KUTSCHER BENNER BARSNESS & STEVENS, INC. (“KBBS”)
has counseled individuals, families and trustees
since 1992. From our origins we were an early
adopter of integrated financial planning under an
exclusively fee‐for‐service arrangement (no
commissions). Scott Benner, Cameron Barsness,
Ryan Stevens, Gianna Giusti and Kyle O’Connor are
the firm shareholders. Professional and
educational backgrounds are described in detail in
the attached brochure supplement (Form ADV Part
2B). The firm has non‐discretionary regulatory
assets under management of $513,175,872 as of
December 31, 2023.
We emphasize routine financial planning with a
distinctively in‐depth review and written report,
involving and integrating these important
determinants of financial success:
Balance sheet (prepare and updated to include
all assets)
Budgeting and cash flow (12‐month forward‐
looking projection)
Tax analysis and issue spotting (12‐month
forward‐looking forecast)
Savings analysis, both for retirement and
regular assets
Portfolio sustainability analysis and spending
targets
Investment policy (establish, review and revise
as appropriate)
Asset allocation (integrate across entire balance
sheet as appropriate for investment policy)
Selection of subadvisors and investment
strategies
Strategies for harvesting employee stock
options and dealing with other stock
concentration situations
Performance reports, if feasible for entire
investment portfolio
Insurance and risk management (identify gaps
and suggest improvements)
Estate planning and charitable goals (identify
and suggest potential improvements)
The advice we provide is customized for each
client. The investment advice for each client is
integrated with other financial planning
considerations (described above) and affects all of
a client’s investment assets. For example,
recommendations often involve bank accounts,
regular brokerage accounts, employer retirement
plans, commercial real estate, private equity
and/or debt, annuities, mutual funds, legacy stocks
and bonds holdings. Special facets of our advice
may touch on environmental, social and
governance (“ESG”) investments, private
placement funds, insider stock with certain
investment restrictions, and other investment
approaches that might be unique to a client’s
wishes or circumstances.
We believe the success of clients’ financial planning
is enhanced when they understand and are
involved in their investment strategies. Therefore,
we encourage communication as well as client
oversight and review of our investment
recommendations we make. Accordingly, we seek
approval prior to affecting changes to a client’s
investment portfolio. In this way, the client retains
absolute discretion over all such implementation
decisions and is free to accept or reject any
recommendations.
In our role as financial counsel, we do not serve as
an attorney, accountant or insurance agent, and no
portion of our services should be construed as
legal, accounting or insurance services.
Accordingly, we do not prepare estate planning
documents or tax returns and we do not sell
insurance products. To the extent requested by a
client, we may recommend the services of other
professionals for certain non‐investment
implementation purposes (e.g., attorneys,
accountants, insurance, etc.), including certain
KBBS representatives in their separate capacities as
attorneys (for more information see Item 10
below). If the client engages any recommended
unaffiliated professional, and a dispute arises
thereafter relative to such engagement, the client
agrees to seek recourse exclusively from and
against the engaged professional, and the engaged
licensed professional will be exclusively responsible
for the quality and competency of the services they
provided.
FIDUCIARY DUTY AND PORTFOLIO ACTIVITY
Our firm has a fiduciary duty to provide services
consistent with our clients’ best interests. As part
of our investment advisory services, we review
client portfolios on an ongoing basis to determine if
any changes are appropriate based upon various
factors, including, but not limited to, investment
performance, fund manager tenure, style drift,
and/or a change in the clients’ investment
objectives. Based upon these factors, there may be
extended periods of time when we determine that
changes to a client’s portfolio are neither necessary
nor prudent.
CLIENT PARTNERSHIP AND ENGAGEMENT
In performing our services, we are not required to
verify information received from clients or from
their other professionals. We rely on our clients to
notify us promptly if there is ever any change in
their situations or investment objectives for the
purpose of reviewing/evaluating/revising our
previous recommendations and/or services. We
believe that it is important for the client to address
financial planning issues on an ongoing basis. Our
advisory fees, as set forth in Item 5 below, will
remain the same regardless of whether or not the
client engages with us on matters that fall within
the scope of our relationship.
INVESTMENT RISK
Different types of investments involve varying
degrees of risk, and it should not be assumed that
future performance of any specific investment or
investment strategy (including the investments
and/or investment strategies recommended or
undertaken by our firm) will be profitable or equal
any specific performance level(s).
PRIVATE INVESTMENT FUNDS
As noted above, we may provide investment advice
regarding unaffiliated private investment funds.
Our role relative to these funds is limited to the
initial and ongoing due diligence and investment
monitoring services. These private investment
funds will be considered in the investment
portfolio base for purposes of our investment
advisory fee. Our clients are under absolutely no
obligation to consider or make an investment in
private investment funds, and in fact, many of our
clients are not invested in such funds. We
acknowledge and make considerable effort to
inform clients that private investment funds
involve various risk factors, including, but not
limited to, potential for complete loss of principal,
liquidity constraints, lack of transparency, conflicts
and additional fees, including incentive
compensation (as laid out in such funds’ offering
documents, which will be provided to each client
for review and consideration). Unlike liquid
investments that a client may own, private
investment funds do not provide daily liquidity or
pricing. Each prospective client investor will be
required to complete a Subscription Agreement,
pursuant to which the client shall establish
themselves as qualified for investment in the fund,
and acknowledging and accepting the various risk
factors that are associated with such an
investment. For valuation purposes, both for client
reporting and calculation of our fees, we use the
most recent value reported by the fund sponsor.
