Item 5 - Additional Compensation .......................................................................................................................... 23
Item 6 - Supervision ..................................................................................................................................................... 23
Item 7 - Requirements for State-Registered Advisors ................................................................................... 24
Firm Description
Highland Investment Advisors, LLC (“HIA”) was founded in 2006. Adam Drake is 100%
owner. Highland Investment Advisors LLC provides investment advice under Highland
Investment Advisors LLC (“HIA), Highland Investment Advisors LLC DBA Fund
Management (“FM”), and Highland Investment Advisors LLC DBA Whitman Wealth
Management (“WWM”). Fund Management (“FM”) and Whitman Wealth Management have
separate ADVs, available upon request or on our website.
Types of Advisory Services
ASSET MANAGEMENT
HIA offers discretionary and non-discretionary asset management services to advisory
Clients. HIA will offer Clients ongoing asset management services through determining
individual investment goals, time horizons, objectives, and risk tolerance. Investment
strategies, investment selection, asset allocation, portfolio monitoring and the overall
investment program will be based on the above factors.
Discretionary
When the Client provides HIA discretionary authority the Client will sign a limited
trading authorization or equivalent. HIA will have the authority to execute transactions
in the account without seeking Client approval on each transaction.
Non-Discretionary
When the Client elects to use HIA on a non-discretionary basis, HIA will determine the
securities to be bought or sold and the amount of the securities to be bought or sold.
However, HIA will obtain prior Client approval on each and every transaction before
executing any transaction.
When deemed appropriate for the Client, HIA may hire Sub-Advisors to manage all or a
portion of the assets in the Client account. HIA has full discretion to hire and fire Sub-
Advisors as they deem suitable. Sub-Advisors will maintain the models or investment
strategies agreed upon between Sub-Advisor and HIA. Sub-Advisors execute trades on
behalf of HIA in Client accounts. HIA will be responsible for the overall direct relationship
with the Client. HIA retains the authority to terminate the Sub-Advisor relationship at HIA’s
discretion.
HIA is an authorized provider of Dimensional Fund Advisor (“DFA”) mutual funds and may
purchase and hold DFA funds in client portfolios. DFA funds are generally not available
through retail investment channels. This restriction may limit a client’s ability to manage
these funds should the client subsequently terminate his/her relationship with HIA.
As part of the recommendations provided, the Client may have a financial plan completed.
This may include but is not limited to a thorough review of all applicable topics such as
Investments, Taxes, Qualified Plans, Insurance, Retirement Income, College Planning, Home
Buying, Budgeting, Debt Management, Emergency Funds, and Risk Tolerance Assessment.
If a conflict of interest exists between the interests of HIA and the interests of the Client, the
Client is under no obligation to act upon HIA’s recommendation. If the Client elects to act
on any of the recommendations, the Client is under no obligation to effect the transaction
through HIA. This service will be provided at no additional cost to the Client.
FINANCIAL PLANNING AND CONSULTING
Financial planning services include a comprehensive evaluation of an investor's current
and future financial state and will be provided by using currently known variables to
predict future cash flows, asset values and withdrawal plans. HIA will use current net
worth, tax liabilities, asset allocation, and future retirement and estate plans in developing
financial plans.
Typical topics reviewed in a financial plan may include but are not limited to:
• Financial goals: Based on an individual's or a family's clearly defined financial
goals, including funding a college education for the children, buying a larger home,
starting a business, retiring on time or leaving a legacy. Financial goals should be
quantified and set to milestones for tracking.
• Personal net worth statement: A snapshot of assets and liabilities serves as a
benchmark for measuring progress towards financial goals.
• Cash flow analysis: An income and spending plan determines how much can be set
aside for debt repayment, savings and investing each month.
• Retirement strategy: A strategy for achieving retirement independent of other
financial priorities. Including a strategy for accumulating the required retirement
capital and its planned lifetime distribution.
• Comprehensive
risk management plan: Identify all risk exposures and provide
the necessary coverage to protect the family and its assets against financial loss. The
risk management plan includes a full review of life and disability insurance,
personal liability coverage, property and casualty coverage, and catastrophic
coverage.
• Long-term investment plan: Include a customized asset allocation strategy based
on specific investment objectives and a risk profile. This investment plan sets
guidelines for selecting, buying and selling investments and establishing
benchmarks for performance review.
• Tax reduction strategy: Identify ways to minimize taxes on personal income to the
extent permissible by the tax code. The strategy should include identification of tax-
favored investment vehicles that can reduce taxation of investment income.
• Estate preservation: Help update accounts, review beneficiaries for retirement
accounts and life insurance, provide a second look at your current estate planning
documents, and prompt you to update your plan when the legal environment
changes or you have major life events such as a marriage, death, or births.
If a conflict of interest exists between the interests of HIA and the interests of the Client, the
Client is under no obligation to act upon HIA’s recommendation. If the Client elects to act
on any of the recommendations, the Client is under no obligation to effect the transaction
through HIA. Financial plans will be completed and delivered inside of ninety (90) days
contingent upon timely delivery of all required documentation.
