A. Thrive Wealth Management, LLC (“Thrive”) is a Pennsylvania limited liability company
formed in 2013 and has been providing investment advisory services since that time.
Thrive has been registered as an investment adviser with the United States Securities and
Exchange Commission since September 2016. Thrive is principally owned by Stephen Erfle
and Michael Ptaszenski, who are Thrive’s Managing Members.
B. Thrive offers investment advisory services, retirement plan consulting services, and
financial planning and related consulting services to its clients, who generally include
individuals, high net worth individuals, pension and profit sharing plans, charitable
organizations, corporations or other businesses, trusts and estates.
INVESTMENT MANAGEMENT SERVICES
Clients can choose to engage Thrive to provide discretionary and non-discretionary
investment advisory services on a fee basis according to the terms and conditions of an
Investment Management Agreement. Thrive’s annual investment advisory fee is based
upon a percentage of the market value of assets placed under Thrive’s management.
Thrive’s annual investment advisory fee compensates for initial and routine financial
planning and consulting services to the extent the client specifically requests them. If the
client seeks extraordinary planning and consultation services, Thrive may propose to
charge for those services according to the terms and conditions of a stand-alone Financial
Planning Agreement.
To begin the process, an investment adviser representative will first meet with the client
to develop investment objectives, risk tolerance and other relevant information to
formulate an investment strategy. Then, Thrive will allocate and/or recommend that the
client allocate investment assets consistent with the designated investment strategy. In
this respect, Thrive may invest client assets according to one or more model portfolios
described in Item 8 below. Once Thrive allocates client investment assets, it provides
ongoing monitoring and review of account performance and asset allocation as compared
to client investment objectives and may periodically execute or recommend execution of
transactions for the account based upon those reviews, market conditions, and the
client’s financial circumstances.
Clients who engage Thrive to provide discretionary investment management services sign
an agreement authorizing Thrive to determine the specific securities, and the amount of
securities, to be purchased or sold for the client’s account without the client’s prior
approval for each transaction. Clients who engage Thrive on a non-discretionary basis
concurrently acknowledge that Thrive cannot execute any account transactions without
obtaining the client’s prior consent to each proposed transaction. Therefore, if Thrive
would like to make a transaction for a client’s account (including removing a security that
Thrive no longer believes is suitable or adding a security that Thrive believes is suitable),
and the client is unavailable, Thrive will be unable to execute the account transactions (as
it would for its discretionary clients). Affected clients may suffer investment losses or miss
potential investment gains as a result.
As part of its investment management services, Thrive may allocate (or recommend that
the client allocate) a portion of a client’s investment assets among unaffiliated
independent investment managers (“Independent Managers”) in accordance with the
client’s designated investment objectives. In these instances, the Independent Managers
will have day-to- day responsibility for the active discretionary management of the
allocated assets. Thrive will continue to provide investment supervisory services to the
client including ongoing monitoring and review of account performance, asset allocation
and client investment objectives. Thrive generally considers the following factors when
recommending Independent Managers: the client’s designated investment objectives,
management style, performance, reputation, financial strength, reporting, pricing, and
research. The investment management fees charged by the designated Independent
Managers are exclusive of, and in addition to, Thrive’s ongoing investment advisory fee,
which will be disclosed in and subject to the terms and conditions of a separate
agreement between the client and the Independent Managers or the platform sponsor
providing access to Independent Managers.
FINANCIAL PLANNING AND CONSULTING SERVICES (STAND-ALONE)
Upon specific client request, Thrive may agree to provide financial planning and
consulting services (including investment and non-investment related matters, including
estate planning, insurance planning, etc.) on a stand-alone separate fee basis. Before
engaging Thrive to provide planning or consulting services, clients are generally required
to enter into a Financial Planning Agreement with Thrive 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 before Thrive
will provide those services. If requested by the client, Thrive may recommend the services
of other professionals for implementation purposes, including Thrive’s supervised
persons in their capacities as licensed insurance agents. (Please refer to Items 5.E. and
10.C. in this respect). 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
Thrive.
RETIREMENT PLAN CONSULTING SERVICES
Thrive offers retirement plan consulting services to sponsors of self-directed retirement
plans organized under the Employee Retirement Security Act of 1974 (“ERISA”). The terms
and conditions of the engagement between Thrive and the plan sponsor will be set forth
in a Pension Consulting Agreement. If Thrive performs these services in an ERISA Section
3(21) capacity, it will assist the plan sponsor with the development of investment policy
statements, and then the selection and monitoring of investment alternatives from which
plan participants may choose in self-directing the investments for their individual plan
retirement accounts. Upon request by the plan sponsor, Thrive may also provide
participant education designed to assist participants in identifying the appropriate
investment strategy for their retirement plan accounts. If the plan sponsor chooses to
engage Thrive in an ERISA Section 3(38) capacity, Thrive may provide the same services
as described above, but may also: create specific asset allocation models that Thrive
manages on a discretionary basis, which plan participants may choose in managing their
individual retirement account; and/or modify the investment options made available to
plan participants on a discretionary basis.
