14901 Quorum Drive, Suite 900 Dallas, Texas 75254 (214) 871-8833 www.avondalewealth.com March 2011 This Brochure provides information regarding the qualifications and business practices of Avondale Wealth Management LLC. If you have any questions about the contents of this Brochure, please contact us at andy@avondalewealth.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. However, it has been provided to the SEC. Avondale Wealth Management LLC is a registered investment Adviser. Registration of an Investment Adviser does not imply any level of skill or training. The oral and written communications of an Adviser provide you with information about which you determine to hire or retain an Adviser. Additional information about Avondale Wealth Management LLC is also available on the SEC s website at www.adviserinfo.sec.gov.
MATERIAL CHANGES This Brochure, dated March 2011, is a new document prepared according to new SEC and State Securities rules and regulations. Accordingly, this document is materially different in structure and requires certain new information that our previous brochure did not require. In the future, this section of the Brochure will disclose only specific material changes that are made to the Brochure and provide clients with a summary of such changes. It will also reference the date of Avondale Wealth Management LLC s last annual update of this Brochure. Pursuant to new SEC and State Rules and Regulations, we will ensure that each client receives a summary of any material changes to this and subsequent brochures within 120 days of the close of Avondale Wealth Management LLC s fiscal year. We will further provide you with a new Brochure as necessary based on changes or new information, at any time, without charge. A copy of this brochure may be obtained by contacting Andrew Patrick Mutscheller, Chief Compliance Officer, at andy@avondalewealth.com or (214) 871-8833. Page 2 of 19
Please Retain a Copy of This Brochure for Your Records TABLE OF CONTENTS Item Number Item Page FORM ADV PART 2A Item 1 Cover Page... Item 2 Material Changes... 2 Item 3 -Table of Contents... 3 Item 4 Advisory Business... 4, 5 Item 5 Fees and Compensation... 5,6,7,8 Item 6 Performance-Based Fees and Side-By-Side Management... 8 Item 7 Types of Clients... 8 Item 8 Methods of Analysis, Investment Strategies and Risk of Loss... 8,9 Item 9 Disciplinary Information... 10 Item 10 Other Financial Industry Activities and Affiliations... 10, 11, 12 Item 11 Code of Ethics... 12, 13 Item 12 Brokerage Practices... 13, 14 Item 13 Review of Accounts... 14 Item 14 Client Referrals and Other Compensation... 15 Item 15 Custody... 15 Item 16 Investment Discretion... 16 Item 17 Voting Client Securities... 16 Item 18 Financial Information... 16 FORM ADV PART 2B Supervised Persons.. 11, 12 Page 3 of 19
ITEM 4: ADVISORY BUSINESS Avondale Wealth Management LLC s ( Avondale ) is a fee-only, hourly-only, investment advisory firm. It was incorporated in 2010, and the principal owners are Andrew Patrick Mutscheller, John Wilson Spears, Samuel Sean McGee, and Justin Coy Jacobs. Avondale focuses on providing its clients a broad range of comprehensive financial planning, investment management, and consulting services (which may include non-investment related matters) primarily through individual consultations. Our consulting services include, but are not limited to, advice related to liability management and bank relationship consulting, direct debt, contingent debt and traditional/nontraditional liabilities. Avondale offers advice on various types of investments including equities, corporate debt securities, CDs, municipal securities, mutual funds, insurance products and U.S. government securities. Avondale may also provide advice about exchange traded funds (ETFs), real estate investment trusts (REITs) and any type of investment held in a client s portfolio at the beginning of the advisory relationship. That said, Avondale primarily allocates its client s investment management assets on a discretionary basis among mutual funds, exchange traded funds, individual debt and equity securities and Independent Managers (as defined under Item 10 below), in accordance with the stated investment objectives of the client. Proprietary Investment Strategy In addition to the foregoing services, Avondale may manage client portfolios by allocating portfolio assets among various mutual funds on a discretionary basis using one or more of its proprietary investment strategies (collectively referred to as investment strategy ). In so doing, Avondale shall buy, sell, exchange and/or transfer shares of mutual funds based upon the investment strategy. Avondale s management using the investment strategy has been designed to comply with the requirements of Rule 3a-4 of the Investment Company Act of 1940, as amended. Rule 3a-4 provides similarly-managed accounts, such as the investment strategy, with a safe harbor from the definition of an investment company. In accordance with Rule 3a-4, the following features have been specifically included in Avondale s management using the investment strategy: Independent Managers As further discussed in under Item 10 herein, Avondale may recommend that clients authorize the active discretionary management of a portion of their assets by and/or among certain Independent Manager(s), based upon the stated investment objectives of the client. Avondale shall continue to render services to the client relative to the discretionary selection of Independent Manager(s) as well as the monitoring and review of account performance and client investment objectives. When selecting an Independent Manager for a client, Avondale shall review information about the Independent Manager(s) such as its disclosure statement and/or material supplied by the Page 4 of 19
