A. Brown Financial Management Group, LLC (the “Registrant”) is a limited liability
company located in the state of New York. Thomas James Brown, a predecessor SEC
registered firm, succeeded to the Registrant in January 2016. Thomas James Brown
operated as a registered Sole Proprietor from 2007 until succeeding to the Registrant.
B.
INVESTMENT MANAGEMENT SERVICES
The Registrant provides discretionary and non-discretionary investment advisory services
on a fee basis. The Registrant’s annual investment advisory fee is based upon a percentage
(%) of the market value of the assets placed under the Registrant’s management. Prior to
engaging the Registrant to provide investment advisory services, clients are required to
enter into an Investment Advisory Agreement with Registrant setting forth the terms and
conditions of the engagement (including termination), describing the scope of the services
to be provided, and the fee that is due from the client.
Registrant's annual investment advisory fee shall include investment advisory services,
and, to the extent specifically requested by the client, financial planning and consulting
services. In the event that the client requires extraordinary planning and/or consultation
services (to be determined in the sole discretion of the Registrant), the Registrant may
determine to charge for such additional services, the dollar amount of which shall be set
forth in a separate written notice to the client.
FINANCIAL PLANNING AND CONSULTING SERVICES (STAND-ALONE)
The Registrant provides financial planning and/or consulting services (including
investment and non-investment related matters, including estate planning, insurance
planning, etc.) on a stand-alone separate fee basis. Registrant’s planning and consulting
fees are negotiable.
Prior to engaging the Registrant to provide planning or consulting services, clients are
generally required to enter into a Financial Planning and Consulting Agreement with
Registrant setting forth the terms and conditions of the engagement (including
termination), describing the scope of the services to be provided, and the portion of the fee
that is due from the client prior to Registrant commencing services.
If requested by the client, Registrant may recommend the services of other professionals
for implementation purposes, including Thomas J. Brown in his individual capacity as a
registered representative of Cambridge Investment Research (“Cambridge”) and/or in his
individual capacity as a licensed insurance agent. (See disclosure below at Items 10.C
below).
MISCELLANEOUS
Non-Investment Consulting/Implementation Services. As indicated above, to the extent
requested by a client, Registrant may provide financial planning and related consulting
services. Neither the Registrant nor its investment adviser representatives assist clients with
the implementation of any financial plan, unless they have agreed to do so in writing. The
Registrant does not monitor a client’s financial plan, and it is the client’s responsibility to
revisit the financial plan with the Registrant, if desired.
Furthermore, although the Registrant may provide recommendations regarding non-
investment related matters, such as estate planning, tax planning and insurance, the
Registrant does not serve as an attorney or accountant, and no portion of its services should
be construed as legal or accounting services. Accordingly, the Registrant does not prepare
estate planning documents or tax returns.
To the extent requested by a client, the Registrant may recommend the services of other
professionals for certain non-investment implementation purposes (i.e., attorneys,
accountants, insurance, etc.), including the Registrant’s representative in his individual
capacities as a registered representative of a broker dealer and/or a licensed insurance agent
as described below.
The client is under no obligation to engage the services of any such recommended
professional. The client retains absolute discretion over all such implementation decisions
and is free to accept or reject any recommendation from the Registrant.
If the client engages any recommended unaffiliated professional, and a dispute arises
thereafter relative to such engagement, the client agrees to seek recourse exclusively from
and against the engaged professional. At all times, the engaged licensed professional[s]
(i.e., attorney, accountant, insurance agent, etc.), and not the Registrant, shall be
responsible for the quality and competency of the services provided.
It remains the client’s responsibility to promptly notify the Registrant if there is ever any
change in their financial situation or investment objectives for the purpose of reviewing,
evaluating or revising Registrant’s previous recommendations and/or services.
