LSB Capital Management, Inc. (“Adviser”, “LSB Capital”, “we”, or “us”) was registered as an investment
adviser in 2020 and provides asset management and financial planning services. The Adviser is a wholly-
owned subsidiary of Lincoln Savings Bank. The Adviser offers discretionary asset management services,
advisory/consulting services to its clients both directly and as a sub-adviser on behalf of other entities,
and offers wrap fee programs. We provide personalized asset management services to individuals,
retirement and profit-sharing plans, trusts, estates, charitable organizations, and corporations. The
Adviser is a fiduciary and is required to act in a client’s best interest at all times.
Our wrap fee programs allow clients to pay a single fee for investment advisory services and associated
custodial transaction costs. Because our firm absorbs client transaction fees under a wrap arrangement,
an incentive exists to limit trading activities in client accounts. Custodial transaction costs are not
included in the advisory fee charged by our firm for non-wrap services and are to be paid by the client to
their chosen custodian. Depending on the client’s account or portfolio trading activity, clients may pay
more for using our wrap fee services than they would for using our non-wrap services. This conflict of
interest is mitigated by our fiduciary responsibility to always act in our client’s best interest, and as such
we do not manage wrap accounts in any manner different from non-wrap accounts.
Asset Management Services
We offer Asset Management Service on a discretionary basis. Asset management services are provided
through a direct relationship between LSB Capital and the client, or through sub-advisory services in a
partnership with other financial institutions. This service begins with us assisting each new client in
defining the client's investment objectives. We then manage the client's assets in a manner consistent
with those objectives. Asset Management Services usually include ongoing supervision of investment
assets such as mutual funds, stocks, bonds, exchange-traded funds, warrants, municipal securities,
government bonds, and cash and cash equivalents. Clients receive a written report of securities in their
managed portfolio each quarter from the Custodian.
The initial investment and asset allocation recommendations are based on the financial information
gathered from each client including net worth, risk tolerance, financial goals and objectives, investment
restrictions requested by the client and overall financial conditions. Based on this information, each client
is provided with initial investment recommendations designed to provide an appropriate asset mix
consistent with the client’s objectives and restrictions. The client’s portfolio and its performance are
monitored by us in light of the client’s stated objectives and restrictions. The frequency of these reviews
and transactions made for a client’s account are determined by us. We typically meet with the client on
an as-needed or as-requested basis to discuss the portfolio and other aspects of the service.
As a general rule, we believe that investing is best suited to those who believe in a long-term buy-and-
hold policy. Therefore, clients should not expect frequent investment changes in the portfolio.
However, as a result of monitoring the account, investment purchases and sales will be made.
Sub-Advisory Portfolio Management Services
We provide ongoing portfolio management services on behalf of other entities pursuant to sub-advisory
arrangements with those entities. In these sub-advisory relationships, these entities delegate all or part
of their advisory responsibilities to us. These clients may include affiliated and non-affiliated banks, trust
companies, investment companies, and private funds, among others. Specific management authority
will be detailed in the applicable sub-advisory agreement. Investments recommended or selected by us
may include stocks, bonds, mutual funds, exchange-traded funds, accounts or model portfolios managed
by third party managers, and other types of investments. Portfolios are individually constructed based
on the strategies or overall objectives rather than being individualized for that institution’s client.
Selection and Monitoring of Third-Party Money Managers
Clients’ investment portfolios are managed either by our Investment Adviser Representatives or outside
portfolio managers. With our clients input and agreement we have the ability to hire or delegate
authority to independent third-party investment managers to manage a portion or all of our clients’
portfolios through advisory management services programs.
We help clients select and review outside portfolio managers based on the following factors:
• past performance;
• cost;
• investment philosophy;
• market outlook;
• experience of portfolio managers and executive team;
• opinions of third party analysts;
• disciplinary, legal and regulatory histories of the firm and its associates;
• whether established compliance procedures are in place to address at a minimum, insider
trading, conflicts of interest, anti-money laundering.
When we review outside portfolio managers, we do not independently calculate portfolio manager
performance. Instead, we rely upon the performance figures from client’s account statements or
reports provided to us by the outside portfolio managers. We do, however, watch for several types
of events in conjunction with poor performance. These events trigger an in-depth review of an
outside portfolio manager and primarily include:
• Significant changes in asset allocation;
• Substantial drift in investment style; and/or
• Sustained under-performance.
We do not verify the accuracy of such performance information or its compliance with presentation
standards. As a result, performance information may not be calculated on a uniform and consistent
basis.