Independent Manager(s) or independent third parties for a description of the Independent Manager s investment strategies, past performance and risk results to the extent available. In addition to the methods of analysis, sources of information and investment strategies listed in Item 8 by Avondale, the Independent Manager(s) may utilize other methods, sources and strategies, all of which is described on such Independent Manager(s) Form ADV, and provided to clients. Prior to engaging Avondale to provide any of the foregoing investment advisory services, the client will be required to enter into one or more written agreements with Avondale setting forth the terms and conditions under which Avondale shall render its services (collectively the Agreement ). ITEM 5: FEES AND COMPENSATION Avondale offers its services on a fee basis which, depending upon the engagement may include fixed fees and/or fees based upon assets under management. The specific manner in which fees are charged is established in the client s Agreement with Avondale. All fees are subject to negotiation, and the factors considered are the size of the account, service requested and the type of assets managed. In the event the client determines to engage Avondale to provide investment management services, Avondale shall do so on a fee basis. If engaged, Avondale shall charge an annual fee based upon a percentage of the market value of the assets being managed by Avondale. As described in further detail below, Avondale s annual fee is exclusive of, and in addition to brokerage commissions, transaction fees, and other related costs and expenses which shall be incurred by the client. However, Avondale shall not receive any portion of these commissions, fees, and costs. Avondale s annual fee shall be prorated and charged quarterly, in advance, based upon the market value of the assets on the last day of the previous quarter. The annual fee shall vary (between 0.10% and 1.25%) depending upon the market value of the assets under management and the type of investment management services to be rendered, as follows: Investment Portfolio PORTFOLIO VALUE ANNUAL FEE First $1,000,000... 1.25% Next $4,000,000... 0.90% Next $5,000,000... 0.60% Next $10,000,000... 0.35% Above $20,000,000... 0.20% Page 5 of 19
Preservation Portfolio PORTFOLIO VALUE ANNUAL FEE First $1,000,000... 0.50% Next $4,000,000... 0.40% Next $5,000,000... 0.30% Next $10,000,000... 0.20% Above $20,000,000... 0.10% Avondale does not impose an account minimum for starting or maintaining an account. However, as a condition for starting and maintaining a relationship, Avondale shall generally impose a minimum annual fee of $5,000. This minimum fee may have the effect of making Avondale s services impractical for clients, particularly those with portfolios less than $500,000 under Avondale s management. Accordingly, Avondale, in its sole discretion, may negotiate to charge a lesser management fee based upon certain criteria (i.e., anticipated future earning capacity, anticipated future additional assets, dollar amount of assets to be managed, related accounts, account composition, pre-existing client, account retention, pro bono activities, etc.). For the initial quarter of investment management services, the first quarter s fees shall be calculated on a pro rata basis. The Agreement between Avondale and the client will continue in effect until terminated by either party pursuant to the terms of the Agreement. Avondale s annual fee shall be prorated through the date of termination and any remaining balance shall be charged or refunded to the client, as appropriate, in a timely manner. Avondale s financial planning and consulting services fees are negotiable, but generally range from $5,000 to $75,000 on a fixed fee basis, depending upon the level and scope of the services and the professional rendering the financial planning services. Avondale in some complex cases shall charge a separate fixed fee for these services which shall be agreed upon prior to rendering the services. If the client engages Avondale for multiple services, Avondale may offset all or a portion of its fees for those services based upon the amount paid for the financial planning and/or consulting services. Independent Managers Fees If Avondale refers a client to certain Independent Manager(s) (as described in further detail under Item 4 and Item 10 herein) where Avondale s compensation is included in the advisory fee charged by such Independent Manager(s) and the client engages those Independent Manager(s), Avondale shall be compensated for its services by receipt of a fee to be paid directly by the Independent Manager(s) to Avondale in accordance with the requirements of Rule 206(4)-3 of the Investment Advisers Act of 1940, as amended, and any corresponding state securities laws, rules, regulations, or requirements. Any such fee shall be paid solely from the Independent Manager(s) investment management fee or the program fee of the wrap fee program (as appropriate), and shall not result in any additional charge to the client. Page 6 of 19
