Item 5: Account Requirement and Type of Clients .................................................................................... 29
Item 6: Portfolio Manager Selection and Evaluation ................................................................................ 29
Item 7: Client Information provided to Portfolio Managers ..................................................................... 34
Item 8: Client Contact with Portfolio Managers ........................................................................................ 34
Item 9: Additional Information .................................................................................................................. 34
INFORMATIONAL BROCHURE
Proactive Wealth Strategies, LLC
Proactive Wealth Strategies, LLC (PWS) is an independent registered investment advisor. The firm
was founded by Cindy Derso and Craig Seligman in 2005. PWS provides comprehensive planning and
investment management services to assist clients with creating a roadmap tailored to their specific
needs.
Financial Planning
PWS’s process starts with an introductory meeting which is spent getting to know the client and what
is most important to them, where the client is now financially and what they would like their money
to accomplish for them. Once the client’s goals are identified, PWS constructs a plan that is tailored
to the client’s specific needs and works with the client to implement the steps outlined in the plan.
Portfolio Management and Asset Allocation Services
PWS performs portfolio management and asset allocation services primarily on a discretionary basis.
This means that while PWS will continue an ongoing relationship with each client, being involved in
various stages of their lives and decisions to be made, PWS will not seek specific approval of changes
to client accounts. Because PWS takes discretion when managing accounts, clients engaging us will
be asked to execute a Limited Power of Attorney (granting us the discretionary authority over the
client accounts) as well as an Investment Advisory Agreement that outlines the responsibilities of
both the client and PWS. In the case of assets managed by a third‐party manager, PWS may, have the
discretion to hire and fire the third‐party manager, in which case that change would be made in
keeping with client objectives but not necessarily with prior client authorization.
In limited circumstances, PWS may provide asset management services on a non‐discretionary basis,
which means PWS will consult with the client prior to implementing any investment
recommendation. Clients should be aware that some recommendations may be time‐sensitive, in
which case recommendations not implemented because PWS is unable to reach a non‐discretionary
client may not be made on a timely basis and therefore the client’s account may not perform as well
as it would have had PWS been able to reach the client for a consultation on the recommendation.
PWS may provide advisory services through certain programs sponsored by LPL Financial LLC (LPL), a
registered investment advisor and broker‐dealer. Below is a brief description of each LPL advisory
program available to PWS. For more information regarding the LPL programs, including more
information on the advisory services and fees that apply, the types of investments available in the
programs and the potential conflicts of interest presented by the programs please see the program
account packet (which includes the account agreement and LPL Form ADV program brochure) and
the Form ADV, Part 2A of LPL or the applicable program.
Optimum Market Portfolios Program (OMP)
OMP offers clients the ability to participate in a professionally managed asset allocation program
using Optimum Funds shares. Under OMP, client will authorize LPL on a discretionary basis to
purchase and sell Optimum Funds pursuant to investment objectives chosen by the client. PWS will
assist the client in determining the suitability of OMP for the client and assist the client in setting an
appropriate investment objective. PWS will have discretion to select a mutual fund asset allocation
portfolio designed by LPL consistent with the client’s investment objective. LPL will have discretion
to purchase and sell Optimum Funds pursuant to the portfolio selected for the client. LPL will also
have authority to rebalance the account.
A minimum account value of $10,000 is required for OMP. In certain instances, LPL will permit a
lower minimum account size.
Model Wealth Portfolios Program (MWP)
MWP offers clients a professionally managed mutual fund asset allocation program. PWS will obtain
the necessary financial data from the client, assist the client in determining the suitability of the MWP
program and assist the client in setting an appropriate investment objective. PWS will initiate the
steps necessary to open an MWP account and have discretion to select a model portfolio designed
by LPL’s Research Department consistent with the client’s stated investment objective. LPL’s
Research Department, a third‐party portfolio strategist and/or Advisor, through its IAR, may act as a
portfolio strategist responsible for selecting the mutual funds or ETFs within a model portfolio and
for making changes to the mutual funds or ETFs selected.
The client will authorize LPL to act on a discretionary basis to purchase and sell mutual funds and
ETFs and to liquidate previously purchased securities. The client will also authorize LPL to effect
rebalancing for MWP accounts.
MWP requires a minimum asset value for a program account to be managed. The minimums vary
depending on the portfolio(s) selected and the account’s allocation amongst portfolios. The lowest
minimum for a portfolio is $25,000. In certain instances, a lower minimum for a portfolio is permitted.
