a model. SIMC also may create new models within the Asset Allocation Program. PSI determines whether to follow SIMC s adjusted model for their clients invested in the current model, and is solely responsible for determining the suitability of the Asset Allocation model strategy (and SEI Funds) for its clients. Since a large portion of the assets in the SEI Funds may be comprised of End Investors following these Asset Allocation Program models or other asset allocation models for which SIMC either determines or influences the People s Securities, Inc. Form ADV, Part 2A Page 4

5 allocation, model reallocation activity could result in significant purchase or redemption activity in the SEI Funds. While reallocations are intended to benefit End Investors that invest in the SEI Funds through the Asset Allocation models, they could in certain cases have a detrimental effect on the SEI Funds that are being materially reallocated, including by increasing portfolio turnover (and related transaction costs), disrupting portfolio management strategy, and causing a SEI Fund to incur taxable gains. SIMC seeks to manage the impact to the SEI Funds resulting from reallocations. SEI Managed Account Solutions ( MAS ) PSI may offer MAS to clients. MAS is a wrap fee program with numerous program types. Under MAS, PSI can invest client s assets in one or more ETF portfolios that are managed pursuant to a specific strategy selected by the PSI FA with the client. Although SIMC may offer numerous investment options under the MAS program, PSI only offers the ETF portfolios. SIMC manages MAS through its manager of manager s structure, which means that SIMC retains one or more sub advisors to manage the client(s) portfolios on day to day basis, monitors the sub advisors and, as necessary, replaces sub advisors. As part of MAS, SIMC develops various investment strategies, each of which seeks to achieve particular investment goals. MAS strategies are not tailored to accommodate the needs or objectives of specific individuals, but rather the program is designed to enable PSI clients to be matched by the PSI FA with a MAS strategy that is consistent with such client s investment goals and objectives. PSI and its client(s) will select the Investment Style into which the client s assets will be invested. In MAS, PSI FA s are responsible for determining the initial and on going suitability to invest the client s assets in the portfolio and strategy selected by the PSI FA based on, among other things, the client s investment goals, risks, tolerance, limitations and financial circumstances. PSI may use tools made available by SIMC, including SEI s proprietary Proposal Tool, to develop the appropriate asset allocation strategy for the client. As part of the services, SEI may provide PSI with administrative assistance in developing end Client proposals. PSI previously participated in the following programs under MAS, the Managed Account Program ( MAP ) and the Integrated Managed Account Program ( IMAP ), both of which are sponsored by SIMC. However, these programs are closed to new investors at PSI. Both the MAP and the IMAP Program utilize money managers that manage individual portfolios of stocks, ETFs, mutual funds or bonds based on a specific investment style. Under the Managed Account Agreement, the client will appoint SEI Investments to manage the assets that are within the MAP and IMAP program in accordance with a strategy selected by the client together with PSI using SEI Investments account opening documents. SEI Investments may delegate its responsibility for selecting particular securities to one or more portfolio managers to provide management services relative to those allocated assets. SEI Distribution Focused Strategies ( DFS ) DFS, which was offered to high net worth individuals and other retail investors through PSI, are investment strategies designed for investors requiring regular distributions from their investment accounts. In this program, PSI invested client assets in a portfolio of SEI Funds within a strategy seeking to generate a targeted level of distributions using a broadly diversified portfolio of assets. In addition to pursuing the targeted distribution objectives, DFS seeks to provide a degree of principal preservation by seeking to leave a positive residual value at the end of each strategy s stated investment time horizon. While each DFS strategy has a targeted distribution level and residual value, there is no assurance that either target will actually be met. DFS portfolios are closed to new investors at PSI. As part of DFS, SIMC develops various DFS strategies, each of which seeks to achieve particular investment goals. SIMC is responsible for selecting securities (generally SEI s proprietary mutual funds) underlying each portfolio and actively managing each portfolio in accordance with its investment strategy. These DFS strategies People s Securities, Inc. Form ADV, Part 2A Page 5