Asset Withdrawals and Additions The client may make additions to and withdrawals from the account at any time, subject to the Registrant s right to terminate an account. If assets are deposited into an account after the inception of a quarter, the fee payable with respect to such assets will be prorated based on the number of days remaining in the quarter. Clients may withdraw account assets on notice to the Registrant, subject to the usual and customary securities settlement procedures. For partial withdrawals within a billing period, Avondale may credit its unearned fee towards the next quarter s fee. However, Avondale designs its portfolios as long-term investments and asset withdrawals may impair the achievement of a client s investment objectives. Additions may be in cash or securities provided that Avondale reserves the right to liquidate any transferred securities, or decline to accept particular securities into a client s account. Avondale may consult with its clients about the options and ramifications of transferring securities. However, clients are advised that when transferred securities are liquidated, they are subject to transaction fees, fees assessed at the mutual fund level (i.e. contingent deferred sales charge) and/or tax ramifications. Additional Fees Clients may incur certain charges imposed by the Financial Institution(s) and other third parties such as fees charged by Independent Managers (as defined above), custodial fees, charges imposed directly by a mutual fund or exchange traded fund in the account, which shall be disclosed in the fund s prospectus (e.g., fund management fees and other fund expenses), deferred sales charges, odd-lot differentials, transfer taxes, wire transfer and electronic fund fees, and other fees and taxes on brokerage accounts and securities transactions. Additionally, for assets outside of any wrap fee programs, clients may incur brokerage commissions and transaction fees. Such charges, fees and commissions are exclusive of and in addition to Avondale s fee. Item 12 further describes the factors that Avondale considers in selecting or recommending broker-dealers for client transactions and determining the reasonableness of their compensation (e.g., commissions). Avondale s Agreement and/or the separate agreement with the Financial Institution(s) may authorize Avondale through the Financial Institution(s) to debit the client s account for the amount of Avondale s fee and to directly remit that management fee to Avondale in accordance with applicable custody rules. Termination Provisions, Refunds and Assignment Prior to engaging Avondale to provide financial planning and/or consulting services, the client will generally be required to enter into a written agreement with Avondale setting forth the terms and conditions of the engagement and describing the scope of the services to be provided and the portion of the fee that is due from the client prior to Avondale commencing services. Either party may terminate the agreement by written notice to the other. In the event the client terminates Avondale s financial planning and/or consulting services, the balance of Avondale s unearned fees (if any) shall be refunded to the client. If termination occurs within five business days of entering into an agreement for such services the client shall be entitled to a full refund. Page 7 of 19
Neither Avondale nor the client may assign the Agreement without the consent of the other party. Transactions that do not result in a change of actual control or management of Avondale shall not be considered an assignment. ITEM 6: PERFORMANCE-BASED FEES AND SIDE-BY-SIDE MANAGEMENT Avondale does not charge any performance-based fees (fees based on a share of capital gains on or capital appreciation of the assets of a client). ITEM 7: TYPES OF CLIENTS Avondale provides financial planning, consulting, and investment management services to individuals, pension and profit sharing plans, trusts, estates, charitable organizations, corporations and business entities. ITEM 8: METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF LOSS Avondale reminds clients that investing in securities involves risk of loss that they must be prepared to bear. To aid clients in discerning their investment needs, Avondale measures investors goals, risk tolerance and time horizon through a comprehensive interview process. The initial and ongoing review process, and method of analysis includes the following procedures: 1. Initial Interview an initial interview is conducted with each client to determine the client s financial circumstances, goals, acceptable levels of risk, any reasonable restrictions on the management of their account, and other relevant circumstances. Clients should note that Avondale shall not be required to verify any information received from the client or from the client s other professionals (e.g., attorney, accountant, etc.) and is expressly authorized to rely on such information; 2. Individual Treatment the client s account is managed on the basis of the client s financial circumstances and investment objectives; 3. Consultation an Advisory Affiliate (see Item 10 for further details) of Avondale knowledgeable about the client s account shall be reasonably available to consult with the client relative to the status and management of their account; Page 8 of 19