Recommendation or Selection of Other Investment Advisors and Conflicts of Interest
In addition to our own analysts, we engage a select group of unaffiliated institutional investment
managers for our investment program to serve as portfolio managers. These entities are required to be
registered as investment advisors, and they share in a portion of the overall advisory fee assessed to an
account via the custodian of record for their services. Beyond their reputation and investment
knowledge, there are no other incentives they offer our firm that require disclosure.
LPL Financial Sponsored Advisory Programs
We 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 us. 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.
Advisory Services
Manager Access Select Program
Manager Access Select offers clients the ability to participate in the Separately Managed Account
Platform (the “SMA Platform”) or the Model Portfolio Platform (the “MP Platform”). In the SMA
Platform, [Advisor] will assist client in identifying a third party portfolio manager (SMA Portfolio
Manager) from a list of SMA Portfolio Managers made available by LPL, and the SMA Portfolio Manager
manages client’s assets on a discretionary basis. We will provide initial and ongoing assistance regarding
the SMA Portfolio Manager selection process. In the MP Platform, clients authorize LPL to direct the
investment and reinvestment of the assets in their accounts, in accordance with the selected model
portfolio provided by LPL’s Research Department or a third-party investment advisor.
A minimum account value of $50,000 is required for Manager Access Select, however, in certain
instances, the minimum account size may be lower or higher.
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. We will assist the client in
determining the suitability of OMP for the client and assist the client in setting an appropriate
investment objective. We 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.
Personal Wealth Portfolios Program (PWP)
PWP offers clients an asset management account using asset allocation model portfolios designed by
LPL. We will have discretion for selecting the asset allocation model portfolio based on client’s
investment objective. We will also have discretion for selecting third party money managers (PWP
Advisors), mutual funds and ETFs within each asset class of the model portfolio. LPL will act as the
overlay portfolio manager on all PWP accounts and will be authorized to purchase and sell on a
discretionary basis mutual funds, ETFs and equity and fixed income securities.
A minimum account value of $250,000 is required for PWP. 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. We 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. We 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.
Small Market Solution (SMS) Program
Under SMS, LPL Research (a team of investment professionals within LPL) creates and maintains a series
of different investment menus (“Investment Menus”) consisting of a mix of different asset classes and
investment vehicles (“investment options”) for clients that sponsor and maintain participant-directed
defined contribution plans (“Plan Sponsors”). The Plan Sponsor is responsible for selecting the
Investment Menu that it believes is appropriate based on the demographics and other characteristics of
the Plan and its participants. LPL Research is responsible for the selection and monitoring of the
investment options made available through Investment Menus. The investment options that are offered
through SMS are limited to the specific investments available through the record keeper that the Plan
Sponsor selects. The Plan Sponsor may only select an Investment Menu in its entirety and does not have
the option to remove or substitute an investment option.
In addition to the services described above, Plan Sponsor may also select from a number of consulting
services available under SMS that are provided by us. These consulting services may include, but are not
limited to: general education, and support regarding the Plan and the investment options selected by
Plan Sponsor; assistance regarding the selection of, and ongoing relationship management for, record
keepers and other third-party vendors; Plan participant enrollment support; and participant-level
education regarding investment in the Plan. These consulting services do not include any individualized
investment advice to the Plan Sponsor or Plan participants with respect to Plan assets.
Guided Wealth Portfolios (GWP)
GWP offers clients the ability to participate in a centrally managed investment program, which is made
available to users and clients through a web-based, interactive account management portal (“Account
View”). Investment recommendations to buy and sell exchange-traded funds and open-end mutual
funds are generated based upon model portfolios constructed by LPL and selected for the account.
Communications concerning GWP are intended to occur primarily through electronic means (including
but not limited to, through email communications or through the Account View), although we will be
available to discuss investment strategies, objectives or the account in general in person or via
telephone.
A preview of the Program (the “Proposal Tool”) is provided to help users determine whether they would
like to become advisory clients and receive ongoing financial advice from LPL and us by enrolling in the
advisory service (the “Advisory Service”). The Proposal Tool and Advisory Service are described in more
detail in the GWP Program Brochure. Users of the Proposal Tool are not considered to be advisory
clients of LPL or us, do not enter into an advisory agreement with LPL or us, do not receive ongoing
investment advice or supervision of their assets, and do not receive any trading services.
A minimum account value of $5,000 is required to enroll in the Advisory Service.
Features of the Proposal Tool
Users of the Proposal Tool (each, a “user”) agree to a terms of use (“Terms of Use”) and complete an
investor profile. Users must select from one of the following goals for each account: retirement
(“Retirement Goal”), major purchase (“Major Purchase Goal”), or general investing (“General Investing
Goal”). Based on the investor profile completed, the Proposal Tool generates sample asset allocation
recommendations (“Sample Recommendations”).