SUBSCRIPTION-BASED FINANICAL PLANNING
This service involves working one-on-one with Beverly over an extended period of time. By
paying the monthly fee, Clients will work with Beverly to identify and prioritize goals
and
develop and implement their financial plan. Upon desiring a comprehensive plan, a Client
will be taken through a four or five-meeting process over two or three months to assist
them in establishing their goals and values around money. They will be required to provide
information to help complete the following areas of analysis: net worth, cash flow,
insurance, employee benefits, retirement planning, insurance, investments, college
planning, and estate planning. Once the Client's information is reviewed and data is
compiled, a draft will be reviewed with the Client. Clients Point A (where they are now) is
established. Once the draft is reviewed with the client, a final meeting is scheduled to
address how to reach their goals or their Point B (where they are going). Clients
subscribing to this service will receive a written or an electronic report, providing the
Client with a detailed financial plan designed to work towards Clients’ stated financial goals
and objectives. This report will include at a minimum a Net Worth Statement, ten years of
cash flow statements, a Monte Carlo analysis, and recommendations. If a follow-up
meeting is required, we will meet at the Client's convenience. While the implementation of
the plan is solely the client’s responsibility, Beverly is available for assistance or as
questions arise. On an annual basis, clients are invited for a full review of this plan to
ensure any required adjustments are made.
FINANCIAL INSTITUTION SERVICES
HIA provides investment advisory services, acting as a third-party manager, to certain
broker/dealers’ customers (“Brokerage Customers”). These Brokerage Customers are
referred to Highland by the broker/dealers and their solicitors. The Brokerage Customers
enter into a written advisory agreement with HIA, similar to the advisory agreement for
non-broker/dealer Customers. No additional fee to the client is charged as a result of the
relationship between HIA and broker/dealers and/or HIA and the broker/dealers’
solicitors. Brokerage Customers receive a disclosure before or concurrent with signing an
advisory agreement with HIA that describes the relationship between HIA and the
broker/dealer and its solicitor. Please reference Section E under “Item 5 - Fees and
Compensation” and Section G under “Item 10 - Other Financial Industry Activities and
Affiliations” for more information related to this arrangement.
PROFESSIONAL REIMBURSEMENT OPTION
The professionals at Highland Investment Advisors are strong believers that we provide
the greatest level of value to our clients by building a relationship that is based upon the
confidence that only a strong financial plan can provide. In order for that plan to be
successful, it must be based upon the most current and complete information, and very
often requires the engagement of outside professionals who possess very specific skill sets.
Effective collaboration with other professionals, most notably Certified Public Accountants,
Enrolled Agents, and licensed Estate Planning Attorneys, gives us the greatest opportunity
to craft a successful working plan.
Based upon this need, and in a desire to encourage our clients to engage with the best
independent professionals in this area, we have created the Professional Reimbursement
Option (PRO) Plan. The PRO Plan allows you to hire the tax- or estate-planning professional
of your choice, and within the terms of the Plan you will receive a management fee credit
back from Highland for the professional service fees that you incur, up to a set limit
amount. To benefit from this plan the following criteria must be met:
The Accounting or Estate Planning profession that you retain must be practicing in good
standing, and must be professionally credentialled with a Certified Public Accountant (CPA)
or Enrolled Agent (EA) designation, or must be a member of the State Bar Association.
The independent professional must be truly independent, must serve the client in a
fiduciary capacity, and must not be in a position that could create conflicts of interest with
regard to investment advice or commission-driven activities. This means that to qualify for
PRO Plan reimbursement the professional may not possess any form of Securities
Licensing, either through FINRA or the SEC, nor may they engage in the sale of insurance-
related products. Additionally, the professional’s employing firm may not have any
individuals on staff who are securities licensed or engaged in the sale of insurance
products, nor may the firm have a common ownership or affiliation with another “outside
firm” that engages in those activities.
To participate in this program, Highland Investment Advisor must be the client’s sole
investment/financial planning professional. While utilizing multiple investment
professionals is always a client’s right, we have found that this arrangement is most
valuable and effective for those individuals who utilize one primary advisor in each of their
respective capacities. Certain types of investment accounts, such as employer-sponsored
Retirement plans or self-directed trading accounts may be exempted, if Highland deems it
to be in the best interest of the client.
Because the purpose of this program is to encourage greater informational access and
collaboration, in order to qualify for reimbursement under this plan the completed income
tax return(s) or estate plan documents must be shared in full with a client’s advisor at
Highland.
In order for a client to receive the reimbursement amount for their professional services,
their managed relationship with Highland must be in place for at least 90 days prior to the
request for a credit.
Credits are available on a calendar year basis, and unused benefits are not transferable
from year-to-year.
If the client qualifies for the PRO Plan, as outlined above, the following reimbursement
credits would be available to them to offset or eliminate their income tax or estate planning
costs.
Assets Under Management
Credit Available
Under $500,000
No credit available at this time
$500,000 to $1,000,000
$500.00
$1,000,001 to $2,500,000
$1,000.00
$2,500,001 to $5,000,000
$2,500.00
Over $5,000,000
$3,500.00
Client Tailored Services and Client Imposed Restrictions
The goals and objectives for each Client are documented in our Client files. Investment
strategies are created that reflect the stated goals and objectives. Clients may impose
restrictions on investing in certain securities or types of securities. Agreements may not be
assigned without written Client consent.
Wrap Fee Programs
HIA does not sponsor any wrap fee programs.
Client Assets under Management
HIA has the following assets under management:
Discretionary Amounts: Non-discretionary Amounts: Date Calculated:
$231,006,421 $0 July 28, 2023