Description of the Advisory Firm
This firm has been in business since May of 2007, and the principal owner is Financial Gravity
Companies, Inc. (“FGC”) (OTCQB: FGCO).
Types of Advisory Services
Financial Gravity Asset Management, Inc. (hereinafter “FG Asset Management”) offers the following
services to advisory clients:
Investment Supervisory Services
FG Asset Management offers ongoing portfolio management services based on the individual goals,
objectives, time horizon, and risk tolerance of each client. Investment Supervisory Services include,
but are not limited to, the following:
● Investment strategy
● Asset allocation
● Asset selection
● Regular portfolio monitoring
● Asset location optimization when applicable
● Tax lot harvesting when requested
FG Asset Management endeavors to provide clients with risk appropriate investment management
but using our Real Risk System. Real Risk is defined as the percentage decline of an investment from
peak to trough. Each investor has a Real Risk Tolerance, and each portfolio of investments has a Real
Risk Score. The client’s Real Risk Tolerance, meaning maximum amount of Real Risk a client is willing
to take with the investments to be managed, is measured using the Risk Meter, a proprietary software
designed to help clients understand and consider the relationship between expected risk and
expected return. The highest level of Real Risk available is 50% and the lowest is zero. FG Asset
Management recommends portfolios whose Real Risk Score is equal to or less than the client’s Real
Risk Tolerance. FG Asset Management will request discretionary authority from clients in order to
select securities and execute transactions without permission from the client prior to each
transaction. Real Risk Tolerance is documented in the Investment Policy Statement, which is given to
each client.
Selection of Other Advisors
FG Asset Management may direct clients to appropriate third-party money manager(s). FG Asset
Management will be compensated via a fee share from these advisors to which it directs clients. This
relationship will be disclosed in each contract between FG Asset Management and the third-party
money manager, and each client will receive full disclosure of the relationship. The fees shared will
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not exceed any limit imposed by any regulatory agency. Before selecting other advisors for clients,
FG Asset Management will always ensure those other advisors are properly licensed or registered as
investment advisor(s).
FG Asset Management Strategies
All strategies are managed by FG Asset Management’s Investment Committee chaired by Chief
Investment Officer William R. Nelson, PhD.
We feel 4 Alpha invests in individual equities and focuses on dominant companies, loved brands, and
great products that are understandable, inspire confidence, and are on the right side of long-term
trends.
The long term trends include, but are not limited to, the electrification of vehicles, renewable energy
(as opposed to fossil fuel dependence), autonomous vehicles, biotech, genetic engineering, the
growing global middle class, the move from a purchase to a service model, the reduction in the
importance of location versus other amenities, the increase in e-commerce accompanied by
reduction in conventional retail, proliferation of online platforms, increased economies of scale, aging
of developed nation populations, healthier eating including veganism, direct contact between micro-
producers and clients, and the reduced influence of traditional push marketing.
The 4 Alpha model invests solely in individual stocks that, while actively monitored and managed, are
chosen based on the long-term growth prospects. While many of the stocks pay dividends, income is
the program’s secondary objective.
The three 4 Beta strategies invest in-cost Exchange-Traded Funds (“ETFs”).
4 Beta Taxable Fixed Income diversifies across corporate and sovereign; USA and foreign; short,
medium, and long duration; and investment grade to high yield with the objective of earning an
efficient risk adjusted return.
The 4 strategies are typically blended, often along with insurance products, to accommodate the
client’s Real Risk Tolerance.
FG Asset Management strives to manage the different models in a low turnover, tax-efficient manner.
Additional tax-efficiencies may be gained through location optimization which places securities from
the same household in different account types taxed, tax-deferred, and after tax based upon security
type (like equity or fixed income) and yield. This strategy only applies to households whose accounts
have more than one tax treatment governed by the same investment policy statement.
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Gravity Asset Management, Inc.
Depending on the size of the account(s) and/or the model or blend chosen, there may be instances
where certain higher-priced securities are not purchased. In these cases, the Advisor may replace the
security not purchased with a substitute security to maximize the percentage of assets invested.
FG Asset Management is a proprietary investment advisory program and the Advisor may benefit
financially by recommending these programs over other programs that are not managed by the
advisor but any recommendation made by the Advisor should be in the client’s best interest and not
based on the interests of the Advisor.
Additionally, the Representative acting as a solicitor for the proprietary programs may own stock in
or may be a participant in a stock option or stock appreciation plan sponsored by FGC (“Stock
Ownership”). Representatives may benefit from placing assets with the Manager in that the value of
the FGC stock may be enhanced by such placement. In approving the investment of funds in a
Manager Portfolio, Clients should consider whether Representative’s recommendation is influenced
by the Stock Ownership. The full extent of the relationship between FCG and Financial Professional
is described in Financial Professional’s ADV.
Transition Services
From time to time, FG Asset Management may provide transition services for the management of a
client’s current portfolio and transition it to a FG Asset Management Strategies over time. Transition
times will vary and could take several years to complete based on various client specific reasons for
example as taxation.
Financial Planning
FG Asset Management will allow Investment Advisor Representatives to offer financial planning for a
fee if the client is given a detailed contract outlining the services from the Advisor. The Investment
Advisor Representative is responsible for completing this document which will outline the fees that
can be charged along with a detailed list of the services. This client will need to be recorded in the
CRM as a client and complete the required documents just like any other wealth client.
Private Placements
Our affiliated Representatives may refer to private placement products. Private placements can carry
a substantial risk and should adhere to the overall philosophies of FG Asset Management.
Tax Advice Policy
Representatives may reference common tax features associated with specific accounts or products
offered by or through FG Asset Management (e.g., tax deferral associated with IRAs or tax-free
benefits of insurance products, ie death benefits), but may not provide individualized tax advice in
connection with the recommendation of such accounts or products. In connection with services being
provided by or through FG Asset Management, representatives may not recommend any tax strategy
or engage in any conduct that would cause the representative or FG Asset Management to be a
8 Financial Gravity Asset Management, Inc.
“material advisor” as defined by the IRS. Representatives may not recommend or participate in any
way in the formation or execution of an IRS “transaction of interest,” IRS “listed transaction,” or
potentially abusive tax structure.
Services Limited to Specific Types of Investments
FG Asset Management limits its investment advice and/or money management to mutual funds,
equities, bonds, fixed income, debt securities, ETFs, real estate, hedge funds, third party money
managers, REITs, private placements, government securities. FG Asset Management may use other
securities as well to help diversify a portfolio when applicable.
Client Tailored Services and Client Imposed Restrictions
FG Asset Management offers the same suite of services to all its clients. However, specific investment
allocations and their implementation are dependent upon the client Investment Policy Statement
which outlines each client’s current Real Risk Tolerance and provides a risk appropriate portfolio.
Clients may impose restrictions in investing in certain securities or types of securities in accordance
with their values or beliefs. However, if the restrictions prevent FG Asset Management from properly
servicing the client account, or if the restrictions would require FG Asset Management to deviate from
its standard suite of services, FG Asset Management reserves the right to end the relationship.
Wrap Fee Programs
FG Asset Management does not participate in a wrap fee program and no transaction costs are
wrapped in the program fees.
Amounts Under Management
FG Asset Management has the following assets under management as calculated in the last ADV
filing:
Discretionary Amounts: Non-discretionary Amounts: Date Calculated:
$290,599,160 $0 09/31/2023