And; 4. Notice of Transactions the client shall receive notice of all transactions in their account as if they had maintained a similar account outside of the investment strategy; 5. Quarterly Statement the client shall be provided with a quarterly statement containing a description of all activity in the their account; 6. Ability to Impose Restrictions the client shall have the ability to impose reasonable restrictions on the management of their account, including the ability to instruct Avondale not to purchase certain securities or types of securities; 7. No Pooling the client s beneficial interest in a security does not represent an undivided interest in all the securities held by the custodian, but rather represents a direct and beneficial interest in the securities which comprise the client s account; 8. Separate Account a separate account is maintained for the client with the custodian, 9. Ownership - each client retains indicia of ownership of the account (e.g. right to withdraw securities or cash, exercise or delegate proxy voting, and receive transaction confirmations). In providing its financial planning services, Avondale looks to the long-term. After Avondale evaluates the Client s financial needs, the Adviser will design investment and risk management strategies to help the Client achieve his or her financial goals. Avondale may recommend the services of itself, and/or its Advisory Affiliates (registered representatives of a broker-dealer, and/or other professionals in their individual capacities) to implement its recommendations. Clients are advised that a conflict of interest exists if Avondale recommends its own services. The client is under no obligation to act upon any of the recommendations made by Avondale under a financial planning / consulting engagement and/or engage the services of any such recommended professional, including Avondale itself. The client retains absolute discretion over all such implementation decisions and is free to accept or reject any of Avondale s recommendations. Moreover, each client is advised that it remains his/her/its responsibility to promptly notify Avondale if there is ever any change in his/her/its financial situation or investment objectives for the purpose of reviewing, evaluating, or revising Avondale s previous recommendations and/or services. Avondale s clients are advised to promptly notify Avondale if there are ever any changes in their financial situation or investment objectives or if they wish to impose any reasonable restrictions upon Avondale s management services. Page 9 of 19
Account Review For those clients to whom Avondale provides investment management services, Avondale monitors those portfolios as part of an ongoing process while regular account reviews are conducted on at least a quarterly basis. For those clients to whom Avondale provides financial planning and/or consulting services, reviews are conducted on an as needed basis. Such reviews are conducted by one of Avondale s investment adviser representatives. All investment advisory clients are encouraged to discuss their needs, goals, and objectives with Avondale and to keep us informed of any changes thereto. Avondale shall contact ongoing investment advisory clients at least annually to review its previous services and/or recommendations and to discuss the impact resulting from any changes in the client s financial situation and/or investment objectives. ITEM 9: DISCIPLINARY INFORMATION Registered Investment Advisers are required to disclose all material facts regarding any legal or disciplinary events that would be material to your evaluation of the registered investment Adviser or the integrity of its management. Neither Avondale, its principals, nor its employees have a history of any legal or disciplinary action. ITEM 10: OTHER FINANCIAL INDUSTRY ACTIVITIES AND AFFILIATIONS Other Financial Industry Activities or Affiliations Investment Advisers: Avondale may recommend that certain clients authorize the active discretionary management of a portion of their assets by and/or among certain independent investment manager(s) ( Independent Manager(s) ), either directly or through a wrap fee program, based upon the stated investment objectives of the client. The terms and conditions under which the client shall engage the Independent Manager(s) shall be set forth in separate written agreements between (1) the client and Avondale and (2) the client and the designated Independent Manager(s) and/or wrap fee program sponsor. Avondale shall continue to render advisory services to the client relative to the ongoing monitoring and review of account performance, for which Avondale shall receive an annual advisory fee which is based upon a percentage of the market value of the assets being managed by the designated Independent Manager(s). Factors that Avondale shall consider in recommending Independent Manager(s) include the client s stated investment objective(s), management style, performance, reputation, financial strength, reporting, pricing, and research. Page 10 of 19
