4a: Firm Description THEORY FINANCIAL, LLC, dba Theory Financial an Idaho S-Corporation, became licensed to do business in June 2019 in the State of Colorado. Our main office is located in Fort Collins, Colorado. 4a1: Principal Member
• Ryan Charles Stout CFP®, is the Managing Member, Chief Compliance Officer and sole owner of Theory. Mr. Stout may be contacted by email at [email protected] or by telephone at (970) 305‐4649. 4b: Types of Advisory Services Theory Financial offers a variety of investment advisory services to our clients with discretionary and non-discretionary authority. Theory ’s services include investment management, financial planning, consulting services and retirement advisory services. Prior to providing advisory services, clients are required to enter into a written agreement with Theory. When we provide investment advice to you regarding your retirement plan account or individual retirement account, we are fiduciaries within the meaning of Title I of the Employee Retirement Income Security Act and/or the Internal Revenue Code, as applicable, which are laws governing retirement accounts. The way we make money creates some conflicts with your interests, so we operate under a special rule that requires us to act in your best interest and not put our interests ahead of yours. As fiduciaries we are obligated to do the following:
• Meet a professional standard of care when making investment recommendations (give prudent advice);
• Never put our financial interests ahead of yours when making recommendations (give loyal advice);
• Avoid misleading statements about conflicts of interest, fees, and investments;
• Follow policies and procedures designed to ensure that we give advice that is in your best interest;
• Charge no more than is reasonable for our services; and
• Give you basic information about conflicts of interest. Investment Management Services We work with our clients to identify their investment goals and objectives as well as risk tolerance in order to create an initial portfolio investment strategy designed to integrate with their specific financial goals and objectives. The Firm focuses on providing clients with investment portfolios designed to balance client specific risk and return requirements. Portfolios are constructed using a strategic asset allocation approach to provide a globally balanced investment strategy. Portfolios are constructed with diversified mutual funds, and exchange traded funds. Individual stocks and bonds can be used if appropriate for individual client needs. Each portfolio will initially be designed to meet a particular investment goal which Theory has determined to be suitable to our client’s circumstances. Once the appropriate portfolio construction has been determined, we will monitor and rebalance the account based upon our client’s individual needs, stated goals and objectives. Theory ’s strategy, generally, will be to seek to meet client investment objectives while providing clients with access to personal advisory services. Theory may also provide advice about any type of legacy investment holding or other investments held in client portfolios. As a fiduciary, Theory always acts solely in your best interests. Your portfolio is customized based on your investment objectives. You may make requests or make suggestions in writing regarding the investments made in your portfolio. Restrictions on trading which, in our opinion, are not in your best interest cannot be honored and if forced may result in the termination of our agreement. In cases where we are not given discretion, we must receive permission from the client to make any trades on a non- discretionary basis. In non-discretionary accounts, you have the right to decide whether to act upon Theory’s recommendations. If you elect to act on any of the recommendations, you have the right to effect the transaction through a professional unaffiliated with Theory.
Financial Planning Services Theory offers a broad range of financial planning and consulting services for our clients. Planning services can be provided on a stand-alone basis, or in conjunction with our investment management services. Financial Planning services are generally complimentary for clients that have investment management services. The exception would be if financial planning is requested for complex situations beyond our normal scope listed below. The services take into account information collected from the client such as financial status, investment objectives, tax status, and financial resources among other data. With respect to estate planning and tax planning, our role will be that of a coordinator between you and your designated professional(s). Financial Planning includes, in all or part, but is not limited to, the preparation of a financial plan for an investment advisory client which may include reviews and recommendations on any or all the following areas depending on the client’s circumstances: ▪ Investment Planning: Determine with the client, based on their goals, time horizon and risk tolerance, how to structure a suitable portfolio (using mutual funds and ETF’s) using principles of diversification, asset allocation, and sometimes asset location. ▪ Investment Policy Statements: Determining specific parameters within which a client’s investments will be managed that can include the weighting of stocks to bonds to cash, the limitation on the use of any particular type of security, the methodology used for rebalancing and so on. ▪ Portfolio review and evaluation: Assessment of a client’s existing portfolio to determine suitability of their current investments and in some cases, evaluating the differences between such and the methods Theory utilizes to manage assets. Evaluation can include weighting of asset classes, types of securities used, concentrated positions, tax efficiency of investments, expense ratios and so forth. ▪ Capital Needs Analysis (Goal Funding): A method using time value of money calculations to determine how much a client would need to save, at a given level of return, every month or year in order to achieve a certain financial goal, such as paying for 4 years of college for their child. ▪ Tax Management and Planning: Forward-looking tax strategy that can help a client minimize their tax expenses and maximize what they