6 are not tailored to accommodate the needs or objectives of specific individuals, but rather the program is designed to enable clients to be matched by PSI with a DFS strategy that is consistent with such client s investment goals and objectives. Morningstar Managed Portfolios sm Programs The Morningstar Programs described below ( MS Programs ) are discretionary investment advisory programs offered by Morningstar Investment Services LLC ( MIS ). MIS is a federally registered investment adviser and subsidiary of Morningstar Investment Management, LLC ( Morningstar Investment Management ). MIS provides discretionary investment management services to a client in accordance with the terms of an Investment Management Agreement that will be executed by the client and MIS. This Investment Management Agreement is separate from the agreement that the client executes with PSI, and grants discretionary trading authority to MIS. MIS will determine what transactions MIS will execute in the client s account and the frequency with which MIS will execute account transactions. MIS may also delegate certain duties to PSI, which include having each client complete a questionnaire and other applicable account opening documents pertaining to suitability, contacting the client at least annually to obtain any changes in their financial status and acting as a liaison between MIS and the client. Pursuant to an agreement between PSI and MIS, an SEC registered investment advisor, PSI may offer participation in one or more of the following Morningstar Programs to clients: Morningstar Managed Portfolios sm Program Mutual Fund Strategies ( MS Program Mutual Funds ) Morningstar Managed Portfolios sm Program ETF Strategy ( MS Program ETF ); and Morningstar Managed Portfolios sm Program Select Equity Portfolios ( MS Program Select Equity ). 1) MS Program Mutual Funds The mutual fund portfolios give investors access to a wide array of mutual funds, each constructed with MIS asset allocation expertise and objective research. Sophisticated Portfolio Construction To give investors a range of investing options, MIS offers a suite of portfolios. Each portfolio adheres to a distinct strategic asset allocation, which dictates the asset mix. The different portfolios allow MIS to provide targeted solutions for different risk/reward profiles. Investment professionals of Morningstar Investment Management provide portfolio construction and ongoing monitoring and maintenance of the portfolios in the Morningstar Managed Portfolios Program. Their analysis forms the basis for the strategic asset allocation that is used in each Asset Allocation portfolio. Morningstar Investment Management s forecasts are rooted in thorough analysis of long term historical performance and relationships between asset classes. Manager Research When selecting fund managers, MIS employ s various quantitative and qualitative screens to sift through thousands of mutual funds, emphasizing factors like historical performance, investment style, and expenses. MIS investment team conducts extensive due diligence, including phone interviews, on site fund manager visits, detailed portfolio analysis, and reviews of the performance attributed to the manager. Documenting their research through a proprietary evaluation system, they award the highest scores to fund managers who employ a prudent, repeatable investment process that has yielded strong results over time. MIS team favors funds that have below average expense ratios and are run by managers whose interests, MIS believes, are properly aligned with those of shareholders. People s Securities, Inc. Form ADV, Part 2A Page 6

7 A Range of Portfolios MIS Retirement Income portfolios may be appropriate for investors seeking a stable income stream with an emphasis on trying to preserve the value of their portfolios underlying assets. Through a mix of equity, fixedincome, and alternative strategies, MIS Retirement Income portfolios aim to support a desired distribution rate without unnecessarily depleting the value of an investor s account. MIS Absolute Return portfolio allows investors to access mutual funds that employ hedge fund like strategies. Meant to deliver returns that are not tied to a specific asset class or market index, the Absolute Return portfolio can be a useful diversification and risk management tool. MIS four Equity Style portfolios Multi Cap Value, Multi Cap Growth, Foreign Equity, Small & Mid Cap Equity offer a range of complementary strategies, each largely concentrated in one asset class, allowing investors to take a tactical approach to investing or further diversify existing portfolios that may lack exposure to certain market segments. 