PSI Advisors, LLC (hereinafter "PSI") offers the following services to advisory clients:
A. Description of Services
PSI participates in and sponsors a wrap fee program, which allows PSI to manage client accounts
for a single fee that includes both portfolio management services and brokerage costs. We offer
portfolio management services through a wrap-fee program ("Program") as described in this wrap
fee program brochure to prospective and existing clients. A wrap-fee program is a type of
investment program that provides clients with asset management and brokerage services for one
all-inclusive fee. If you participate in our wrap fee program, you will pay our firm a single fee, which
includes money management fees, certain transaction costs, and custodial and administrative
costs. You are not charged separate fees for the respective components of the total services. We
receive a portion of the wrap fee for our services. The overall cost you will incur if you participate
in our wrap fee program may be higher or lower than you might incur by separately purchasing
the types of securities available in the Program.
Prior to becoming a client under the Program, you will be required to enter into a separate written
agreement with us that sets forth the terms and conditions of the engagement and describes the
scope of the services to be provided, and the fees to be paid.
Assets for program accounts are held at LPL Financial, LLC and Charles Schwab & Co., as
custodian. LPL Financial, LLC and Charles Schwab & Co. also acts as executing broker/dealer
for transactions placed in Program accounts and provides other administrative services as
described throughout this Brochure. To compare the cost of the wrap fee program with non-wrap
fee portfolio management services, you should consider the frequency of trading activity
associated with our investment strategies and the brokerage commissions charged by LPL
Financial, LLC and Charles Schwab & Co. and the advisory fees charged by investment advisers.
Fees are negotiable depending upon the needs of the client and complexity of the situation. The
final and agreed upon fee schedule is attached as Exhibit II of the client contract. PSI uses the
last day of previous quarter for purposes of determining the market value of the assets upon which
the advisory fee is based. Our program fee does not exceed 2%.
We charge an annual "wrap-fee" for participation in the Program depending upon the market value
of your assets under our management. You are not charged separate fees for the different
components of the services provided by the Program. Our firm pays all trade expenses of trades
placed on your behalf. Our Program fee includes the fee we pay to any portfolio manager for their
management of your account and LPL Financial, LLC's and Charles Schwab & Co.'s transaction
or execution costs. Assets in each of your account(s) are included in the fee assessment unless
specifically identified in writing for exclusion. In special circumstances, and in our sole discretion,
we may negotiate a lesser management fee based upon certain criteria (i.e., anticipated future
earning capacity, dollar amount of assets to be managed, related accounts, account composition,
pre-existing client relationship, account retention, etc.).
Advisory fees are withdrawn directly from the client's accounts with client written authorization.
Fees are paid quarterly in advance. Refunds are given on a prorated basis, based on the number
of days remaining in the billing period on the effective date of termination. The fee refunded will
be the balance of the fees collected in advance minus the daily rate* times the number of days in
the billing period up to and including the effective date of termination. (*The daily rate is calculated
by dividing the annual fee by 365).
Clients may terminate the contract without penalty, for full refund, within five business days of
signing the contract. Thereafter, clients may terminate the contract with fifteen days' written notice.
B. Contribution Cost Factors
The program may cost the client more or less than purchasing such services separately. There
are several factors that bear upon the relative cost of the program, including the trading activity
in the client's account, the adviser's ability to aggregate trades, and the cost of the services if
provided separately (which in turn depends on the prices and specific services offered by different
providers).
Wrap Fee Program Disclosures
• The benefits under a wrap fee program depend, in part, upon the size of the
Account, the management fee charged, and the number of transactions likely to be
generated in the Account. For example, a wrap fee program may not be suitable for
Accounts with little trading activity. In order to evaluate whether a wrap fee program
is suitable for you, you should compare the Program Fee and any other costs of the
Program with the amounts that would be charged by other advisers, broker-dealers,
and custodians, for advisory fees, brokerage and other execution costs, and
custodial services comparable to those provided under the Program.
• In considering the investment programs described in this brochure, you should be
aware that participating in a wrap fee program may cost more or less than the cost of
purchasing advisory, brokerage, and custodial services separately from other
advisers or broker-dealers.
• Our firm and Associated Persons receive compensation as a result of your
participation in the Program. This compensation may be more than the amount our
firm or the Associated Persons would receive if you paid separately for investment
advice, brokerage, and other services. Accordingly, a conflict of interest exists
because our firm and our Associated Persons have a financial incentive to
recommend the Program.
• Similar advisory services may be available from other registered
investment advisers
for lower fees.
