A. Description of Advisory Firm Including How Long We Have Been In Business and Our Principal
Owner(s)
Western Financial Corporation (“WFC,” “The Firm,” or “We”) is an SEC-registered investment
adviser (“RIA”) and adheres to a fiduciary duty to all clients of the firm, including retirement plan
clients where we act as a fiduciary adviser under the Employee Retirement Income Security Act
of 1974 (“ERISA”). We are dedicated to providing individuals and other types of clients with a
wide array of investment advisory services. The Firm is a privately-owned corporation
headquartered in San Diego, California. Originally formed in the State of California in 1971, under
the name JB Financial, Inc., the name was changed to Western Financial Corporation in 1974.
WFC maintained registration as a FINRA registered broker-dealer from 1971 to 2020. We
expanded to include an RIA in 2017. The Firm’s principal owner is the Richard S. Levenson Trust.
Fiduciary Duty
Registered investment advisers are considered fiduciaries under federal law. Our fiduciary duty
carries with it an obligation to act in the best interest of our clients pursuant to a relationship of
trust and confidence. It encompasses a duty of care and a duty of loyalty.
Duty of Care
The duty of care includes, among other things:
1. the duty to provide advice that is in the best interest of the client;
2. the duty to seek best execution of a client’s transactions where the adviser has the
responsibility to select broker-dealers to execute client trades; and
3. the duty to provide advice and monitoring over the course of the relationship.
The duty to provide advice suitable to each client based on a reasonable understanding of the
client’s objectives is a critical component of the duty of care. Providing suitable advice includes
making a reasonable inquiry into the client’s financial situation, investment experience, and
financial goals and then updating this information as necessary throughout the course of the
relationship to reflect the client’s changing objectives over time and adjusting the advice we
provide to reflect any changed circumstances.
When WFC has the responsibility to select broker-dealers to execute client trades in
discretionary accounts, we seek to trade such that the client’s total cost or proceeds in each
transaction are the most favorable under the circumstances. In doing so, we consider the full
range and quality of a broker’s services and so the determinative factor is not necessarily the
lowest possible commission cost but whether the transaction represents the best qualitative
execution. Moreover, we periodically and systematically evaluate the execution we receive on
behalf of our clients.
Our duty of care includes an obligation to provide advice and monitoring at a frequency that is in
the best interest of the client, taking into account the scope of the agreed relationship. This scope
is indicated by the duration and nature of the services as outlined in each client’s advisory
arrangement and extends to all personalized advice provided to clients.
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Duty of Loyalty
WFC adheres to a duty of loyalty where we seek to serve the best interests of our clients and
never subordinate the interests of our clients to our own. Simply put, WFC cannot place its own
interests ahead of the interests of our clients. In observance of this duty, we must make full and
fair disclosure to clients of all material facts relating to the advisory relationship. Further, we also
seek to eliminate or at least expose through full and fair disclosure all conflicts of interest which
might incline WFC, consciously or unconsciously, to render advice that is not disinterested. We
believe that in order for disclosure to be full and fair, it should be sufficiently specific so that each
client is able to understand the material fact or conflict of interest and make an informed decision
whether to provide consent. Consequently, we provide this ADV 2A brochure to all prospective
clients at or before entering into a contract so that they can use the information within to decide
whether or not to enter into an advisory relationship.
B. Description of the Types of Advisory Services We Offer
Customized Portfolio Management Services
WFC offers Customized Portfolio Management (CPM) services to individual investors, trusts,
estates, charitable organizations, retirement plans, retirement plan fiduciaries, participants of
retirement plans, small businesses and high-net-worth individuals based on the individual goals,
objectives, time horizon, liquidity needs and risk tolerance of each particular client. The Firm
assesses each client’s current situation (income, tax levels, existing resources, financial goals, and
risk tolerance levels) and then constructs a plan to aid in the selection of a portfolio of securities
that matches each client’s specific situation. These services include, but are not limited to, the
following:
▪ Investment Strategy
▪ Asset Allocation
▪ Individual Security Selection
▪ Regular portfolio monitoring
WFC actively manages client portfolios on an ongoing basis and rebalances them when, in WFC’s
judgment, rebalancing is warranted in light of market conditions and/or changes in clients’
circumstances. If the client experiences any significant changes to his/her financial or personal
circumstances, the client must notify us so that we can consider such information in managing
the client’s investments. The Firm’s practice includes account management offered on both a
discretionary and non-discretionary basis.
Clients who engage WFC to provide investment advisory services will be required to complete an
Investment Management Agreement (IMA) and Client Profile. The IMA details the terms and
conditions of the engagement and the scope of the services WFC will provide. The Client Profile
provides WFC with valuable personal information regarding the client’s financial situation and
risk tolerance. This information is used in the design, implementation, and management of a
client’s investment portfolio.
WFC utilizes the following investment types in its clients’ accounts:
1. Equity Securities, including U.S. stocks and foreign stocks listed on U.S. exchanges (ADRs)
2. Fixed Income Securities, including corporate, U.S. government and municipal bonds,
commercial paper, and certificates of deposit (CD’s)
3. Exchange Traded Funds (ETFs)
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4. Money market funds and cash
Depending on the client’s individual investment objectives and needs WFC’s investment
selections may further include:
1. Securities with equity and debt characteristics, including convertible bonds, preferred stocks,
or other preferred securities
2. Real estate investment trusts (REITs)
3. Mutual funds
4. Exchange traded notes (ETNs)
5. Closed-end funds
6. Unit Investment Trusts (UITs)
7.