Retirement Rollovers-Potential for Conflict of Interest: 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) roll over the assets to the new employer’s plan, if one is
available and rollovers are permitted, (iii) roll over 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). If Registrant recommends that a client roll over their
retirement plan assets into an account to be managed by Registrant, such a recommendation
creates a conflict of interest if Registrant will earn new (or increase its current)
compensation as a result of the rollover. If Registrant provides a recommendation as to
whether a client should engage in a rollover or not, Registrant is acting as a fiduciary within
the meaning of Title I of the Employee Retirement Income Security Act and/or the Internal
Revenue Code, as applicable, which are laws governing retirement accounts. No client is
under any obligation to roll over retirement plan assets to an account managed by
Registrant.
Non-Discretionary Service Limitations. Clients that determine to engage Registrant on a
non-discretionary investment advisory basis must be willing to accept that Registrant
cannot effect any account transactions without obtaining prior consent to such
transaction(s) from the client. Thus, in the event that Registrant would like to make a
transaction for a client’s account (including in the event of an individual holding or general
market correction), and the client is unavailable, the Registrant will be unable to effect the
account transaction(s) (as it would for its discretionary clients) without first obtaining the
client’s consent.
Portfolio Activity. Registrant has a fiduciary duty to provide services consistent with the
client’s best interest. As part of its investment advisory services, Registrant will review
client portfolios on an ongoing basis to determine if any changes are necessary based upon
various factors, including but not limited to investment performance, fund manager tenure,
style drift, account additions/withdrawals, the client’s financial circumstances, and changes
in the client’s investment objectives. Based upon these and other factors, there may be
extended periods of time when Registrant determines that changes to a client’s portfolio
are neither necessary nor prudent. Notwithstanding, there can be no assurance that
investment decisions made by Registrant will be profitable or equal any specific
performance level(s). Clients nonetheless remain subject to the fees described in Item 5
below during periods of account inactivity.
Cash Positions. Registrant continues to treat cash as an asset class. As such, unless
determined to the contrary by Registrant, all cash positions (money markets, etc.) shall
continue to be included as part of assets under management for purposes of calculating
Registrant’s advisory fee. At any specific point in time, depending upon perceived or
anticipated market conditions/events (there being no guarantee
that such anticipated market
conditions/events will occur), Registrant may maintain cash positions for defensive
purposes. In addition, while assets are maintained in cash, such amounts could miss market
advances. Depending upon current yields, at any point in time, Registrant’s advisory fee
could exceed the interest paid by the client’s money market fund.
Cash Sweep Accounts. Certain account custodians can require that cash proceeds from
account transactions or new deposits, be swept to and/or initially maintained in a
specific custodian designated sweep account. The yield on the sweep account will
generally be lower than those available for other money market accounts. When this
occurs, to help mitigate the corresponding yield dispersion Registrant shall (usually within
30 days thereafter) generally (with exceptions) purchase a higher yielding money market
fund (or other type security) available on the custodian’s platform, unless Registrant
reasonably anticipates that it will utilize the cash proceeds during the subsequent 30-day
period to purchase additional investments for the client’s account. Exceptions and/or
modifications can and will occur with respect to all or a portion of the cash balances for
various reasons, including, but not limited to the amount of dispersion between the sweep
account and a money market fund, the size of the cash balance, an indication from the client
of an imminent need for such cash, or the client has a demonstrated history of writing
checks from the account.
The above does not apply to the cash component maintained within a Registrant actively
managed investment strategy (the cash balances for which shall generally remain in the
custodian designated cash sweep account), an indication from the client of a need for access
to such cash, assets allocated to an unaffiliated investment manager and cash balances
maintained for fee billing purposes.
The client shall remain exclusively responsible for yield dispersion/cash balance decisions
and corresponding transactions for cash balances maintained in any Registrant unmanaged
accounts.