The investment management fees charged by the designated Independent Manager(s), together with the fees charged by the wrap fee program sponsor and corresponding designated brokerdealer/custodian of the client s assets, may be exclusive of, and in addition to, Avondale s investment advisory fee set forth above. As discussed above, the client may incur additional fees than those charged by Avondale, the designated Independent Manager(s), wrap fee program sponsor (if applicable), and corresponding broker-dealer and custodian. In addition to Avondale s written disclosure statement, the client shall also receive the written disclosure statement of the designated Independent Manager(s) and wrap fee program sponsor (if applicable). Certain Independent Manager(s) may impose more restrictive account requirements and varying billing practices than Avondale. In such instances, Avondale may alter its corresponding account requirements and/or billing practices to accommodate those of the Independent Manager(s) or wrap fee program sponsor. In the event the client desires, the client can engage certain persons associated with Avondale (but not Avondale) to render securities brokerage services under a commission arrangement. Under this arrangement, the client may implement securities transactions through certain of Avondale s Advisory Affiliates (as defined below), in their respective individual capacities as registered representatives of Purshe Kaplan Sterling Investments, Inc. ( PKS ), an SEC registered broker-dealer and member of the FINRA. Brokerage commissions may be charged by PKS to effect these securities transactions and thereafter, a portion of these commissions may be paid by PKS to such Advisory Affiliates. Prior to effecting any transactions, the client will be required to enter into a new account agreement with PKS. The brokerage commissions charged by PKS may be higher or lower than those charged by other broker-dealers. In addition, certain of Avondale s Advisory Affiliates (as applicable), may also receive additional ongoing 12b-1 fees for mutual fund purchases from the mutual fund company during the period that the client maintains the mutual fund investment. While Avondale does not sell such securities products to its investment advisory clients, the Registrant does permit its Advisory Affiliates, in their individual capacities as registered Representatives of PKS, to sell securities products to its investment advisory clients. A conflict of interest exists to the extent that Avondale recommends the purchase of securities where the Registrant s Advisory Affiliates receive commissions or other additional compensation as a result of Avondale s recommendations. Insurance Company or Agency Avondale may render non-discretionary investment management services to clients relative to: (1) variable life/annuity products that they may own, and/or (2) their individual employer sponsored retirement plans. In so doing, Avondale either directs or recommends the allocation of client assets among the various mutual fund subdivisions that comprise the variable life/annuity product or the retirement plan. The client assets shall be maintained at either the specific insurance company that issued the variable life/annuity product which is owned by the client, or at the custodian designated by the sponsor of the client s retirement plan. Page 11 of 19
Certain of Avondale s Advisory Affiliates, in their individual capacities, are also licensed insurance agents with various insurance companies, and in such capacity, may recommend, on a fully disclosed commission basis, the purchase of certain insurance products. While Avondale does not sell such insurance products to its investment advisory clients, Avondale does permit its Advisory Affiliates, in their individual capacities as licensed insurance agents, to sell insurance products to its investment advisory clients. A conflict of interest exists to the extent that Avondale recommends the purchase of insurance products where Avondale s Advisory Affiliates receive insurance commissions or other additional compensation. Other Financial Industry Activities or Affiliates - Individuals Andy Mutscheller, Justin Jacobs, and Sam McGee are Registered Representative Agents of Purshe Kaplan Sterling Investments, 18 Corporate Woods Boulevard Albany, New York 12211 a FINRA registered Broker-dealer. On occasion, they may effect transactions on behalf of clients of Avondale Wealth Management LLC with respect to the purchase of securities products. The registered representative effecting the sale of an insurance product may receive a commission for the sale of such product. Commission payments are made directly to the individual registered representative who effected the transaction. Prior to effecting a sale of an insurance product, disclosure will be provided to the client that the registered representative will receive a commission. No compensation is paid to Avondale Wealth Management LLC, Inc. with respect to such transactions. ITEM 11: CODE OF ETHICS As a fiduciary, Avondale has an affirmative duty to render continuous, unbiased investment advice, and at all times act in the clients best interest. To maintain this ethical responsibility to clients, Avondale has adopted a Code of Ethics that establishes the fundamental