Description of Advisory Firm
Spectrum Asset Management, Inc. (“Spectrum”) is a registered investment adviser with offices in Newport
Beach, CA, Paia, HI and Gunter, TX. Spectrum became registered with the Securities and Exchange
Commission on 14 September 1987. Spectrum has continued to operate its business in Newport Beach
since its founding.
Roland D. Kelly was the sole owner of the company at the time of its founding. Roland continues to work
in the business to this date. He serves as the Chief Investment Officer. Ryan L. Kelly is the current
President/Chief Executive Officer of Spectrum and is active in the operation of the company on a daily
basis. Ryan is considered a “principal owner” as he owns the majority of the outstanding shares of
Spectrum stock through a trust. The remaining shares of the company are held by Roland Kelly through a
trust, as noted above and Marc D. Kelly, who has not been active in Spectrum’s operations since 1999.
Advisory Services Offered
Managed Accounts
Spectrum provides investment advisory services to over 300 Clients. Currently, Spectrum allocates Client
investment assets on a discretionary or non-discretionary basis, among various individual equity and fixed
income securities, exchange traded funds (“ETFs”), and mutual funds, in accordance with the Client’s
designated investment objective(s). Spectrum generally recommends that investment advisory accounts
are maintained at an independent custodian such as Charles Schwab & Co, Inc. (“Schwab”), but may
recommend or utilize other independent custodians. Prior to engaging Spectrum to provide investment
advisory services, the Client will be required to enter into a formal Investment Advisory Agreement with
Spectrum that sets forth the terms and conditions under which Spectrum shall manage the Client’s assets.
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
Securities Act (“ERISA”) and/or the Internal Revenue Code (“IRC”), as applicable, which are laws governing
retirement accounts. The receipt of our advisory fee for making a recommendation may create a conflict
of interest under ERISA/IRC with your interests, so we operate under a special rule that requires us to act
in your best interest and not put our interest ahead of yours. For example, if we recommend that you roll
over assets from one retirement account to another and we will receive increased compensation as a
result of that recommendation, a conflict may be present that requires us to operate under this special
rule.
The primary methods of analysis used by Spectrum in performing its investment advisory services are
fundamental, technical and cyclical. These are discussed in greater detail in the section titled Item 8 -
Methods of Analysis, Investment Strategies and Risk of Loss.
Financial Planning Services
Spectrum also provides basic financial planning
and consulting services. In the event that the Client
requires extraordinary planning and/or consultation services (to be determined in the sole discretion of
Spectrum), Spectrum may determine to charge for such additional services. The actual dollar amount of
the services will be mutually agreed upon. The agreement with respect to the fee amount, as well as the
scope and extent of financial planning to be performed, will be set forth in a separate written Financial
Planning agreement.
Sub‐Advisory Relationships
Clients can also access Spectrum’s investment management services through unaffiliated third parties
under a sub-advisory relationship. These services are offered as separately managed accounts in
Spectrum’s investment strategies, as described below under Item 8 - Methods of Analysis, Investment
Strategies, and Risk of Loss. The fees Spectrum receives under these arrangements are described below
under Item 5 - Fees and Compensation.
Tailored Services and Client Imposed Restrictions
Prior to engaging Spectrum to perform any services, prospective Clients will spend time with a Spectrum
executive to discuss their financial objectives. Spectrum attempts to gain clarity about the Client’s vision,
values and goals as they specifically relate to their investments. Once hired, Client accounts are placed in
one of a number of models Spectrum has created. The model selected attempts to match the goals and
objectives that have been communicated by the Client.
Clients may request that Spectrum be restricted from buying or selling certain securities or security types.
Such requests must be delivered to Spectrum in writing. In the event there is an investment asset that is
currently held by the Client where instructions have been delivered to not sell that asset, Spectrum may
consider that investment asset to not be a part of the assets managed by Spectrum. If Spectrum decides
they are not to be a part of the managed assets, they will be referred to as “Excluded Assets” or “Special
Assets”. If the Client wishes for Spectrum to report on the Excluded Assets, the Client will be required to
acknowledge that, with respect to the Excluded Assets, Spectrum’s service is limited to reporting services
only and does not include investment management, review, or monitoring services, nor investment
recommendations or advice. As such, the Client, and not Spectrum, shall be exclusively responsible for
the investment performance of the Excluded Assets. In the event the Client desires that Spectrum provide
investment advisory services with respect to the Excluded Assets, the Client may engage Spectrum to do
so for a separate and additional fee in accordance with the fee schedule set forth in the Appendix of the
Investment Advisory Agreement.
Assets Under Management
As of December 31, 2023, Spectrum’s assets under management were as follows:
Discretionary Assets $ 634,788,711
Non-Discretionary Assets $ 11,665,972
Total Assets $ 646,454,683