MISCELLANEOUS
Limitations of Financial Planning and Non-Investment Consulting/Implementation
Services. Thrive does not serve as a law firm or accounting firm, and no portion of its
services should be construed as legal or accounting services. Accordingly, Thrive does not
prepare estate planning documents or tax returns. Unless specifically agreed in writing,
neither Thrive nor its representatives are responsible to implement any financial plans or
financial planning advice; provide ongoing financial planning services; or provide ongoing
monitoring of financial plans or financial planning advice. The client is solely responsible
to revisit the financial plan or financial planning advice with Thrive, if desired. The client
retains absolute discretion over all financial planning and related implementation
decisions and is free to accept or reject any recommendation from Thrive and its
representatives. Thrive’s financial planning and consulting services are completed upon
communicating its recommendations to the client, upon delivery of a written financial
plan, or upon termination of an agreement to provide those services, as applicable. Upon
request, Thrive may recommend the services of other professionals such as attorneys,
accountants, and insurance agents, including representatives of Thrive in their individual
capacities as licensed insurance agents discussed in Items 5.E and 10.C. Clients have no
obligation to engage the services of any such recommended professional who are
responsible for the quality and competency of the services they provide. The
recommendation by Thrive’s representative that a client purchase an insurance
commission product through Thrive’s representative in their separate and individual
capacity as an insurance agent, presents a conflict of interest, as the receipt of
commissions may provide an incentive to recommend insurance products based on
commissions to be received, rather than on a particular client’s need. Clients are not
obligated to purchase any insurance commission products through Thrive’s
representatives and may purchase insurance products recommended by Thrive through
other, non-affiliated insurance agents or agencies.
Retirement Plan Rollovers – No Obligation / 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 Thrive recommends that a client roll over their
retirement plan assets into an account to be managed by Thrive, such a recommendation
presents a conflict of interest if Thrive will earn a new (or increase its current) advisory
fee
as a result of the rollover. Notwithstanding this conflict, Thrive’s fiduciary duty
compels it to provide its advisory services in the client’s best interest, without
subserviating the client’s interests to Thrive’s. Clients are under no obligation to roll over
retirement plan assets to an account managed by Thrive.
ERISA / IRC Fiduciary Acknowledgment. When Thrive provides investment advice to a
client about the client’s retirement plan account or individual retirement account, it does
so as a fiduciary within the meaning of Title I of the Employee Retirement Income Security
Act (“ERISA”) and/or the Internal Revenue Code (“IRC”), as applicable, which are laws
governing retirement accounts. Because the way Thrive makes money creates some
conflicts with client interests, Thrive operates under a special rule that requires it to act
in the client’s best interest and not put its interests ahead of the client’s. Under this
special rule’s provisions, Thrive must: meet a professional standard of care when making
investment recommendations (give prudent advice); never put its financial interests
ahead of the client’s when making recommendations (give loyal advice); avoid misleading
statements about conflicts of interest, fees, and investments; follow policies and
procedures designed to ensure that Thrive gives advice that is in the client’s best interest;
charge no more than is reasonable for Thrive’s services; and give the client basic
information about conflicts of interest.
Client Obligations. As part of its investment management services, Thrive will review
client portfolios on an ongoing basis to determine if any trades are necessary based upon
various factors, including but not limited to investment performance, market conditions,
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 when Thrive determines that upon review,
trades within a client’s portfolio are not prudent. Clients nonetheless remain subject to
the fees described in Item 5 during periods of portfolio trading inactivity.
Unaffiliated Private Investment Fund Valuation. If Thrive bills an investment advisory fee
based upon the value of private investment funds or otherwise references private
investment funds owned by the client on any supplemental account reports prepared by
Thrive, the value for all private investment funds owned by the client will generally reflect
the more recent of the client’s initial purchase price or the most recent valuation provided
by the fund sponsor. The current value of any private investment fund could be
significantly more or less than the original purchase price or the price reflected in any
supplemental account report.