principles of conduct and professionalism expected by all officers, directors and employees in discharging their duties. Avondale s Code of Ethics is designed to deter inappropriate behavior and heighten awareness as to what is right, fair, just and good by promoting: Honest and ethical conduct. Full, fair and accurate disclosure Compliance with applicable rules and regulations. Reporting of any violations of the Code. Accountability To help clients understand Avondale s ethical culture and standards and what steps have been taken to prevent personnel from abusing their inside position, a copy of Avondale s Code of Ethics is available for review upon request. Avondale has adopted a code of ethics that sets forth the standards of conduct expected of its associated persons and requires compliance with applicable securities laws ( Code of Ethics ). Page 12 of 19
In accordance with Section 204A of the Advisers Act, its Code of Ethics contains written policies reasonably designed to prevent the unlawful use of material non-public information by Avondale or any of its associated persons. The Code of Ethics also requires that certain of Avondale s personnel (called Access Persons ) report their personal securities holdings and transactions and obtain pre-approval of certain investments such as initial public offerings and limited offerings. Clients may contact Avondale to request a copy of its Code of Ethics. Unless specifically permitted in Avondale s Code of Ethics, none of Avondale s Access Persons may effect for themselves or for their immediate family (i.e., spouse, minor children, and adults living in the same household as the Access Person) any transactions in a security which is being actively purchased or sold, or is being considered for purchase or sale, on behalf of any of Avondale s clients. Participation or Interest When Avondale is purchasing or considering for purchase any security on behalf of a client, no Access Person may effect a transaction in that security prior to the completion of the purchase or until a decision has been made not to purchase such security. Similarly, when Avondale is selling or considering the sale of any security on behalf of a client, no Access Person may effect a transaction in that security prior to the completion of the sale or until a decision has been made not to sell such security. These requirements are not applicable to: (i) direct obligations of the Government of the United States; (ii) money market instruments, bankers acceptances, bank certificates of deposit, commercial paper, repurchase agreements and other high quality shortterm debt instruments, including repurchase agreements; (iii) shares issued by mutual funds or money market funds; and (iv) shares issued by unit investment trusts that are invested exclusively in one or more mutual funds. ITEM 12: BROKERAGE PRACTICES Avondale may recommend a broker to the client for the purpose of executing trades at a previously negotiated discount rate. For this service, Avondale shall generally recommend that clients utilize the brokerage and clearing services of Fidelity Institutional Wealth Services and its affiliates (collectively referred to as Fidelity ). Factors which Avondale considers in recommending Fidelity or any other broker-dealer, to clients include their respective financial strength, reputation, execution, pricing, research, and service. Fidelity enables Avondale to obtain many mutual funds without transaction charges and other securities at nominal transaction charges. The commissions and/or transaction fees charged by Fidelity may be higher or lower than those charged by other broker-dealers. The commissions paid by Avondale s clients shall comply with Avondale s duty to obtain best execution. However, a client may pay a commission that is higher than another qualified broker-dealer might charge to effect the same transaction where Page 13 of 19
Avondale determines, in good faith, that the commission is reasonable in relation to the value of the brokerage and research services received. Avondale may receive from Fidelity, without cost to Avondale, computer software and related systems support, which allow Avondale to better monitor client accounts maintained at Fidelity. Avondale may receive the software and related support without cost because Avondale renders investment management services to clients that maintain assets at Fidelity. The software and related systems support may benefit Avondale, but not its clients directly. Additionally, Avondale may receive the following benefits from Fidelity through the Fidelity Institutional Wealth Services Group: receipt of duplicate client confirmations and bundled duplicate statements; access to a trading desk that exclusively services its Institutional Wealth Services Group participants; access to block trading which provides the ability to aggregate securities transactions and then allocate the appropriate shares to client accounts; and access to an electronic communication network for client order entry and account information. Conflict of Interest In fulfilling its duties to its clients, Avondale endeavors at all times to put the interests of its clients first. Clients should be aware however, that Avondale s receipt of economic benefits from a broker-dealer creates a conflict of interest