Our Firm is a Charlotte-based investment adviser that primarily provides individuals, high net worth
individuals and other types of clients with discretionary investment advisory services. We became
registered with the U.S. Securities and Exchange Commission on February 29, 2016. Prior to that we
maintained registration with the North Carolina Securities Division. Our Firm is a limited liability
company formed under the laws of the State of North Carolina in 2013, the day we began operations.
Our Firm is wholly owned by Christopher S. (Chris) Hobart, who also serves as Managing Member,
President and Chief Executive Officer. Thomas Hamilton is the Firm’s Chief Compliance Officer, and
Robert Barton is the Firm’s Chief Operating Officer.
In each section below, you will find more information about the specific services we offer.
Types of Advisory Services Offered
The following are descriptions of the primary advisory services of Hobart. Please understand that a
written agreement, which details the exact terms of the service, must be signed by you and Hobart
before we can provide you the services described below. That agreement contains important details
regarding, among other things, our obligations to you and the costs to you of the management of your
accounts.
Asset Management Services:
We manage clients’ assets primarily on a discretionary basis pursuant to our Investment Advisory &
Financial Planning Agreement. As part of our Asset Management service, a portfolio is created,
potentially including individual stocks, bonds, exchange traded funds (“ETFs”), options, mutual funds
and other public and private securities or investments. The client’s individual investment strategy is
tailored to their specific needs and may include some or all of the previously mentioned securities.
Portfolios will be designed to meet a particular investment goal which we have determined to be
suitable to the client’s circumstances. Once the appropriate portfolio has been determined, portfolios
are continuously and regularly monitored, and, if necessary, rebalanced based upon the client’s
individual needs, stated goals and objectives. We will meet with clients periodically to review the
performance of the account and determine whether any changes should be made.
We also offer asset management services on a non-discretionary basis. When a client engages us to
provide asset management services on a non-discretionary basis, we monitor the accounts in the
same way as for discretionary services. The difference is that changes to the client’s account will not
be made until we have confirmed with the client (either verbally or in writing) that our proposed
change is acceptable to the client.
Most of our asset management client accounts are maintained with Charles Schwab & Co, Inc.
(“Schwab”), as further described below in Item 12 – Brokerage Practices. However, we do also offer
non-discretionary asset management services for clients with assets held away at other qualified
custodians, or “Outside Accounts.” For those clients who have elected to use this service, they must
also enter into a separate user agreement with Pontera Solutions Inc. (“Pontera”), a third-party order
management system software provider. Once the client has established an online Pontera account
and linked their Outside Account to Pontera, we are able to use Pontera’s system to view and manage
the Outside Accounts. We do not have access to any client passwords as a result of this arrangement,
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nor the ability to withdraw or direct the disposition of securities or funds to any person other than
the client.
We offer asset management services for fee-based variable annuity insurance products. We will
directly manage these annuity insurance products by reallocating buckets or sub-accounts within the
annuities in accordance with your suitability profile. These services are subject to a separate written
agreement covering the annuity products. Annuity products serviced by Hobart are charged an asset-
based management fee. Hobart does not receive any commissions on these products.
Financial Planning & Consulting Services:
We provide stand-alone financial planning and consulting services to clients for the management of
financial resources for a planning fee under our Investment Advisory & Financial Planning
Agreement. We provide these services based upon an analysis of clients’ current situation, goals, and
objectives. Financial planning services will typically involve preparing a financial plan after
consultation with clients based on the client’s financial goals and objectives. This planning or
consulting may encompass investment planning, retirement planning, estate planning, charitable
planning, education planning, corporate and personal tax planning, cost segregation study, corporate
structure, real estate analysis, mortgage/debt analysis, insurance analysis, lines of credit evaluation,
or business and personal financial planning. We will perform these services on an ongoing basis. Once
an initial summary, strategy, assessment or plan is presented to the client, we will periodically review
and assess whether the summary, strategy, assessment or plan remains appropriate for the client
and make recommendations for adjustments as needed.
Written financial plans or financial consultations rendered to clients may include general
recommendations for a course of activity or specific actions to be taken by the clients.
Implementation of the recommendations will be at the discretion of the client. Each client may choose
whether or not to act on our recommendations. If a client chooses to do so, the client is free to use
another financial professional or firm.