2) MS Program ETF MIS ETF portfolio is comprised entirely of ETFs; Each ETF portfolio confers the following benefits: disciplined asset allocation, objective research, access to a wide array of ETFs, and proactive portfolio management. Portfolio Construction MIS offers a suite of managed ETF portfolios to suit a variety of investor needs. Each of these portfolios follows a distinct strategic asset allocation, which dictates the mix of stocks, bonds, and other asset classes. Making different asset allocation models available allows MIS to offer solutions to clients with different risk/reward profiles. Investment professionals of Morningstar Investment Management create the portfolios on an asset class level. Morningstar Investment Management s forecasts are rooted in thorough analysis of long term historical performance and relationships between asset classes. Approach Though each managed ETF portfolio maintains a consistent asset allocation, MIS investment team uses a core and explore approach to shift the mix of assets based on market conditions. Serving as the anchors of its ETF portfolios, each core position tracks an asset class represented in its strategic allocation, ensuring that each portfolio remains true to its risk/reward profile. By contrast, MIS explore positions express MIS investment team s tactical view. For instance, if MIS team identifies a market segment that looks attractive on a fundamental basis, it might establish an explore position in an ETF that targets that area. ETF Selection MIS bottom up, fundamentals based approach ensures that MIS applies consistent criteria to each ETF account. Its investment team uses a proprietary evaluation system to seek investments that have low expenses and other attractive fundamental attributes. MIS makes tactical allocations to ETF s in the portfolio. Its investment team confers on a regular basis regarding market conditions and the relative attractiveness of the various asset classes. Generally speaking, MIS takes a contrarian tack, favoring those areas that it believes offer the most attractive risk/reward tradeoff. People s Securities, Inc. Form ADV, Part 2A Page 7

8 3) MS Program Select Equity The four portfolios in the Strategist Series combine the active portfolio management of MIS with the extensive equity research of Morningstar, Inc. The first three portfolios in the series, the Tortoise, Hare, and Dividend, are patterned after portfolios of the same name featured in Morningstar, Inc. s Morningstar StockInvestor sm and Morningstar DividendInvestor sm newsletters. The fourth portfolio, the U.S. Wide Moat Focus, is designed to track the Morningstar Wide Moat Focus sm Index. Approach MIS Tortoise, Hare, and Dividend strategies share a common approach investing in higher quality firms at a discount to what Morningstar Inc. s analysts believe they are worth. This approach assumes that a stock investment represents an ownership interest in a business. Accordingly, when selecting stocks, MIS attempts to operate from the mindset of a business owner, asking questions like what gives this firm an edge over competitors, how durable are those advantages and does this business create value for shareholders? MIS U.S. Wide Moat Focus portfolio is based on Morningstar s concept of an economic moat. Just as a moat around a medieval castle kept the opposition at bay, an economic moat is a structural competitive advantage that Morningstar believes allows a firm to earn above average returns on capital over a period of time. Analysis The MIS Select Equity Portfolios utilize Morningstar s research. The nearly 100 equity analysts at Morningstar conduct extensive research on industry dynamics, a firm s competitive position, and the defensibility of any advantages that the business might boast, all in an effort to estimate a firm s intrinsic worth per share. Available Strategies Each of MIS Select Equity Portfolios in the put a slightly different twist on quality centric, value conscious investing. Tortoise Invests in the stocks of relatively stable, high quality businesses that are well entrenched in the various markets in which they operate. Though these firms are not typically growing at a fast pace, they are normally very profitable, reflecting their dominance. Hare Invests in the stocks of firms that are experiencing rapid growth, emphasizing those that have carved out a defensible niche of some kind. Importantly, they are selling at reasonable prices, not high price multiples. Dividend Invests in high yielding stocks with the potential for dividend growth and capital appreciation. Though dividend investing often brings to mind stodgy utilities or banks, the Dividend portfolio is composed of stocks from a variety of industries. The common thread is that the typical name is significantly undervalued, financially strong, and founded on a durable business model. PFA Program The PFA Program is closed to new clients. This description and subsequent material regarding this program is included to address existing investors in the PFA Program. PSI may recommend that all or a portion of certain clients investible assets are allocated to the PFA Program. Using a questionnaire that is designed to elicit the client s investment objectives, attitude toward risk and financial and tax circumstances, PSI will recommend a portfolio for the client consisting of various mutual funds managed by selected mutual fund managers. Retirement Rollovers. A client or prospective client leaving an employer typically has four options regarding an existing retirement plan (and may engage in a combination of these options): (i) leave the money in the former employer s plan, if permitted, (ii) rollover the assets to the new employer s plan, if one is available and People s Securities, Inc. Form ADV, Part 2A Page 8