since these benefits may influence Avondale s choice of broker-dealer over another broker-dealer that does not furnish similar software, systems support, or services. Best Execution In seeking best execution, the determinative factor is not the lowest possible cost, but whether the transaction represents the best qualitative execution, taking into consideration the full range of a broker-dealer s services, including among others, the value of research provided, execution capability, commission rates, and responsiveness. Consistent with the foregoing, while Avondale will seek competitive rates, it may not necessarily obtain the lowest possible commission rates for client transactions. ITEM 13: REVIEW OF ACCOUNTS Clients' accounts are reviewed quarterly. Accounts are reviewed more frequently than quarterly if there is any unusual activity in the securities held by such account. Clients receive a quarterly statement and a quarterly portfolio evaluation. Each Avondale advisory representative will conduct the investment review of their client account(s). Each client s account is reviewed periodically to determine if the clients investment needs and objectives are being met. General guidelines, market conditions, and cash needs are adjusted as necessary. Specific security holdings are monitored for market conditions on a day to day basis. Specific goals and objectives, as designed by the client through the financial profile, are established for portfolio positioning and diversification, and monitored periodically and revised as needs dictate. Page 14 of 19
Investment results may be provided to clients on a quarterly basis. If such report is prepared, each quarterly statement will summarize the specific investments currently held and the value of client s portfolio. Unless otherwise agreed upon, clients are provided with transaction confirmation notices and regular summary account statements directly from the broker-dealer or custodian for the client accounts. ITEM 14: CLIENT REFERRALS AND OTHER COMPENSATION If a client is introduced to Avondale by either an unaffiliated or an affiliated solicitor, the Registrant may pay that solicitor a referral fee in accordance with the requirements of Rule 206(4)-3 of the Advisers Act and any corresponding state securities law requirements. Any such referral fee shall be paid solely from Avondale s investment management fee, and shall not result in any additional charge to the client. If the client is introduced to Avondale by an unaffiliated solicitor, the solicitor shall provide the client with a copy of Avondale s written disclosure statement which meets the requirements of Rule 204-3 of the Advisers Act and a copy of the solicitor s disclosure statement containing the terms and conditions of the solicitation arrangement including compensation. Any affiliated solicitor of Avondale shall disclose the nature of his/her relationship to prospective clients at the time of the solicitation and will provide all prospective clients with a copy of Avondale s written disclosure statement at the time of the solicitation. ITEM 15: CUSTODY Clients receive quarterly statements from Avondale. The broker-dealer, bank or other qualified custodian holds and maintains our client s investment assets sends statements at least quarterly, indicating all amounts disbursed from the account including the amount of management fees paid directly to Avondale. Avondale urges you to carefully review such statements and compare such official custodial records to the account statements that we may provide to you. Our statements may vary from custodial statements based on accounting procedures, reporting dates, or valuation methodologies of certain securities. All customer assets will be held by the custodian of the client s account. Avondale will not hold customer funds or securities and is independent of the custodian. ITEM 16: INVESTMENT DISCRETION Avondale usually receives discretionary authority from the client at the outset of an Advisory relationship which sets forth the authority to buy and sell securities in whatever amounts are Page 15 of 19
determined to be appropriate for the account and whether such transactions are with, or without, prior approval by the client. However, Clients may, in writing, place reasonable limitations upon Avondale s discretionary authority. When selecting securities and determining amounts, Avondale observes the investment policies, limitations and restrictions of the clients for which it advises. ITEM 17: VOTING CLIENT SECURITIES As a matter of firm policy and practice, Avondale is hereby expressly precluded from voting proxies. Clients understand and agree that the client retains the right to vote all proxies, which are solicited for securities held in the managed accounts. Any proxy solicitations received at Avondale s place of business will be immediately forwarded to the client for their evaluation and decision. ITEM 18: FINANCIAL INFORMATION Registered Investment Advisers are required to provide you with certain financial information or disclosures regarding their financial condition. Avondale has no financial commitment that impairs its ability to meet contractual and fiduciary commitments to clients, and has not been the subject of any bankruptcy proceedings. Page 16 of 19