C. Additional Fees
Although clients do not pay a transaction charge for transactions in a Strategic Wealth
Management II ("SWM II") account, clients should be aware that IAR pays LPL transaction
charges for those transactions. The transaction charges paid by the IAR vary based on the type
of security transaction (e.g. mutual fund, equity or Exchange Traded Funds ("ETFs")) and for
mutual funds based on whether or not the mutual fund pays 12b-1 fees and/or recordkeeping fees
to LPL. Transaction charges paid by the IAR for equities and ETFs are $9. For mutual funds, the
transaction charges range from $0 to $26.50. Because IAR pays the transaction charges in SWM
II accounts, there is a potential conflict of interest in cases where the mutual fund is offered at
both $0 and $26.50. Clients should understand that the cost to the IAR of transaction charges
may be a factor that IAR considers when deciding which securities to select and how frequently
to place transactions in a SWM II account.
LPL makes available mutual funds in a SWM II account that offer various classes of shares,
including shares designated as Class A Shares and shares designed for advisory programs,
called for example, "Class I," "institutional," "investor," "retail," "service," "administrative" or
"platform" share classes ("Platform Shares"). The Platform Share class offered for a particular
mutual fund in SWM II in many cases will not be the least expensive share class that the mutual
fund company offers and was selected by LPL in certain cases because the share class pays LPL
compensation for the administrative and recordkeeping services LPL provides to the mutual fund.
Client should understand that another financial services firm may offer the same mutual fund at a
lower overall cost to the investor than is available through SWM II. In other instances, a mutual
fund may offer only Class A Shares, but another similar mutual fund may be available that offers
Platform Shares. Class A Shares typically pay LPL a 12b-1 fee for providing brokerage-related
services to the mutual funds. Platform Shares generally are not subject to 12b-1 fees. As a result
of the different expenses of the mutual fund share classes, it is generally more expensive for a
client to own Class A Shares than Platform Shares. An investor in Platform Shares will typically
pay lower fees over time than an investor who holds Class A Shares of the same fund.
However, clients are still responsible for all other account fees, such as transition fees if the
account is moved to another broker, or mutual fund fees.
The Program Fee does not include mark-ups and mark-downs, dealer spreads or other costs
associated with the purchase or sale of securities, interest, taxes, or other costs, such as national
securities exchange fees, charges for transactions not executed through the Qualified Custodian,
costs associated with exchanging currencies, wire transfer fees, or other fees required by law or
imposed by third parties. The Account will be responsible for these additional fees and expenses.
The wrap program fees that you pay to our firm for portfolio management services are separate
and distinct from the fees and expenses charged by mutual funds or exchange traded funds
(described in each fund's prospectus) to their shareholders. These fees will generally include a
management fee and other fund expenses. To fully understand the total cost you will incur, you
should review all the fees charged by mutual funds, exchange traded funds, our firm, and others.
We may trade client accounts on margin. Each client must sign a separate margin agreement
before margin is extended to that client account. Fees for advice and execution on these securities
are based on the total asset value of the account, which includes the value of the securities
purchased on margin. While a negative amount may show on a client's statement for the margined
security as the result of a lower net market value, the amount of the fee is based on the absolute
market value. This creates a conflict of interest where we have an incentive to encourage the use
of margin to create a higher market value and therefore receive a higher fee. The use of margin
may also result in interest charges in addition to all other fees and expenses associated with the
security involved.
Brokerage Practices
If you participate in the Program, you will be required to establish an account with LPL Financial,
LLC or Charles Schwab, member FINRA/SIPC, an unaffiliated SEC-registered broker-dealer. If
you do not direct our firm to execute transactions through LPL Financial, LLC or Charles Schwab,
we reserve the right to not accept your account. Not all advisers require their clients to direct
brokerage. Since you are required to use LPL Financial, LLC or Charles Schwab, we may be
unable to achieve the most favorable execution of your transactions. We believe that LPL
Financial, LLC and Charles Schwab provide quality execution services based on several factors,
including, but not limited to, the ability to provide professional services, reputation, experience
and financial stability.
Brokerage for Client Referrals
We do not receive client referrals from broker-dealers in exchange for cash or other
compensation, such as brokerage services or research.
D. Compensation of Client Participation
Neither PSI, nor any representatives of PSI receive any additional compensation beyond advisory
fees for the participation of client's in the wrap fee program. However, compensation received
may be more than what would have been received if client paid separately for investment advice,
brokerage, and other services. Therefore, PSI may have a financial incentive to recommend the
wrap fee program to clients.