9 rollovers are permitted, (iii) rollover to an Individual Retirement Account ( IRA ), or (iv) cash out the account value (which could, depending upon the client s age, result in adverse tax consequences). Conflict of Interest. If PSI FAs recommend that a client rollover their retirement plan assets into an account to be managed by PSI FAs, such a recommendation creates a conflict of interest if PSI FAs will earn an advisory fee on the rolled over assets. No client is under any obligation to rollover retirement plan assets to an account managed by PSI FAs. PSI s Chief Compliance Officer remains available to address any questions that a client or prospective client may have regarding the potential for conflict of interest presented by such rollover recommendation. Client Obligations. In performing its services, PSI FAs will not verify any information received from the client or from the client s other professionals, and are expressly authorized to rely thereon. It is the client s responsibility to promptly notify PSI FAs if there is ever any change in financial situation or investment objectives for the purpose of reviewing/evaluating/revising PSI FAs previous recommendations and/or services. C. PSI FAs provide investment advisory services specific to the needs of each client. Prior to providing investment advisory services, PSI FAs will ascertain each client s investment objective(s). Thereafter, PSI FAs will allocate and/or recommend that the client allocate investment assets consistent with the designated investment objective(s). Please Note: The client may, at any time, impose reasonable restrictions, in writing, on the management of its account. ITEM 5: FEES AND COMPENSATION A. Gerstein Fisher Managed Solutions A wrap fee program is a common alternative to a typical advisory fee structure that provides clients with advisory and brokerage services for one inclusive bundled fee. GFMS is a wrap fee program and as such, GFMS charges clients a single bundled fee ( Wrap Fee ) that covers the investment advisory services it provides, as well as the brokerage and custodial services provided by a custodian. The Wrap Fee is an annual fee that shall be prorated and paid quarterly, in arrears, based upon the market value of account assets on the last business day of the previous quarter. The Wrap Fee is not charged on the basis of a share of capital gains or capital appreciation of any portion of the assets of a client. The Wrap Fee is generally not negotiable. Please see below for the fees schedule. Assets Under Management Wrap Fee Initial $500, % Next $500, % Next $1,000, % All assets over $2,000, % The Wrap Fee is paid to PSI and is separate and distinct from the fees and expenses charged by the mutual funds and ETFs to their shareholders. These fees and expenses are described in each fund s prospectus and are embedded in the securities purchased on every client s behalf. These fees are generally composed of a management fee and other fund expenses. There are additional fees assessed by the custodian that the client will typically incur such as termination fees, wire fees and other fees that are incidental to the management of the account. People s Securities, Inc. Form ADV, Part 2A Page 9

10 Clients participating in GFMS appoint Fidelity Brokerage Services, LLC ( Fidelity ) as their broker dealer and custodian for the program and accordingly agree to direct brokerage in their accounts through Fidelity. Clients should understand that directing brokerage through Fidelity may result in transactions in a client s account receiving less favorable execution than could be obtained using a broker dealer other than Fidelity. Fidelity has the discretion to negotiate with and select trading partners. Fidelity procedures are intended to comply with applicable requirements concerning best execution, although there can be no assurance that best execution will be obtained. GFMS is offered to individual clients. Individual, joint, IRA and Roth IRA accounts are currently available. The minimum account size to open a GFMS account is $25,000. SEI Asset Allocation Program PSI s advisory fee for providing services to those client assets that are allocated into the SEI Asset Allocation Program shall generally be in accordance with the following annual fee schedule: Assets Under Management Percentage Fee to PSI Initial $500, % Next $500, % Next $1,000, % All assets over $2,000, % PSI s advisory fee is debited from the client s account by SIMC on behalf of the client. SIMC does not receive any portion of PSI s advisory fee. SIMC will debit the client s account on a quarterly basis for those