Retirement Plan Consulting Services:
We offer retirement plan consulting services to employer-sponsored retirement plans subject to the
Employee Retirement Income Security Act of 1974 (“ERISA”). Our retirement plan consulting
services include, but are not limited to, the following services:
• Plan Design and Consultation – Analysis of employer retirement plan objectives based on its
needs and employee demographics, and recommendation of appropriate type of plan.
Consultation and recommendation on plan design and specifications.
• Employer Investment Consulting – Consulting on ERISA fiduciary issues. Participation in the
selection of the menu of investment choices, including analysis of proposed menu and
development of portfolio models.
• Employee Meetings – Conduct meetings with eligible employees to provide information to
such employees about the plan and its purpose, investing in general, available investment
choices, and to enroll employees.
• Participant Investment Consultant – Consulting with individual participants as to
appropriate investment choices, including assistance in developing custom portfolio models
on a participant-by-participant basis.
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• Evaluation of Plan Effectiveness – Providing analysis of the plan’s effectiveness in achieving
the employer’s goals and purposes of the plan.
The specific services to be provided will be listed in our agreement with each retirement plan. The
Firm acknowledges that in performing the retirement plan consulting services listed above it is acting
as a “fiduciary” as such term is defined under ERISA Section 3(21)(A)(ii) for purposes of providing
investment advice only. The Firm acts in a manner consistent with the requirements of a fiduciary
under ERISA if, based upon the facts and circumstances, such services cause the Firm to be a fiduciary
as a matter of law.
Newsletters:
We occasionally prepare general, educational and informational newsletters. Newsletters are always
offered on an impersonal basis and do not focus on the needs of a specific individual.
Seminars:
Our Firm may occasionally provide seminars in areas such as financial planning, retirement planning,
estate planning, college planning, charitable planning and tax planning. Seminars are always offered
on an impersonal basis and do not focus on the individual needs of participants.
Retirement Plan Rollovers:
When we provide investment advice to you regarding your retirement plan account or individual
retirement account, we are fiduciaries 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. The way we make money creates some conflicts with your interests, so we
operate under a special rule that requires us to act in your best interest and not put our interest ahead
of yours. 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 we are asked by a client or prospective client to make a recommendation from
among these choices, we have a conflict of interest in that we have an incentive to recommend that a
client roll over their retirement plan assets into an account to be managed by the Firm. Such a
recommendation creates a conflict of interest as we will earn a new (or increase our current)
advisory fee as a result of the rollover. We address this conflict of interest by reviewing any such
recommendation to ensure it is in the best interest of the client. No client is under any obligation to
accept our recommendation or to roll over retirement plan assets to an account managed by us.
Tailoring of Advisory Services
Our Firm offers individualized investment advice to our asset management clients. General
investment advice will be offered to our financial planning & consulting clients.
Each asset management client has the opportunity to place reasonable restrictions on the types of
investments to be held in the portfolio. Restrictions on investments in certain securities or types of
securities may not be possible due to the level of difficulty this would entail in managing the account.
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Participation in Wrap Fee Programs
Our Firm does not participate in any wrap fee programs.
Regulatory Assets Under Management
Our Firm managed $326,212,682 in client assets as of 12/31/2023. Of that amount, we managed
$324,757,158 on a discretionary basis and $1,455,524 on a non-discretionary basis.
Conflicts of Interests Regarding Compensation to Our Representatives
Some of our representatives are also individually licensed insurance agents. Please see your
representative’s Form ADV, Part 2B Brochure Supplement to determine their licensing status.
Whenever any such representative recommends that a client purchase an insurance product in this
capacity, the representative is recommending a product on which he or she will receive either a
commission or other variable compensation, as further described below, or both. Some of our
representatives who are licensed insurance agents have an added incentive to recommend
commissionable insurance products or asset management services to their clients because of the way
Hobart compensates its representatives under a compensation plan that involves both fixed and
variable compensation, as discussed in more detail below. Currently, these incentives vary depending
on the representative.