The Educational Tool provides Sample Recommendations that may assist users in determining whether
to utilize the Advisory Service. The Proposal Tool is intended to be used for educational and
informational purposes only. The Proposal Tool does not provide comprehensive financial planning and
is not intended to constitute legal, financial or tax advice. To use the Proposal Tool, users are
responsible for providing information about, among other things, their goals, age, risk tolerance, and
investment horizon. The Proposal Tool is only one of many tools that users may use as part of a
comprehensive investment analysis process. Users should not rely on the Proposal Tool as the sole basis
for investment decisions.
Although LPL is an investment adviser and broker-dealer registered with the SEC and a member of the
Financial Industry Regulatory Authority, the Proposal does not establish an investment advisory contract
or advisory relationship between the user and LPL or us. Users are not charged an advisory fee or any
other fee or expense to use the Proposal Tool. The scope of any investment advisory relationship with
LPL or us begins when users enroll in the Advisory Service. The output that users receive by using the
Proposal Tool, including the Sample Recommendations, may differ materially from the advice users
would receive as an advisory client of LPL or us.
Neither LPL or us provide ongoing investment management or trading services for assets of users of the
Proposal Tool, make any determination as to whether the website through which the Program is
accessed or the Proposal Tool is appropriate for any user, can access any assets in any accounts users
aggregate in the Proposal Tool, place any trades on behalf of users of the Proposal Tool, or provide
ongoing supervision of assets of users of the Proposal Tool. The Sample Recommendations provided are
intended as an informational preview of the Advisory Service, and the Sample Recommendations are
being provided to demonstrate the types of analysis, advice and recommendations provided by the
Advisory Service.
Features of the Advisory Service
Investors participating in the Advisory Service complete an account application and enter into an
account agreement with LPL and us. As part of the account opening process, clients are responsible for
providing complete and accurate information regarding, among other things, their goal for the account,
age, risk tolerance, and investment horizon. LPL and us rely on this information to provide services
under the Program, including but not limited to, determination of suitability of the Program for clients.
Based on the Client Profile, LPL selects an appropriate investment allocation track and model portfolio
for a client. We are required to review and accept the account, including the investment allocation and
model portfolio prior to account opening. The Model Portfolios have been designed and are maintained
by LPL Research and include a list of exchange-traded funds (“ETFs”) holdings and open-end mutual
funds holdings, relative weightings and a list of potential replacement securities for tax harvesting
purposes. LPL Research currently serves as the sole Portfolio Strategist and does not charge a fee for its
services. Only one Model Portfolio is permitted per account. Advisory Service are described in more
detail in the GWP Program Brochure.
Financial Planning Services
We provide Financial Planning services which include, but are not limited to, estate planning, financial
and retirement planning, insurance, taxes, investment strategies, and analysis of a client's financial
assets with recommendations for the selection and positioning of assets. The nature and scope of
services are decided at contract signing. As services are provided, consideration is given to each client's
risk tolerance, income needs and short- and long-term financial objectives and restrictions. Financial
Planning Services result in a report being provided to a client which may be in writing if requested by the
client. While services are being provided, clients are free to meet with their adviser at any time.
Clients decide which investment recommendations to accept and implement. Clients are also free to
select any brokerage, insurance, or other product provider to purchase (or sell) the investments,
insurance, or other products discussed with us. We do not guarantee results, and losses can occur from
receiving Financial Planning services.
Changes in client's financial condition, personal circumstances, goals, or general economic conditions
may trigger changes to the advice provided by us. To the extent that material changes have occurred to
a client's circumstances or goals, or to the extent a client requests us to address a new project, the client
may be asked to sign a new Financial Planning Retainer Agreement.
All Financial Planning services advice is based on information provided by the client. It is the client's
responsibility to be certain that we have current and accurate information.
General Information
The Adviser shall never have physical custody of any client funds or securities, as the services of a qualified
and independent Custodian will be utilized for these asset management services. The Adviser does not
assure or guarantee the results of its services; thus, losses can occur from following our advice pertaining
to any investment or investment approach, including using conservative investment strategies. All
advisory services are tailored specifically to the individual needs of the clients as described within each
service above. Clients may impose restrictions on investment in certain securities or types of securities.
In the event of trading errors caused by the Adviser employees, it is the Adviser’s policy to make its clients
whole and to document errors in its trade error file.
Adviser manages a total of $231,767,237 of assets under management on a discretionary basis as of
December 31, 2023.
Please see our Wrap Brochure that details our wrap fee program.