fees, as well as any additional charges that may be imposed by SIMC. Those fees will be disclosed to the client pursuant to the terms of the agreement between SIMC and the client. The charges to the client s account will be on an arrears basis and will be remitted quarterly net of any applicable account and performance reporting charges not charged to the client. Upon written notification, the agreement between the parties may be terminated by either PSI or the client. In the event the relationship between PSI and the client is terminated, prorated fees will be charged based on the market value on the date notice of termination is received. SIMC serves as transfer agent and custodian of all client assets under the SEI Asset Allocation Program, for which SIMC receives compensation in the form of an administrative charge (the amount of which is disclosed on the administrative charge schedule attached to or contained in the SEI account agreement that each SEI Asset Allocation Program participating client is required to sign). SIMC is the broker and custodian for the SEI Asset Allocation Program based on the terms thereof. The minimum account size for participating in this program through People s Securities is $25,000. SEI may charge an additional maintenance fee for accounts valued below $25,000. SEI Managed Account Solutions ( MAS ) For each client participating in the MAS program, PSI will receive compensation that is equal to a portion of the fee that is imposes on the client. In addition, a program fee is paid to SIMC for its advisory services, the trade execution provided by SIMC s affiliate SEI Investments Distribution Co. ( SIDCO ), custody and related services provided by SEI Private Trust Company ( SPTC ), and the advisory services of portfolio managers. SIMC s fees are a percentage of the daily market value of the assets invested in the relevant portfolio. The SIMC fees do not cover execution charges (such as commissions, commission equivalents, mark ups, markdowns or spreads) on transactions SIMC places with broker dealers other than SIDCO or its affiliates. People s Securities, Inc. Form ADV, Part 2A Page 10

11 The fee is calculated and paid to SIMC quarterly in arrears. SIMC will deduct the Total Fee directly from the Client s custody account. SEI MAS ETF Strategy Fees For each client participating in the SEI MAS ETF program, PSI will receive compensation that is equal to a portion of the fee that SIMC imposes on the client. SIMC will receive compensation for their investment advisory services under each of the ETF Strategies as a percentage of assets allocated using them. Market Value of Assets SEI Fee PSI Fee Total Fee (SEI Fee + PSI Fee) First $250, % 1.00% 1.45% Next $250, % 1.00% 1.40% Next $500, % 1.00% 1.35% Next $1,000, % 0.50% 0.80% Next $3,000, % 0.50% 0.75% Next $5,000, % 0.50% 0.72% Over $10,000, % 0.50% 0.70% *Fee breakpoint levels are determined based on a Client s total account assets invested in the SEI ETF Strategies listed above. SIMC may, in its sole discretion, waive one or more of these fees, in whole or part based on SEI's relationship with the firm. SIMC may end any such fee waiver at any time, after which time affected accounts will be assessed the applicable fees. Client will also pay PSI s Advisory Fee as indicated above. SEI charges an additional Tax Management fee of 0.10% in addition to the SEI Fee described above if Tax Management is requested. The minimum account size for participating in the SEI MAS ETF Strategy through PSI is $50,000. SEI MAS Managed Account Program ( MAP ) and Integrated Managed Account Program ( IMAP ) For each client participating in the SEI MAS MAP and IMAP, PSI will receive compensation that is equal to a portion of the fee that SIMC imposes on the client. SIMC will receive compensation for their investment advisory services as a percentage of assets allocated using them. These fees vary depending on the Investment Styles as indicated in the Investment Categories and Styles indicated below. CATEGORY 1 Investment Style Breakpoints SEI Fee PSI Fee Total Fee (SEI Fee + PSI) All Cap. Alternative Multi Strategy SMA, Equity Income, Global Equity, International Developed Markets, Large Cap, Managed Volatility, Mid Cap, Socially Responsible Investing, Windham ETF Strategies First $500, % 1.10% 2.00% Next $500, % 1.05% 1.90% Next $1,000, % 1.00% 1.80% Next $3,000, % 0.90% 1.65% Next $5,000, % 0.90% 1.60% Over $10,000, % 0.90% 1.55% People s Securities, Inc. Form ADV, Part 2A Page 11

