DISCLOSURE CONCERNING RETIREMENT ACCOUNTS INCLUDING IRAs AND ASSETS HELD IN ERISA- COVERED PLANS

Transcription

1 Park Avenue Securities LLC 7 Hanover Square, NY, NY Phone: Web: DISCLOSURE CONCERNING RETIREMENT ACCOUNTS INCLUDING IRAs AND ASSETS HELD IN ERISA- COVERED PLANS

2 The information provided in this Disclosure regarding Compensation (as defined below) and potential material conflicts of interest shall only be applicable to Recommendations for which a Park Avenue Securities LLC ( PAS ) Financial Professional receives Compensation concerning assets held within an Individual Retirement Account, Individual Retirement Annuity or Roth IRA (collectively IRA ), or within Plans covered by Title I of the Employee Retirement Income Security Act of 1974, as amended ( ERISA ), or a Plan described in Section 4975(e)(1)(A) of the Internal Revenue Code ( Code ) ( Retirement Account(s) ). Table of Contents Section: Page: 1. Compensation Received by PAS and Financial Professional 3 2. Description of Material Conflicts of Interest 4 3. Definitions 6

3 A. COMPENSATION RECEIVED BY PAS AND FINANCIAL PROFESSIONAL As a result of making a Recommendation implemented by a Client, PAS and Financial Professional will receive Compensation as described below depending on the product purchased. i. Mutual Funds: Compensation to PAS and Financial Professional consists of commission payments paid by the mutual fund sponsor based on a percentage of the dollar amount of the mutual fund shares purchased by Client which shall range between 0% and 5.75% based on the mutual fund category and share class. Additionally, both PAS and Financial Professional may receive ongoing trail payments generated from the 12b-1 fees charged to Client on an ongoing basis by the mutual fund which shall range between.0% and 1.0%. ii. Individual Stocks, Bonds and Exchange Traded Funds: Compensation to PAS and Financial Professional consists of commissions based on the transaction costs charged to Client by PAS associated with each purchase or sale of the product. For individual stocks and exchange traded funds the Compensation shall range from.75% and 1.4% of the transaction amount plus a $50 transaction fee. For fixed income securities (e.g., corporate bonds, municipal bonds, treasury bonds, Etc.) the maximum Compensation shall be the lesser of (1) a percentage of the principal amount of the trade ranging from 1% to 3% of the trade principal; or (2) the total par value of the bonds multiplied by a basis point value ranging from 10 to 200 basis points. iii. Individual Variable Annuities and Fixed Indexed Annuities: Compensation to PAS and Financial Professional consists of both up-front and trail commissions paid by the issuing insurance company based on a percentage of the total premium payments. The up-front Compensation shall range between 3.5% and 6.0% based on the product category and the trail Compensation shall range between.25% and.50%. iv. Group Annuities and Other Group Qualified Retirement Plan Products: Compensation to PAS and Financial Professional consists of commissions based on the total assets under the qualified retirement plan which shall range between.25% and 1.25%. 3

4 4 B. DESCRIPTION OF MATERIAL CONFLICTS OF INTEREST PAS and Financial Professional have material conflicts of interest when making Recommendations to Client. These material conflicts of interest are described below. Please understand that not all conflicts listed below exist with each Recommendation made by the Financial Professional: i. PAS offers proprietary products manufactured or managed by an affiliate of PAS, including but not limited to variable annuities ( Proprietary Products ), along with non-proprietary products. Financial Professional will not receive greater Compensation for recommending Proprietary Products as opposed to non-proprietary products. As a result of certain Proprietary Product sales, a PAS affiliate will receive payments in the form of contract fees and charges as well as Compensation from the funds (or their affiliates) that comprise the underlying investment options available under certain Proprietary Products. This Compensation can be for management fees, or distribution, marketing and/or administrative services provided to the funds by a PAS affiliate. ii. Financial Professional may receive variable Compensation based on Recommendations of product type (e.g., mutual fund versus variable annuities), product category within a product type (e.g., share class, equity funds, fixed income funds and investment only variable annuities) and available product discounts (e.g., breakpoints). Additionally, trail compensation for mutual funds may vary from fund to fund within the same share class or asset class. These variations may provide an incentive for Financial Professional to recommend one product type, category, fund family, fund or share class over another. iii. Financial Professional may make a Recommendation for Client to roll over or transfer assets from Client s employer-sponsored qualified retirement plan or an outside IRA contract into an IRA held at PAS or an affiliate. Financial Professional has a conflict of interest in recommending a rollover of assets from Client s employer plan or another IRA to an IRA held at PAS or by an affiliate. The conflict arises because Financial Professional would likely earn no compensation if Client were to leave the assets in the employer-sponsored plan or another IRA not affiliated with PAS or an affiliate. iv. When selling an individual variable annuity, group variable annuity or fixed indexed annuity, Financial Professional may have a choice in how s/he gets compensated. Such products may allow Financial Professional to choose between (a) greater upfront Compensation with zero trail Compensation or a smaller amount in trail Compensation or (b) smaller up-front Compensation with larger trail Compensation. Trail Compensation is an ongoing payment to Financial Professional subsequent to the sale. The charges, fees and costs of the annuity product that are paid by Client will not be impacted regardless of the Compensation structure that is selected by Financial Professional. v. PAS levels certain Compensation payments that it makes to Financial Professional for certain product types and categories within those product types (e.g., variable annuities and mutual funds). As a result, if the product sponsor pays out more than the level Compensation set by PAS, PAS will retain any Compensation in excess of the level Compensation paid by PAS to Financial Professional. PAS will not share any excess Compensation it receives with Financial Professional or any other party. vi. Financial Professional may be licensed as an investment adviser representative and may make a Recommendation to Client to participate in an investment advisory program. Client should discuss with Financial Professional the benefits and costs associated with investment advisory programs versus a brokerage account, as well as the benefits and costs associated with either relationship. An investment advisory account may not be appropriate for low volume trading activity or if Client has a long-term buy andhold investment strategy. Sometimes in these instances, a transaction based brokerage account may be more appropriate. In these cases, an investment advisory relationship may cost Client more than a brokerage relationship over time and may result in higher Compensation to Financial Professional, even when taking into account any trail Compensation paid to Financial Professional in a brokerage account. Therefore, careful consideration of the potential total Compensation payable to Financial Professional over time in either account type should be made to determine the most appropriate account type. Alternatively, if it is expected that Client s account will have a high volume of trading activity, an investment advisory relationship may be more