Third Party Reporting Services and Account Aggregation Platforms. Thrive may provide
access to reporting services and/or third-party account aggregation platforms that can
reflect all of the client’s investment assets, including those investment assets that the
client has not engaged Thrive to manage (the “Excluded Assets”). Thrive’s service for the
Excluded Assets is strictly limited to reporting, and specifically excludes investment
management or implementation. Because Thrive does not have trading authority for the
Excluded Assets, the client (and/or a designated investment professional), and not Thrive,
will be exclusively responsible for directly implementing any recommendations for the
Excluded Assets and the resulting performance or related activity (such as timing and
trade errors) pertaining to the Excluded Assets. The third-party platforms may also
provide access to financial planning information and applications, which should not be
construed as services, advice, or recommendations provided by Thrive. Accordingly,
Thrive will not agree to be responsible for any adverse results a client may experience if
the client engages in financial planning or other functions available on the third party
reporting platforms without Thrive’s participation or oversight.
Margin / Securities Based Loans. Thrive does not recommend the use of margin for
investment purposes. However, if a client determines to take a margin loan that
collateralizes a portion of the assets that Thrive is managing, Thrive’s investment advisory
fee will be computed based upon the net value of the assets, after deducting the amount
of the margin loan. Without limiting the above, Thrive may recommend that a client
establish a margin loan or a securities-based loan (collectively, “SBLs”) with the client’s
broker-dealer/custodian or their affiliated banks (each, an “SBL Lender”) to access cash
flow. Unlike a real estate-backed loan, an SBL has the potential benefit of enabling
borrowers to access funds in a shorter period of time, providing greater repayment
flexibility, and may also result in the borrower receiving certain tax benefits. Clients
interested in learning more about the potential tax benefits of borrowing money on
margin should consult with an accountant or tax advisor. The terms and conditions of
each SBL are contained in a separate agreement between the client and the SBL Lender
selected by the client, which terms and conditions may vary from client to client.
Borrowing funds on margin is not suitable for all clients and is subject to certain risks,
including but not limited to: increased market risk, increased risk of loss, especially in the
event of a significant downturn; liquidity risk; the potential obligation to post collateral or
repay the SBL if the SBL Lender determines that the value of collateralized securities is no
longer sufficient to support the value of the SBL; the risk that the SBL Lender may liquidate
the client’s securities to satisfy its demand for additional collateral or repayment / the risk
that the SBL Lender may terminate the SBL at any time. Before agreeing to participate in
an SBL program, clients should carefully review the applicable SBL agreement and all risk
disclosures provided by the SBL Lender including the initial margin and maintenance
requirements for the specific program in which the client enrolls, and the procedures for
issuing “margin calls” and liquidating securities and other assets in the client’s accounts.
Because Thrive assesses its asset-based fee on the client’s net account value, after
deduction of any SBL balance, Thrive is incentivized to recommend that clients refrain
from using SBLs collateralized by assets in Thrive-managed accounts. Thrive is further
incentivized to recommend that clients pay off SBL balances sooner than is necessary,
including by using funds not subject to Thrive’s asset-based fee. If the client were to invest
any portion of the SBL proceeds in an account that Thrive manages, Thrive will receive an
advisory fee on the invested amount, which presents a further conflict of interest. If a
client accesses an SBL through its relationship with Thrive and the client’s relationship
with Thrive is terminated, Clients may incur higher (retail) interest rates on the
outstanding loan balance. Clients are therefore reminded that they are not under any
obligation to employ the use of SBLs, and are solely responsible for determining when to
use, reduce, and terminate the use of SBLs. Although Thrive seeks to disclose all material
conflicts of interest related to its recommended use of SBLs and related business
practices, there may be other conflicts of interest that are not identified above. Clients
are therefore reminded to carefully review the applicable SBL agreement, and all risk
disclosures provided by the SBL Lender as applicable and contact Thrive’s Chief
Compliance Officer with any questions about the use of SBLs.
Cybersecurity Risk. The information technology systems and networks that Thrive and its
third-party service providers use to provide services to Thrive’s clients employ various
controls, which are designed to prevent cybersecurity incidents stemming from
intentional or unintentional actions that could cause significant interruptions in Thrive’s
operations and result in the unauthorized acquisition or use of clients’ confidential or
non-public personal information. Clients and Thrive 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 Thrive has established its systems to reduce the risk of
cybersecurity incidents from coming to fruition, there is no guarantee that these efforts
will always be successful, especially considering that Thrive 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.
C. Thrive provides investment advisory services tailored to the specific needs of each client.
Prior to providing investment advisory services, an investment adviser representative will
ascertain each client’s investment objective(s). Thereafter, Thrive shall allocate and/or
recommend that the client allocate investment assets consistent with the designated
investment objective(s). The client may, at any time, impose reasonable restrictions, in
writing, on Thrive’s services.
D. Thrive does not participate in a wrap fee program.
E. As of February 29, 2024, Thrive had $1,041,260,202 in assets under management on a
discretionary basis and $44,149,021 in assets under management on a non-discretionary
basis.