Mortgage backed securities (MBS) and Collateralized Mortgage Obligations (CMO’s)
8. High-yield debt
9. Treasury inflation protected securities (TIPs)
10. Master limited partnerships (MLP)
11. Call or put options listed on U.S. exchanges
Western Retirement Plan Program (WRPP)
WFC provides various consultation and investment services to retirement plans, fiduciaries of
retirement plans, and participants of retirement plans through its Western Retirement Plan
Program (WRPP) including, but not limited to, the following:
Consultation Services
1. WFC assists clients with plan design considerations.
2. WFC assists clients in understanding their fiduciary responsibilities.
3. WFC provides initial consultation services as to the selection of plan service
vendors.
4. WFC prepares Request for Proposals (RFPs) for plan recordkeepers, third party
administrators or other plan service providers and assists with the review and
evaluation of the responses.
In performing the consultation services listed above, WFC does not provide investment
advice and is not acting as a fiduciary of a plan.
Plan Level Non-Discretionary Investment Advisory Services
1. WFC assists clients in the development of an investment policy statement (IPS). The IPS
establishes the investment policies and objectives for the plan. Clients, however, have the
ultimate responsibility and authority to establish such policies and objectives and to
adopt and amend the IPS.
2. WFC provides non-discretionary investment advice to clients about asset classes and
investment alternatives available for the plan in accordance with the plan’s investment
policies and objectives. Clients have the final decision-making authority regarding the
initial selection, retention, removal, and addition of investment options.
3. WFC assists clients with the selection of a broad range of investment options consistent
with ERISA Section 404(c) and the regulations thereunder.
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4. WFC assists in monitoring investment options by preparing periodic investment reports
that are based on conformance to the guidelines set forth in the IPS and makes
recommendations to maintain or remove and/or replace investment options.
5. WFC meets with clients on a periodic basis to discuss the reports and the investment
recommendations.
6. WFC provides non-discretionary investment advice to clients with respect to the
selection of a qualified default investment alternative (“QDIA”) for participants who fail
to make an investment election. Clients, however, remain responsible for determining
whether the plan should have a QDIA. Clients also retain the sole responsibility to provide
all notices to participants required under ERISA Section 404(c)(5).
The non-discretionary investment services listed above are provided under Section 3(21) of
ERISA.
Plan Level Discretionary Investment Management Services
1. WFC develops an investment policy statement (IPS) for its clients which establishes the
investment policies and objectives for a plan.
2. WFC selects a broad range of investment options consistent with ERISA Section 404(c)
and the regulations thereunder.
3. WFC provides ongoing and continuous discretionary investment management with
respect to the asset classes and investment alternatives available under the plan in
accordance with the IPS. Under this authority, WFC may select, retain, remove and/or
replace the investment alternatives available under the plan in its discretion.
4. Clients are responsible for determining whether the plan should have a qualified default
investment alternative (“QDIA”) for participants who fail to make an investment election.
When clients determine that the plan should have a QDIA, WFC will select the investment
to serve as the QDIA. Clients retain the sole responsibility to provide all notices to
participants required under ERISA Section 404(c)(5).
5. WFC provides clients with periodic reporting of investment performance and results.
The discretionary investment services listed above are provided under Section 3(38) of ERISA.
Rollover Recommendations
WFC provides services to retirement plans and participant clients. With regard to plan
distributions and rollovers, if WFC were to make recommendations (“rollover
recommendations”) to participants, it would be a conflict of interest because it results in WFC
receiving compensation that it would not have received absent the recommendation, for example,
fees for advising the rollover IRA. As a result, WFC does not make rollover
recommendations. Instead, WFC provides information about the alternatives available to
participants, and answers their questions in a neutral, educational manner. In that way, a
participant can make an informed decision about whether to take a distribution and, if so,
whether to roll it over to an IRA with WFC or another IRA provider. No client is under an
obligation to roll over ERISA plan or IRA assets to an account advised by WFC.
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Financial Planning Services
WFC provides financial planning services as part of our overall advisory services or at a client’s
request. When utilized, these services generally include advising clients on retirement and
cashflow planning, risk management, estate planning and tax planning. However, services do not
include preparation of any income tax, gift, or estate tax returns, or preparation of any legal
documents. WFC does not receive separate compensation for the above-mentioned ancillary
financial planning services.
C. Tailored Services and Client Imposed Restrictions
Clients may request restrictions on the account, such as prohibiting specific security purchases
or keeping a minimum level of cash in the account; however, we typically do not allow clients to
impose restrictions on investing in broader types of securities/sectors due to changes in
underlying positions held in some ETFs that we recommend and/or the level of difficulty this
would entail in managing their account. WFC reserves the right to not accept and/or terminate
management of a client’s account if we feel that any client-imposed restrictions would limit or
prevent us from meeting or maintaining the client’s investment strategy.
D. Participation in Wrap Fee Programs
We do not participate in or offer wrap fee programs.
E. Disclosure of the amount of client assets we manage on a discretionary basis and the amount of
client assets we manage on a non-discretionary basis
WFC offers management of client assets in both discretionary and non-discretionary accounts on
a continuous and regular basis. As of September 30, 2023, the total amount of assets under our
management was:
Discretionary Assets $ 200,254,301
Non-Discretionary Assets $ 0
Total Assets $ 200,254,301