Rachor Investment Advisory Services, LLC (referred to in this Brochure as
"Rachor," "us," "we," or "our") is a federally registered investment adviser located in
Linden, Michigan. Rachor through our predecessors began conducting business in
1984. We are currently wholly owned by RIAS Holding Company Incorporated; whose
sole shareholder is Tod G. Fisher.
Our Advisory Services
Rachor offers personalized discretionary and nondiscretionary investment
advisory services to clients based on the client’s individual investment goals, financial
objectives and risk tolerance. As explained in more detail below, our Diversified Strategy
is offered on a discretionary basis while the Concentrated Strategy is offered on a
nondiscretionary basis through third party private money managers.
We meet with each client before any assets are invested to develop, with the
client, the asset allocation referred to as the investment style, for each of the client’s
account(s). We also educate our clients with regard to the long-term nature of the
Diversified and Concentrated Strategies (the “Strategies”). After consultation with our
client, the assets are invested in accordance with the agreed upon investment style.
Client requests for restrictions on investing in certain securities or types of securities will
be considered on a case-by-case basis, although it is anticipated that such restrictions
would inhibit Rachor’s ability to implement either Strategy.
We offer financial planning services to our clients as part of our investment
advisory services. These services may include, but are not limited to:
lifetime cash flow planning (written/online year-by-year hypothetical
plan/projection, including goals and objectives),
estate planning, with the assistance of your attorney(s), including gift and
wealth transfer planning,
tax planning, with the assistance of your accountant(s) and/or attorney(s),
insurance planning, with the assistance of your insurance agent(s), and
other financial matters that may arise (mortgages, student loans, closely held
businesses).
Financial planning services are available on an as requested or as needed basis
and are provided at no extra expense for our investment advisory clients.
We act under the fiduciary duty of care and loyalty applicable to a registered
investment adviser. Our duty of care means we provide investment advice, based on
the client’s objectives, in the best interest of our client. Under the duty of loyalty, we
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must eliminate or make full and fair disclosure of our conflicts of interests which might
incline us—consciously or unconsciously—to render advice which is not disinterested.
If we manage a joint account on your behalf (e.g., husband and wife, parent and
child, etc.), our services will be based upon the identified financial needs and objectives
that all or any one of the persons executing our agreement (collectively, the “Joint
Clients”) communicate to us. Joint Clients are collectively responsible for determining
and advising us if only one or more of the Joint Clients is permitted to give us
instructions, authorizations, or to otherwise control the account. Unless we are directed
otherwise in writing, we are permitted to rely upon any authorization, instruction, or
direction from any one of the Joint Clients until this authority is limited or revoked in a
written notice delivered to us signed by all Joint Clients.
Investment Advice for Retirement Investors
We have special and additional fiduciary responsibilities under Title I of the
Employee Retirement Income Security Act of 1974 (“ERISA”) and/or the Internal
Revenue Code Section 4975 (“IRC 4975”), as applicable, when we provide investment
advice services to individual retirement account owners, ERISA plans, and ERISA plan
participants. As such, we are subject to specific duties and obligations that include,
among other things, prohibited transaction rules which are intended to prohibit
fiduciaries from acting on conflicts of interest. We must either avoid or eliminate the
conflict or rely upon a prohibited transaction exemption.
We are a fiduciary, when, for example, our advisers’ recommend a distribution or
transfer (a “rollover”) of your tax-qualified ERISA-governed account including an IRA, to
us for management. If you accept the recommendation, Rachor will receive
compensation that we would not otherwise receive. Therefore, the recommendation
creates a conflict of interest. To address this conflict we must comply with the impartial
conduct standards that require us to:
Always act in your best interest by:
o Meeting a professional standard of care when making investment
recommendations (give prudent advice);
o
Never putting 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.
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A retirement investor leaving an employer has four options regarding an existing
retirement plan (and under certain circumstances may engage in a combination of the
following options). We will provide general education, for discussion purposes,
regarding the “pros and cons” to each of these choices: (i) leave the money in the
former employer’s plan, if permitted, (ii) roll over the assets to the new employer’s plan,
if one is available and rollovers are permitted, (iii) roll over to an IRA, or (iv) cash out the
account value (which could, depending upon the client’s age, result in adverse tax
consequences).
Diversified Strategy
Our investment advisory service includes ongoing supervisory and
management services of the client assets and trading securities on a
discretionary basis. This means that we determine the securities to buy and
sell for the client’s account without obtaining specific consent prior to each
transaction.
Diversified strategies are diversified, primarily mutual funds, exchange traded
funds (“ETFs”), stocks and/or bonds. The strategies have low rates of
turnover (buying and selling), and allow for aggressive, moderate,
conservative, and defensive allocations to increase/decrease volatility in
accordance with the client’s objectives and guidelines.
Concentrated Strategy offered through Private Money Managers
For certain clients, the investment advisory services include conducting due
diligence upon and recommending, on a non-discretionary basis, third party
managers to manage parts of such clients’ portfolios. Such Private Money
Managers are typically dually registered as investment advisers and broker-
dealers.
The Private Money Managers’ strategies are not diversified having a relatively
small number of holdings, typically stocks. The strategies have a very high
rate of turnover (active buying and selling), are expensive and volatile and in
the case of non-qualified accounts, may use leverage. Funds invested in a
“Concentrated” strategy should be considered only for “long-term” investing.
Clients receive a separate Part 2A of Form ADV, for each Private Money
Manager before or at the time the Private Money Manager is engaged by the
client.
Advisory Services for Qualified Plans
As part of our services to qualified ERISA plans, we will act as a fiduciary as
defined in Sections 3(21)(A) of ERISA. If the “responsible plan fiduciary”, as defined in
ERISA Section 402(a)(2)) engages us as a 3(21) advisor, we will review the investment
options available to the plan and recommend an ERISA Section 3(38) investment
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manager (the “3(38) Manager”) to act as an investment manager for such qualified
ERISA plan. As a 3(21) advisor, we will not have discretion or the authority to invest and
reinvest plan assets or to engage the recommended 3(38) Manager on the plan’s
behalf. It is ultimately the responsible plan fiduciary’s duty to select and give the 3(38)
Manager discretionary authority to manage the plan’s assets. This means that the
responsible plan fiduciary shifts its fiduciary responsibility to the 3(38) Manager for the
selection of the plan’s investments. A tri-party investment advisory agreement between
the responsible plan fiduciary, the 3(38) Manager and us will govern this relationship.
Based on the plan’s investment policy statement or other guidelines established
by the plan we (a) recommend the qualified default investment alternative (“QDIA”) for
plan participants that fail to direct the investment in their accounts, and provide reports,
information and recommendations, to assist in the monitoring of the investments; (b)
recommend and monitor the “Model Portfolios created by the 3(38) Manager.
If requested in the tri-party investment advisory agreement, we will provide
additional non-ERISA fiduciary services such as investment education to the
responsible plan fiduciary, assist in selecting and reviewing other service providers, and
conduct group plan participant education and enrollment meetings.
Assets Under Management
As of December 31, 2022, we managed $185,925,566 in client assets on a
discretionary basis. We have an additional $170,666,027 under advisement as of
December 31, 2022.