12 CATEGORY 2 Investment Style Breakpoints SEI Fee PSI Fee Total Fee (SEI Fee + PSI) Small Cap, Small Mid Cap, REIT First $500, % 1.10% 2.20% Next $500, % 1.05% 2.10% Next $1,000, % 1.00% 2.00% Next $3,000, % 0.90% 1.85% Next $5,000, % 0.90% 1.80% Over $10,000, % 0.90% 1.75% CATEGORY 3 Investment Style Breakpoints SEI Fee PSI Fee Total Fee (SEI Fee + PSI) International Emerging Markets First $500, % 1.10% 2.35% Next $500, % 1.05% 2.25% Next $1,000, % 1.00% 2.15% Next $3,000, % 0.90% 2.00% Next $5,000, % 0.90% 1.95% Over $10,000, % 0.90% 1.90% CATEGORY 4 Investment Style Breakpoints SEI Fee PSI Fee Alternative Income, Alternative Tax Advantage Income, Alternative MLP, Core Aggregate, Core Aggregate Plus, Government/Corporate Bond, Government Securities, Municipal Fixed Income, Preferred Securities Total Fee (SEI Fee + PSI) First $500, % 1.10% 1.75% Next $500, % 1.05% 1.65% Next $1,000, % 1.00% 1.56% Next $3,000, % 0.90% 1.44% Next $5,000, % 0.90% 1.40% Over $10,000, % 0.90% 1.35% CATEGORY 5 SEE ETF STRATEGY PRICING ABOVE People s Securities, Inc. Form ADV, Part 2A Page 12

13 CATEGORY 6 Investment Style Breakpoints SEI Fee PSI Fee Total Fee (SEI Fee + PSI) SEI Fixed Income Strategies First $500, % 1.10% 1.40% Next $500, % 1.05% 1.32% Next $1,000, % 1.00% 1.25% Next $3,000, % 0.90% 1.10% Next $5,000, % 0.90% 1.09% Over $10,000, % 0.90% 1.08% CATEGORY 7 Investment Style Breakpoints SEI Fee PSI Fee Total Fee (SEI Fee + PSI) SEI Factor Based Strategies First $500, % 1.10% 1.65% Next $500, % 1.05% 1.40% Next $1,000, % 1.00% 1.30% Next $3,000, % 0.90% 1.15% Next $5,000, % 0.90% 1.12% Over $10,000, % 0.90% 1.10% SEI Fee breakpoint levels are determined based on an Investor s total Account assets invested in an Investment Style categorized within the same investment style description groupings/fee rate schedules listed above. By way of example only, if an Account is invested in two Investment Styles, the first being a model classified as a Small Cap style and a second model classified as a Small Mid Cap style, the Account assets invested in those two Investment Styles will be combined for purposes of determining the applicable breakpoint levels for purposes of calculating the fees payable to SEI Investments Management Corporation ( SIMC ). Breakpoints are not applied across the style description groupings/fee rate schedules. By way of example only, if an Account is invested in an Investment Style classified as a Small Cap style as well as in a second Investment Style classified as an Alternative Income style, those Account assets will not combined for purposes of determining the applicable breakpoint level for calculating SEI Fees, but assets allocated to each such Investment Style will be considered individually in determining fees payable to SIMC. SEI charges an additional fee for Tax Management of 0.10% in addition to the SEI Fees described above on the MAP and IMAP programs. PSI s Fee under the Managed Account Program and the Integrated Managed Account Program is not negotiable, but may be waived in whole or in part, for varying periods of time, in PSI s sole discretion, in connection with promotional efforts or for any other reason. PSI s compensation may be reduced or waived for persons who are directors, officers or employees of PSI or affiliates of PSI. The minimum account size for participating in the SEI Managed Account Program through PSI is $100,000. The minimum account size for participating in the SEI Integrated Managed Account Program through PSI is $250,000 in equity. The Managed Account Program and the Integrated Managed Account Program programs are closed to new investors. People s Securities, Inc. Form ADV, Part 2A Page 13

14 SEI Distribution-Focused Strategies ( DFS ) For each client participating in the SEI DFS program, PSI will receive compensation that is equal to a portion of the fee that SIMC imposes on the client. SIMC will receive compensation for their investment advisory services under each of the DFS portfolios as a percentage of assets allocated using them. Market Value of Assets SIMC Fee Percentage Fee PSI Percentage Fee Total Fee (SIMC Fee + PSI) First $500, % 1.10% 1.30% Next $500, % 1.05% 1.25% Next $1,000, % 1.00% 1.20% All assets over $2,000, % 0.90% 1.10% The minimum account size for participating in the SEI DFS program through PSI is $50,000. Morningstar Programs For each client participating in the Morningstar Programs, PSI will receive compensation that is equal to a portion of the fee that MIS imposes on the client. MIS will receive compensation for their investment advisory services under each of the Morningstar Programs as a percentage of assets allocated using those Programs. (1) MS Program Mutual Funds. The minimum initial investment for the MS Program Mutual Funds is $10,000. At MIS sole discretion, an initial or subsequent investment of less than this amount may be allowed. Program Fees. An annual fee is charged on a quarterly basis in arrears based on the value either at the beginning of or the end of each quarter, respectively. The annual fee consists of two parts (collectively the MS Program Mutual Funds Program Fee ), the fee imposed by MIS and the fee imposed by PSI. The MS Program Mutual Funds Program Fee schedule is*: Market Value of Assets MIS Fee Percentage Fee PSI Percentage Fee Total Fee (MIS Fee + PSI) First $500, % 1.10% 1.50% Next $500, % 1.05% 1.40% Next $1,000, % 1.00% 1.30% All assets over $2,000, % 0.90% 1.10% * The Portfolios underlying mutual funds incur their own internal expenses such as shareholding servicing, and 12b 1 fees. Supplemental Fee Information When securities can be traded in more than one marketplace, the broker dealer for the MS Program account will use its discretion in selecting the market in which such orders are entered. Please be aware that the broker dealer may receive remuneration, compensation or other consideration for directing orders to particular broker/dealers or market centers for execution (i.e., payment for order flow) and that MIS does not participate in such arrangements. People s Securities, Inc. Form ADV, Part 2A Page 14