Proactive Wealth Strategies Wrap Program
Although clients do not pay a transaction charge for transactions in a Proactive Wealth Strategies
Wrap Program account, clients should be aware that PWS pays LPL transaction charges for those
transactions. The transaction charges paid by PWS vary based on
the type of transaction (e.g., mutual
fund, equity or ETF) 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 PWS for equities and ETFs are $9. For
mutual funds, the transaction charges range from $0 to $26.50. Because PWS pays the transaction
charges in the Proactive Wealth Strategies Wrap Program accounts, there is a conflict of interest in
cases where the mutual fund is offered at both $0 and $26.50. Clients should understand that the
cost to Advisor of transaction charges may be a factor that PWS considers when deciding which
securities to select and how frequently to place transactions in a Proactive Wealth Strategies Wrap
Program account.
Additionally, because of the nature of a wrap program, wherein clients pay one fee for advisory
services as well as certain transactions, the actual fee to the firm will vary as the transaction costs
charged to the program vary. This means that if transaction costs go down, either because the
account is traded less or because the cost per trade goes down, the firm’s fees for the same advisory
services will increase. Likewise, if the costs increase, the firm’s advisory compensation will decrease.
In many instances, LPL makes available mutual funds in a Proactive Wealth Strategies Wrap Program
account that offer various classes of shares, including shares designated as Class A Shares and shares
designed for advisory programs, which can be titled, for example, as “Class I,” “institutional,”
“investor,” “retail,” “service,” “administrative” or “platform” share classes (“Platform Shares”). The
Platform Share class offered for a particular mutual fund in the Proactive Wealth Strategies Wrap
Program in many cases will not be the least expensive share class that the mutual fund makes
available 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 the Proactive Wealth Strategies Wrap Program. 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
shareholder services, distribution, and marketing expenses (“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 pay lower fees over time and keep
more of his or her investment returns than an investor who holds Class A Shares of the same fund.
PWS has a financial incentive to recommend Class A Shares in cases where both Class A and Platform
Shares are available. This is a conflict of interest which might incline PWS, consciously or
unconsciously, to render advice that is not disinterested. Although the client will not be charged a
transaction charge for transactions, Advisor pays LPL a per transaction charge for mutual fund
purchases and sales in the account. PWS generally does not pay transaction charges for Class A Share
mutual fund transactions accounts, but generally does pay transaction charges for Platform Share
mutual fund transactions. The cost to PWS of transaction charges generally may be a factor Advisor
considers when deciding which securities to select and whether or not to place transactions in the
account.
The lack of transaction charges to PWS for Class A Share purchases and sales, together with the fact
that Platform Shares generally are less expensive for a client to own, presents a significant conflict of
interest between PWS and the client. In short, it costs PWS less to recommend and select Class A
share mutual funds than Platform shares, but Platform shares will generally outperform Class A
mutual fund shares on the basis of internal cost structure alone. Clients should understand this
conflict and consider the additional indirect expenses borne as a result of the mutual fund fees when
negotiating and discussing with your Advisor the advisory fee for management of an account.
Use of Third‐Party Managers
PWS may select certain Third‐Party Managers to actively manage a portion of its clients’ assets. The
specific terms and conditions under which a client engages a Third‐Party Manager may be set forth
in a separate written agreement with the designated Third‐Party Manager. In addition to this
brochure, clients may also receive the written disclosure documents of the respective Third‐Party
Managers engaged to manage their assets. PWS evaluates a variety of information about Third Party
Managers, which may include the Third‐Party Managers’ public disclosure documents, materials
supplied by the Third‐Party Managers themselves and other third‐party analyses it believes are
reputable. To the extent possible, PWS seeks to assess the Third‐Party Managers’ investment
strategies, past performance and risk results in relation to its clients’ individual portfolio allocations
and risk exposure. PWS also takes into consideration each Third‐Party Manager’s management style,
returns, reputation, financial strength, reporting, pricing and research capabilities, among other
factors. PWS continues to provide services relative to the discretionary selection of the Third‐Party
Managers. On an ongoing basis, PWS monitors the performance of those accounts being managed
by Third Party Managers. PWS seeks to ensure the Third‐Party Managers’ strategies and target
allocations remain aligned with its clients’ investment objectives and overall best interests.
Assets Under Management
As of December 31, 2022 PWS has $179,768,266 in assets under management. PWS has 898
accounts all managed on a discretionary basis.