(Part 2B of Form ADV) Supervised Persons: Andy Mutscheller, Justin Jacobs, Sam McGee, and John Spears 14901 Quorum Drive, Suite 900 Dallas, Texas 75254 (214) 871-8833 www.avondalewealth.com March 2011 As of March 31, 2011, this brochure supplement provides information about Andy Mutscheller, Justin Jacobs, Sam McGee, and John Spears that supplements the Avondale Wealth Management LLC brochure. You should have received a copy of that brochure. Please contact Andy Mutscheller, Chief Compliance Officer at andy@avondalewealth.com or 214-871-8833, if you did not receive Avondale Wealth Management LLC s brochure, or if you have any questions about the contents of this supplement. Additional information about Mutscheller, Justin Jacobs, Sam McGee, and John Spears is available on the SEC s website at www.adviserinfo.sec.gov. Page 17 of 19
Education and Business Standards Avondale Wealth Management LLC generally requires that all of those employees involved in determining or giving investment advice have an undergraduate degree from an accredited college or university and have either an advanced business degree or at least four years experience in investment management or a related field. Background Information Listed below for Avondale Wealth Management LLC's Supervised Persons: Name, Year of Birth, Formal education after high school, and Professional Background. Andy Mutscheller, Principal Born 1976 Andy Mutscheller has 12 years of expertise in asset management. Prior to founding Avondale, he was Vice President and Client Advisor for J.P. Morgan Asset Management. In his 11 years with J.P. Morgan, he was responsible for managing high net worth client portfolios and advising institutional client portfolios ranging from $100 million to $1 billion. Since 2002, he has specialized on delivering multiple asset class solutions for endowments, foundations, retirement plans, and insurance clients. Previously, he spent four years with Banc One Investment Advisors in Columbus, Ohio as a portfolio manager advising high net worth clients. Andy has a BBA with a focus in financial services from the University of Toledo (1998), and an MBA from Otterbein College in Westerville, Ohio (2005). His licenses include Series 3, 7, 63, 65, and Texas General Lines Insurance. Justin Jacobs, Principal Born 1977 Justin Jacobs specializes in financial and estate planning for high net worth families. He has 10 years expertise in wealth planning and asset management. Before founding Avondale, Justin was a Senior Vice President and Senior Investment Strategist for the BBVA Compass Wealth Management Group in Austin, Texas. Prior to BBVA Compass he spent five years as a Financial Advisor at Merrill Lynch where he was the junior partner on the top producing team in Central Texas. Justin has an Economics degree from Yale University (2000). His licenses include Series 7, 66, and Texas General Lines Insurance. Sam McGee, Principal Born 1975 Sam McGee specializes in wealth management and financial planning for high net worth families. He brings 11 years experience in wealth planning, asset management, and private banking for high net worth families. Prior to founding Avondale, Sam was a Senior Vice President for the BBVA Compass Wealth Management Group in Dallas, TX. Prior to BBVA Compass, he helped launch Wachovia Wealth Management in their de novo expansion in Texas, also serving as the bank's medical segmentation Co-Chairman nationally. Sam has an MBA in Page 18 of 19
Finance from the Bauer School at the University of Houston (2001), and an undergraduate business degree from Texas A&M University (1998). His licenses include Series 7, 66, and Texas General Lines Insurance. John Spears, Principal Born 1976 John Spears focuses on general management, client support and asset management. Prior to founding Avondale, John held a management role as Senior Vice President of Energy Education, Inc., an energy management consulting firm. Prior to joining Energy Education he was an Associate with Arthur Andersen LLP s Business Valuation Group, performing economic valuations of owner interests in businesses. John has a bachelor's degree in Finance from Texas Christian University. His licenses include Series 7, 66, and Texas General Lines Insurance. Other Professional Activity: Andy Mutscheller, Justin Jacobs, and Sam McGee are Registered Representative Agents of Purshe Kaplan Sterling Investments, 18 Corporate Woods Boulevard Albany, New York 12211 a FINRA registered Broker-dealer. On occasion, they may effect transactions on behalf of clients of Avondale Wealth Management LLC with respect to the purchase of securities products. The registered representative effecting the sale of an insurance product may receive a commission for the sale of such product. Commission payments are made directly to the individual registered representative who effected the transaction. Prior to effecting a sale of an insurance product, disclosure will be provided to the client that the registered representative will receive a commission. No compensation is paid to Avondale Wealth Management LLC, Inc. with respect to such transactions. Disciplinary Information: None Additional Compensation: None Supervision: Andy Mutscheller, as Chief Compliance Officer for Avondale Wealth Management LLC, conducts and manages all supervisory and compliance obligations. Page 19 of 19