15 The client may also incur certain charges by the broker dealer or its affiliates related to retirement plan accounts such as IRAs. These charges are in addition to the above mentioned MS Program Focused Annual Program Fee and brokerage fees. (2) MS Program ETF. The minimum initial investment for the MS Program ETF is $50,000. At MIS sole discretion, an initial or subsequent investment of less than this amount may be allowed. Program Fees. An annual fee is charged on a quarterly basis in arrears based on the value either at the beginning of or the end of each quarter, respectively. The annual MS Program ETF fee consists of two parts (collectively the MS Program ETF Annual Program Fee ), the fee imposed by MIS and the fee imposed by PSI. The standard fee schedule for the MS Program ETF Strategy is**: Market Value of Assets MIS Fee Percentage Fee PSI Percentage Fee Total Fee (MIS Fee + PSI) First $1,000, % 1.00% 1.30% Next $4,000, % 0.50% 0.75% All assets over $5,000, % 0.50% 0.70% **Does not include fees/commissions associated with executing transactions nor the internal exchange traded funds. Additionally, this fee covers costs associated with middle office trading infrastructure and client accounting and reporting. Supplemental Fee Information As the result of MIS discretionary authority, investment decisions made for a MS Program ETF account will result in the client incurring brokerage commission/fees imposed by the brokerage firm utilized by the MS Program. The payment of these brokerage fees is solely the client s responsibility. The broker dealer will charge the client s MS Program ETF account directly for any applicable brokerage fees. These brokerage fees are in addition to the above mentioned MS Program ETF Annual Program Fee. When securities can be traded in more than one marketplace, the MS Program broker dealer will use its discretion in selecting the market in which such orders are entered. Please be aware that the broker dealer may receive remuneration, compensation or other consideration for directing orders to particular broker/dealers or market centers for execution (i.e., payment for order flow) and that MIS does not participate in such arrangements. Exchange traded funds have their own internal fees and expenses such as investment advisory, administration, and other fund level expenses and that by investing in them the client incurs a proportionate share of those fees and expenses. Those fees and expenses are in addition to the abovementioned MS Program ETF Annual Program Fee and brokerage fees. The client may also incur certain charges by the broker dealer or its affiliates related to retirement plan accounts such as IRAs. These charges are in addition to the above mentioned MS Program ETF Annual Program Fee and brokerage fees. (3) MS Program Select Equity. The minimum initial investment for the MS Program Select Equity is $100,000. At MIS sole discretion, an initial or subsequent investment of less than this amount may be allowed. People s Securities, Inc. Form ADV, Part 2A Page 15

16 Program Fees. An annual fee is charged on a quarterly basis in arrears based on the value either at the beginning of or the end of each quarter, respectively. The annual MS Program Select Equity fee consists of two parts (collectively the MS Program Select Equity Annual Program Fee ), the MIS fee and the PSI fee. The standard fee schedule for the MS Program Select Equity is: Market Value of Assets MIS Fee Percentage Fee PSI Percentage Fee Total Fee (MIS Fee + PSI) First $1,000, % 0.75% 1.30% Next $4,000, % 0.65% 1.15% All assets over $5,000, % 0.55% 1.00% Does not include fees/commissions associated with execu ng transac ons. It also does not include the PSI s fee. Additionally, this fee covers costs associated with middle office services such as a trading infrastructure and client accounting and reporting. Supplemental Fee Information As the result of MIS discretionary authority, investment decisions made for a MS Program Select Equity account will result in the client incurring brokerage commission/fees imposed by the brokerage firm utilized by the MS Program. The payment of these brokerage fees is solely the client s responsibility. The broker dealer will charge the client s Select Equity Portfolio account directly for any applicable brokerage fees. These brokerage fees are in addition to the above mentioned MS Program Select Equity Annual Program Fee. When securities can be traded in more than