Socially Responsible (ESG) Investing Limitations. Socially Responsible Investing
involves the incorporation of Environmental, Social and Governance (“ESG”)
considerations into the investment due diligence process. ESG investing incorporates a set
of criteria/factors used in evaluating potential investments: Environmental (i.e., considers
how a company safeguards the environment); Social (i.e., the manner in which a company
manages relationships with its employees, customers, and the communities in which it
operates); and Governance (i.e., company management considerations). The number of
companies that meet an acceptable ESG mandate can be limited when compared to those
that do not and could underperform broad market indices. Investors must accept these
limitations, including potential for underperformance. Correspondingly, the number of
ESG mutual funds and exchange-traded funds are limited when compared to those that do
not maintain such a mandate. As with any type of investment (including any investment
and/or investment strategies recommended and/or undertaken by Registrant), there can be
no assurance that investment in ESG securities or funds will be profitable or prove
successful. Registrant does not maintain or advocate an ESG investment strategy but will
seek to employ ESG if directed by a client to do so. If implemented, Registrant shall rely
upon the assessments undertaken by the unaffiliated mutual fund, exchange traded fund or
separate account portfolio manager to determine that the fund’s or portfolio’s underlying
company securities meet a socially responsible mandate.
Use of Mutual Funds: Most mutual funds are available directly to the public. Therefore,
a client or prospective client can obtain many of the mutual funds that may be
recommended and/or utilized by Registrant independent of engaging Registrant as an
investment advisor. However, if a client or prospective client determines to do so, he/she/it
will not receive Registrant's initial and ongoing investment advisory services.
Cybersecurity Risk. The information technology systems and networks that Registrant
and its third-party service providers use to provide services to Registrant’s clients employ
various controls, which are designed to prevent cybersecurity incidents stemming from
intentional or unintentional actions that could cause significant interruptions in Registrant’s
operations and result in the unauthorized acquisition or use of clients’ confidential or non-
public personal information. Clients and Registrant are nonetheless subject to the risk of
cybersecurity incidents that could ultimately cause them to incur losses, including for
example: financial losses, cost and reputational damage to respond to regulatory
obligations, other costs associated with corrective measures, and loss from damage or
interruption to systems. Although Registrant has established procedures to reduce the risk
of cybersecurity incidents, there is no guarantee that these efforts will always be successful,
especially considering that Registrant does not directly control the cybersecurity measures
and policies employed by third-party service providers. Clients could incur similar adverse
consequences resulting from cybersecurity incidents that more directly affect issuers of
securities in which those clients invest, broker-dealers, qualified custodians, governmental
and other regulatory authorities, exchange and other financial market operators, or other
financial institutions.
Client Obligations. In performing its services, Registrant shall not be required to verify
any information received from the client or from the client’s other professionals and is
expressly authorized to rely thereon. Moreover, each client is advised that it remains their
responsibility to promptly notify the Registrant if there is ever any change in their financial
situation or investment objectives for the purpose of reviewing, evaluating or revising
Registrant’s previous recommendations and/or services.
Disclosure Statement. A copy of the Registrant’s written Brochure and Client
Relationship Summary, as set forth on Part 2 of Form ADV and Form CRS respectively,
shall be provided to each client prior to, or contemporaneously with, the execution of the
applicable form of client agreement.
C. The Registrant provides investment advisory services specific to the needs of each client.
Before providing investment advisory services, an investment adviser representative will
ascertain each client’s investment objective(s) based upon a review of personal
benchmarks. Thereafter, the Registrant will allocate investment assets, consistent with the
designated investment objective(s), primarily among mutual funds, but may also
recommend allocations among various individual equities (stocks) and ETFs (exchange
traded funds).
D. In the event that Registrant is engaged to provide investment advisory services as part of
an unaffiliated wrap-fee program, Registrant will be unable to negotiate commissions
and/or transaction costs. Under a wrap program, the wrap program sponsor arranges for the
investor participant to receive investment advisory services, the execution of securities
brokerage transactions, custody and reporting services for a single specified fee.
Participation in a wrap program may cost the participant more or less than purchasing such
services separately. In the event that Registrant is engaged to provide investment advisory
services as part of an unaffiliated managed account program, Registrant will likewise be
unable to negotiate commissions and/or transaction costs. If the program is offered on a
non-wrap basis, the program sponsor will determine the broker-dealer though which
transactions must be executed, and the amount of transaction fees and/or commissions to
be charged to the participant investor accounts.
E. As of February 6, 2024, the Registrant had $44,637,091 in discretionary assets under
management and $1,747,279 in non-discretionary assets under management.