INTERVAL FUNDS
As noted above, we may provide investment advice
regarding interval funds. An interval fund is a non‐
traditional type of closed‐end mutual fund that
periodically offers to buy back a percentage of
outstanding shares from shareholders. These
investment funds will be considered
in the
investment portfolio base for purposes of our
investment advisory fee. Our clients are under
absolutely no obligation to consider or make an
investment in interval funds, and in fact, many of
our clients are not invested in such funds. We
acknowledge and make considerable effort to
inform clients that interval funds involve various
risk factors, including, but not limited to, potential
for complete loss of principal, liquidity constraints
(similar to a private investment) and lack of
transparency.
SEPARATE ACCOUNT MANAGERS/INDEPENDENT MANAGERS
We typically recommend that clients allocate a
portion of their investment assets to investment
managers—most typically open‐end mutual funds,
index funds, closed end funds, and ETFs—who are
not affiliated with us and are independent from us,
while we render investment supervisory services
relative to the ongoing monitoring and review of
account performance, asset allocation and clients’
investment objectives. Those managers have
separate written agreements with their clients and
they have day‐to‐day responsibility for the active
discretionary management of assets under their
care, including, to the extent applicable, proxy
voting responsibility. The investment management
fees charged by independent managers are
separate from, and in addition to, KBBS’ advisory
fee as set forth in the fee schedule at Item 5 below.
IMPACT OR “ESG” INVESTING
ESG investing incorporates a set of criteria/factors
used in evaluating potential investments:
Environmental (i.e., how a company safeguards the
environment); Social (i.e., the manner in which a
company manages relationships with its
employees, customers, and the communities in
which it operates); and Governance (i.e., company
management considerations through transparency,
accounting standards, diversity and inclusion and
shareholder engagement). The number of
companies that meet an acceptable ESG mandate
can be limited when compared to those that do
not, and could underperform broad market indices.
Investors must accept these limitations, including
the potential for underperformance.
Correspondingly, the number of ESG mutual funds
and exchange‐traded funds are limited when
compared to those that do not maintain such a
mandate. As with any type of investment
(including any investment and/or investment
strategies recommended and/or undertaken by
us), there can be no assurance that investment in
ESG securities or funds will be profitable, or prove
successful. We generally rely on the assessments
undertaken by the unaffiliated mutual fund,
exchange traded fund or separate account
portfolio manager to determine that the fund’s or
portfolio’s underlying company securities meet a
socially responsible mandate.
MARGIN
We do not recommend the use of margin for
investment purposes. A margin account is a
brokerage account that allows clients to borrow
money to buy securities and/or for other non‐
investment borrowing purposes. The custodian
then charges the client interest for the right to
borrow money and uses the securities as collateral.
The use of margin can magnify both account gains
and losses. For fee related calculations, we use the
net account value after reducing for margin. For
regulatory AUM reporting purposes, we use the
gross account value as instructed by the SEC.
RETIREMENT ROLLOVERS‐POTENTIAL FOR CONFLICT OF
INTEREST
A client or prospective client leaving an employer
typically has four options regarding an existing
retirement plan (and may engage in a combination
of these options): (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 Individual Retirement Account (“IRA”), or (iv)
cash out the account value (which could,
depending upon the client’s age, result in adverse
tax consequences). If we recommend that a client
roll over their retirement plan assets into an
account to be newly managed by us, such a
recommendation could create a conflict of interest
if we will earn new (or increased) compensation as
a result of the rollover. If we provide a
recommendation as to whether a client should
engage in a rollover or not (whether it is from an
employer’s plan or an existing IRA), we are acting
as a fiduciary 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. No client
is under any obligation to roll over retirement plan
assets to an account managed by us, whether it is
from an employer’s plan or an existing IRA.
CYBERSECURITY RISKS
The information technology systems and networks
that we and our third‐party service providers (e.g.,
ShareFile, Tamarac, eMoney) use to provide
services to clients employ various controls, which
are designed to prevent cybersecurity incidents
stemming from intentional or unintentional actions
that could cause significant interruptions in our
operations and result in the unauthorized
acquisition or use of clients’ confidential or non‐
public personal information. Therefore, we
acknowledge that we are subject to the risk of
cybersecurity incidents that could ultimately cause
our firm and our clients to incur losses, including
for example: financial losses, cost and reputational
damage to respond to regulatory obligations, other
costs associated with corrective measures, and loss
from damage or interruption to systems. Although
we have established processes to reduce the risk of
cybersecurity incidents, there is no guarantee that
these efforts will always be successful, especially
considering that we do not directly control the
cybersecurity measures and policies employed by
third‐party service providers. Clients could incur
similar adverse consequences resulting from
cybersecurity incidents that more directly affect
issuers of securities in which those clients invest,
qualified custodians, governmental and other
regulatory authorities, exchange and other
financial market operators, or other financial
institutions.
CASH FUNDS
Custodians, including Schwab, often place cash
proceeds from account transactions and deposits
into a cash “sweep” account. At Schwab, this
sweep is actually an internal transfer to Schwab
Bank, which is then covered up to $250,000 via
FDIC insured banks. The yield on the sweep cash is
generally lower than what is available via position
traded money market funds. We regularly work
with clients to manage their cash between sweep
and position traded funds, taking into account any
yield dispersion between the sweep cash and a
money market funds, an indication from the client
of an imminent need for such cash, if the client has
a demonstrated history of writing checks from the
account, and/or whether cash is held for fee billing
purposes. Our clients remain responsible for yield
dispersion/cash balance decisions and
corresponding transactions for cash balances
maintained in any unmanaged accounts and away
from our primary custodians (i.e., Schwab).
a client or prospective client may have regarding our
advisory business or related issues.