one marketplace, the MS Program broker dealer will use its discretion in selecting the market in which such orders are entered. Please be aware that the broker dealer may receive remuneration, compensation or other consideration for directing orders to particular broker/dealers or market centers for execution (i.e., payment for order flow) and that MIS does not participate in such arrangements. The client may also incur certain charges by the broker dealer or its affiliates related to retirement plan accounts such as IRAs. The client understands that these charges are in addition to the above mentioned MS Program Stock Basket Annual Program fee and brokerage fees. American Depository Receipts ( ADRs ) are typically created, organized and administered by a U.S. bank. Generally, these banks charge a fee for their services (e.g., custody) and may deduct these fees from the dividends and other distributions generated from the ADR shares. In addition, banks incur expenses, such as those related to converting foreign currency into U.S. dollars, and as a result may pass those expenses on to the ADR shareholder. The client understands that these fees and expenses are in addition to the above mentioned MS Program Stock Basket Annual Program Fee and Brokerage Fees. PFA Program. PSI is no longer accepting new clients into the PFA program. PSI s compensation under the PFA Program is on a fee basis, computed based on the market value of the assets within the account being managed, with breakpoints that reduce the rate, generally in accordance with the following annual fee schedule: People s Securities, Inc. Form ADV, Part 2A Page 16

17 Assets Under Management Percentage Fee to PSI Initial $250, % Next $250, % Next $500, % All assets over $1,000, % Separate from PSI s fee for asset allocation, fund selection and reporting, investments in mutual funds are subject to fees imposed directly at the mutual fund level. Mutual funds charge a separate management fee for investment advisory and administrative services and a distribution or shareholder servicing fee, all of which are disclosed in the applicable mutual fund s prospectus. SEI Trust Company serves as transfer agent and custodian of all client assets under the PFA Program, for which SEI Trust Company receives compensation in the form of an administrative charge (the amount of which is disclosed on the administrative charge schedule attached to or contained in the SEI account agreement that each PFA Program participating client is required to sign). Any brokerage commissions are included in the custodial fee and are not negotiated by PSI. PSI selected SEI Trust Company as the broker and custodian for the PFA Program based on PSI s review of SEI s performance and competitive pricing. PSI s compensation for the program is not negotiable, but may be waived in whole or in part, for varying periods of time, in PSI s sole discretion, in connection with promotional efforts or for any other reason. PSI s compensation may be reduced or waived for persons who are directors, officers or employees of PSI or affiliates of PSI. The minimum account size for this program is $100,000. PSI s compensation is calculated and billed quarterly in arrears, based on the average value of the account over the period that comprises the preceding quarter. PSI s compensation for any period of less than a full quarter will be prorated on a daily basis. Upon written notification, the agreement between the parties may be terminated by either PSI or the client, and the client may withdraw from the PFA Program at any time in accordance with such termination request. In the event the relationship between PSI and the client is terminated, prorated fees will be charged based on the market value on the date notice of termination is received and any unearned compensation will be refunded to the client. B. Advisory fees are deducted from the client s custodial account. The assets of clients receiving investment advisory services will be held at qualified custodians. The client will incur charges imposed directly by the custodian of the client s account, (such as transaction charges imposed by the broker dealer executing securities transactions for the client s account when not employing GFMS, and fees and expenses imposed directly by mutual funds held in or for the client s account). PSI does not act as qualified custodian for any advisory account for which it provides services as an investment adviser. Please see Item 15: Custody for more information on PSI s custody practices. For further discussion concerning PSI s brokerage practices, please see Item 12 of this Disclosure Brochure. All fees paid to PSI for its services are separate and distinct from the fees and expenses charged directly by the client s custodian, the broker dealer, and mutual funds. The fees and expenses imposed by mutual funds are described in each fund s prospectus, and will generally include a management fee, other fund expenses, People s Securities, Inc. Form ADV, Part 2A Page 17