Insurance Revenue-Based Variable Compensation
Some of our investment adviser representatives have incentives in the form of variable compensation
that they will be eligible to receive from Hobart Financial Group based on revenue received by HFG
on commissionable insurance policies issued as a result of recommendations by the representative
if they reach certain non-revenue-based quarterly goals. More specifically, a percentage of the total
amount of revenue received by HFG on issued insurance policies will be shared with the
representative in the form of variable compensation on a quarterly basis, assuming certain non-
revenue-based metrics are achieved. Some of our investment adviser representatives are eligible to
receive quarterly or monthly variable compensation regardless of whether any non-revenue-based
metrics are achieved. This compensation structure creates a clear and direct incentive for the
representative to offer new insurance products to clients, including clients who are currently
investment advisory-only clients of the Firm. This incentive creates a conflict of interest. This conflict
is ameliorated in part by the fact that, for at least some of our representatives, the receipt of this
Insurance Revenue-Based Variable Compensation is tied to achievement of the non-revenue-based
metrics.
Managed (Advised) Asset Revenue-Based Salary Increases
Some of our investment adviser representatives receive a base salary that is in direct relation to the
amount of assets under management assigned to the representative as of the end of the previous year
or quarter, which can include assets under management in fee-based insurance products. This base
salary will not change during the year or quarter, but salaries in subsequent years or quarters will
also be based on the assets under management assigned to the representative as of the end of the
previous year or quarter. The assets under management are used as a reasonable way to project
anticipated firm revenue during the following year. The tying of future base salaries to advisory fee
revenue creates incentives to recommend that clients contribute assets to be managed under an
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investment advisory relationship, or that insurance assets be liquidated in order to be managed
under such a relationship.
Some, but not all, of our investment adviser representatives operate under both the Insurance
Revenue-Based Variable Compensation and the Managed (Advised) Asset Revenue-Based Salary
Increases arrangements. Whether an adviser operates under one type of arrangement or both will
be disclosed in his or her brochure supplement, or Form ADV, Part 2B. Solely with respect to
investment adviser representatives operating under both arrangements, the two incentives
referenced above somewhat counteract each other. That is, the incentive to maximize
commissionable insurance revenue is partially offset by the incentive to maximize advisory revenue,
and vice versa. However, working together these incentives still create an incentive for an investment
adviser representative to maximize his or her income by increasing revenue in one category or
another, although the income-maximizing formula will differ for each adviser depending on, among
other things, the proximity of the representative’s advisory fee revenue level to the next level that
triggers an increase in salary, and the degree to which an adviser is required to split insurance-based
variable compensation with other advisers. Furthermore, since commissionable insurance products
are typically fixed or indexed annuities, and fee-based insurance products are typically variable
annuities, these incentive programs create an incentive to recommend one type of insurance product
over another in order to maximize income.
For investment adviser representatives operating solely under the Insurance Revenue-Based
Variable Compensation, there is no incentive to maximize asset management revenue. That
investment adviser representative’s sole financial incentive is to maximize commissionable
insurance revenue.
Additionally, the incentive programs were established by and are administered through Hobart
Financial Group. Hobart Financial Group and Hobart Insurance Services, LLC, will also benefit if
individual advisors meet their goals. This also represents a conflict of interest.
In addition to what is described above, we address the above-described conflicts of interest by (1)
making sure all clients are advised of this conflict through disclosure in this brochure; (2) requiring
all representatives to assure that any recommendations of insurance products or recommendations
for asset management are in the client’s best interest; (3) requiring all advisors to sign a written
agreement specifying that, as a condition for receipt of any variable compensation, all compliance
paperwork (including suitability documentation) be submitted to the compliance department; and
(4) requiring that all recommendations to convert or liquidate investment advisory assets in order
to purchase insurance policies, or vice versa, be subjected to a thorough review by the Chief
Compliance Officer or his/her designee for a determination that the recommendation is consistent
with the client’s risk tolerance and in fact in the client’s best interest.
Not all our representatives are licensed to make all of these types of recommendations, nor do all
representatives who are licensed to recommend these products do so for all clients. The “Brochure
Supplement” you have received for your representative indicates whether the representative is
insurance licensed.
Please be aware that even if you agree to follow a representative’s recommendation regarding an
insurance product, you do not have to purchase the product through the representative, or through
Hobart Insurance Services, LLC. Rather, you can purchase the product through another insurance
agency or representative.
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