5 5 cost effective than a brokerage relationship. A brokerage account with a high volume of trading activity may provide Financial Professional with higher Compensation related to the individual transactions. Trading activity and the costs and expenses associated with an investment product, among other things, should be considered by Client when deciding whether an investment advisory account or brokerage account is more appropriate for Client s particular situation.

6 C. DEFINITIONS i. Client means: A Plan or owner or participant or beneficiary of a Plan described in Section 3(3) of ERISA and any Plan described in Section 4975(e)(1) of the Code, with authority to direct the investment of assets in his or her Plan account or to take a distribution. ii. Compensation includes sales charges when not paid directly by Client s Retirement Account; including gross dealer concessions (i.e., commissions); revenue sharing payments, if any; 12b-1 fees; distribution, solicitation or referral fees; volume-based fees; fees for seminars and educational programs; and any other consideration or financial benefit provided to PAS or an affiliate as a result of a transaction involving Client s Retirement Account. iii. Financial Professional means: any individual registered with Park Avenue Securities LLC as a registered representative providing Recommendations to Client with respect to Client s Retirement Account. iv. Recommendation means: an individually tailored communication to Client with respect to Client s Retirement Account that, based on its content, context, and presentation, would reasonably be viewed as a suggestion that Client engage in or refrain from taking a particular course of action. Financial Professional may from time to time provide Recommendations to Client for Client s Retirement Account concerning one or more of the following matters: 1. the advisability of acquiring, holding, disposing of, or exchanging securities or other Investment Property; 2. with respect to rollovers, transfers, or distributions from a Plan or IRA, including whether, in what amount, in what form, and to what destination such a rollover, transfer or distribution should be made; 3. how securities or other Investment Property should be invested after the securities or other Investment Property are rolled over, transferred, or distributed from a Plan or IRA; 4. as to the management of securities or other Investment Property, including recommendations on investment policies or strategies, portfolio composition, the selection of individuals other than PAS or Financial Professional to provide investment advice, and the selection of investment account arrangements (e.g., brokerage accounts versus investment advisory accounts). For purposes of this Disclosure, the term Investment Property only includes assets that can be held within a brokerage or investment advisory account and excludes property that does not contain an investment component. 6

7 STEPforward with Park Avenue Securities Park Avenue Securities LLC (PAS) is an indirect, whollyowned subsidiary of The Guardian Life Insurance Company of America (Guardian). PAS is a registered broker-dealer offering competitive investment products, as well as a registered investment adviser offering financial planning and investment advisory services. PAS is a member of FINRA and SIPC. Variable insurance products, their underlying investment options, mutual funds, and ETFs are sold by prospectus only. Prospectuses contain important information, including fees and expenses. Please read the prospectus carefully before investing or sending money. You should consider the investment objectives, risks, fees and charges of the investment company carefully before investing. Please contact your investment professional or call for a prospectus, which contains this and other important information. Annuities and variable life insurance issued by The Guardian Insurance & Annuity Company, Inc. (GIAC), a Delaware corporation. Individual variable annuities are distributed by PAS. GIAC is a wholly owned subsidiary of Guardian. Guardian, GIAC, and PAS are located at 7 Hanover Square, New York, NY (Exp. 11/19) PAS