have to invest. This can include planning for Roth Conversions, Strategic Charitable giving, Deferring income into tax advantaged retirement accounts, tax-loss harvesting – to name a few. ▪ Trust and Estate Planning: Helping a client understand how assets are distributed upon death and at times, working with their estate planning attorneys to achieve both their financial and estate planning goals. This also involves review of beneficiary designations and ensuring clients have the proper and updated documents drafted to ensure they are always in control of how assets will be distributed. ▪ Retirement Planning: Gathering data that relates to a client’s assets, liabilities, expenses, goals and savings, and evaluating such to determine the most appropriate strategy to achieving the greatest probability of being able to retire in the lifestyle they desire and maintain such for the rest of their lives. ▪ Social Security: Helping a client decide when to file for social security is a critical part of the retirement planning process. Married clients are advised on how to make their selections based on their particular circumstances as a couple and can involve a complex analysis that depends on longevity, income needs, and whether the client/s intend to work in their retirement. ▪ Employee Benefits: If a client is an employee and has access to benefits, an analysis of available benefits can be done together with the client, offering advice on what benefits should be selected based upon the particular client’s wishes, goals and family needs. This can include various types of insurance, Flexible Spending accounts, Employee Stock Purchase plans, Restricted Stock Awards, Options, and so on. ▪ Education Planning: Helping clients plan financially for the expenses involved in educating their children and the function of various tax advantaged ways of saving for such expenses such as with a 529 plan and annual gifting. ▪ Budgeting and Cash Flow Planning: Determining with the client what their net income and monthly/annual expenses are so as to determine where costs might be reduced to produce additional cash flow that can be allocated towards goals. ▪ Debt Management: Where a client has debts, gathering data on the nature and interest rates being paid on all liabilities, then completing a cash flow analysis to come up with the best strategy for tackling the paying down of debt in the most efficient way possible. ▪ Business Planning: If a client has or wishes to set up a small business, advice can be provided on entity selection, setting up of a retirement plan, employee benefits, and potentially a cross-purchase/buy-sell agreement. ▪ Charitable Giving: When a client wishes to be philanthropic, Theory can assist the client in how to leverage their investments to maximize contributions and provide tax advantages simultaneously. This can include gifting of required minimum distributions (RMD’s), setting up of Donor Advised Funds or gifting of highly appreciated shares, to name a few. ▪ Insurance Analysis: Gathering data on all current insurance policies that a client may have such as life, disability, and long-term care policies and running an analysis to ensure that there is an adequate transfer of financial risk to the insurance company and a client still has the opportunity to meet their financial goals should something unforeseen occur such as a premature death or an disability. ▪ Risk Management (Life and Disability Insurance): Theory does not sell insurance products but can offer advice on what types of insurance a client may need or be lacking and how much would be adequate to ensure their goals are still met in the event of a disability or premature death. ▪ Disability Planning and Income Protection: Using various planning tools, an analysis of any current income protection a client may have through work (or owned individually) is completed to determine whether there any “gaps” that might leave the client’s family unable to meet financial goals and if so, providing advice with finding the appropriate coverage. Financial planning services can vary and is customized depending on each client’s complexity and circumstances. The financial planning services will be defined and agreed upon by both parties in advance. For example, a client’s not using Theory s’ investment management services may request a comprehensive financial plan, or certain components of our planning services. The amount of time it could take to provide each of the financial planning services will depend on the client’s unique circumstances and will vary from client to client. Our services are customized based on what a client may request. In addition, the amount of time it takes to provide these services is dependent on the quality and scope of the information that is provided by the client to the advisor. Clients are encouraged to review their plans on a regular basis. Theory has a conflict of interest because it offers both financial planning and investment management services. When providing financial planning services, Theory has an incentive to recommend itself for investment management services as Theory receives additional compensation. Theory mitigates this conflict of interest by disclosing this conflict to you and disclosing that clients always have the right to decide whether to act on any of the recommendations made by Theory and if you elect to act on any of the recommendations, you have the right to effect the transactions through a professional unaffiliated with Theory . Our fiduciary obligation is to always act and recommend in the clients’ best interest. 4c: Client Tailored Relationships and Restrictions As a fiduciary, Theory always acts solely in your best interests. Your portfolio is customized based on your investment objectives. You may make requests or make suggestions regarding the investments made in your portfolio. Restrictions on trading which, in our opinion, are not in your best interest cannot be honored and if forced may result in the termination of our agreement. You are under no obligation to act upon Theory’s or their associated person's recommendations. 4d: Wrap Fee Program Theory d oes not sponsor nor provide portfolio management services to a wrap fee program. 4e: Assets under Management (AUM) Theory, as of December 31, 2022, has $177,140,372 in discretionary reportable Assets under Management and no non- discretionary reportable assets for total of $177,140,372 in assets under management.