I. INTRODUCTION Pruco Securities, LLC (“Pruco Securities”) provides investment advisory services and programs as an SEC- registered investment adviser under the marketing name Prudential Financial Planning Services (“PFPS”). Pruco Securities registered with the SEC as an investment adviser in 1984. Pruco Securities also is an SEC-registered broker-dealer, offering brokerage services and engaging in the business of selling variable life insurance, variable annuities, mutual funds, Section 529 College Savings Plans, and general securities. Pruco Securities is a member of the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the Securities Investor Protection Corporation (“SIPC”). Pruco Securities is a wholly owned subsidiary of The Prudential Insurance Company of America (“Prudential Insurance”) which in turn is a wholly owned subsidiary of Prudential Financial, Inc. (“Prudential Financial”), a global financial services organization. Pruco Securities is affiliated with other Prudential Financial insurance companies, insurance agencies, investment advisers and broker-dealers (such affiliates, collectively, “Prudential” or “Prudential Companies”). This Brochure describes PFPS’ wrap fee programs, which are part of a suite of advisory services that PFPS offers through its investment adviser representatives (“IARs”). A wrap fee program bundles, or wraps, investment advice about asset allocation and specific securities, and brokerage services (execution of transactions, reports and custody of assets), for a single asset-based fee. PFPS acts as the sponsor of three wrap fee programs: (1) PruStrategist Portfolios (“PSP”), a mutual fund and ETF discretionary program, (2) PruChoice, a non-discretionary mutual fund and ETF program, and (3) PruUMA, a discretionary unified managed account program. Envestnet Asset Management, Inc. (“Envestnet”), a registered investment adviser, provides services in all the Programs; Envestnet is not affiliated with PFPS. Separate brochures describe PFPS’ other advisory services and are available upon request.
• Managed Income Solutions: PFPS offers investment advice and related administrative services in a non- wrap fee program called the Managed Income Solutions program (“MIS”). To participate in MIS, you purchase a fee-based variable annuity contract (“Annuity”) separately from an insurance company and pay an asset-based fee to PFPS. Currently, the only Annuity that PFPS approves for use in MIS is issued by PFPS’ affiliates, Pruco Life Insurance Company or Pruco Life Insurance Company of New Jersey (“Pruco Life”).
• Financial Planning: PFPS offers fee-based financial planning services through its IARs. We refer to an IAR as a “Planner” throughout this Brochure when the IAR is providing financial planning services, although certain IARs do not use the “Planner” title. Planners also offer educational seminars and workshops on financial-planning-related topics. In this Brochure, the term “Program” refers to PSP, PruUMA or PruChoice by itself, whereas the term “Programs” refers to the three wrap fee programs. As of December 29, 2023, PFPS had approximately $12,357,658,277 of nondiscretionary assets under management and approximately $4,021,144,054 of discretionary assets under management in its wrap fee programs. In this Brochure, we refer to “PFPS” in its investment adviser capacity when discussing advisory services and programs and to “Pruco Securities” when discussing the company generally or in its broker/dealer capacity when discussing its brokerage services and operations. We refer to your assets invested through one of our wrap fee programs as “Assets” and the brokerage account that holds your Assets as your “Account.” When we discuss both mutual funds and exchange-traded funds (“ETFs”), we refer to them as “Funds.” The words “you” and “your” or “client” refer to the person(s) who completes and signs a Statement of Investment Selection (“SIS”) and who signs the Client Agreement (collectively, the “Advisory Agreement”) with PFPS. A. Selection of a Financial Professional Different IARs can assist you in different ways. Not all IARs will offer all Programs offered in this Brochure. When considering advisory products for you, your IAR will only consider the Programs and planning services offered by PFPS. If your IAR is also licensed as a registered representative of Pruco Securities (i.e., a registered representative of a broker-dealer) or a licensed agent of a Prudential insurance company or of an unaffiliated insurance company that has executed a selling agreement with Pruco Securities, then, acting in that capacity, he or she may also offer you brokerage or insurance products, which are not described in this Brochure. If your IAR determines that a Program, service or product he or she does not offer is in your best interest, he or she will either refer you to another IAR that does offer that Program, service or product or recommend another Program to you. Traditional and Virtual IARs. As our client, depending on how you want to work with us, you can choose to work with:
• a dedicated IAR you select for an ongoing relationship who is accessible for in-person meetings, as well as by phone and virtual channels (a “Traditional IAR”) or
• a team of IARs who are available to you through a centralized call center and other virtual channels (e.g., phone, email or videoconference) (each, a “Virtual IAR”). When selecting an IAR, you should consider your preference for an ongoing relationship with a dedicated individual you select, the availability of the same Program at lower cost through the virtual team, the complexity of your financial needs, and your personal preferences for communication. For clients who value the ongoing relationship they establish with a dedicated IAR, or who generally want the ability to meet in person or to interact more frequently, a Traditional IAR may be more appropriate. If you choose to work with a Virtual IAR, your IAR will occasionally change based on the availability of virtual team members but can be available upon request. All Virtual IARs share their client notes, but it can be disruptive to reestablish a rapport with another member of the Virtual IAR team who is less familiar with your circumstances. Clients also may prefer to use a Traditional IAR if they have more complex financial needs or want access to a broader product offering. The only advisory products or services that Virtual IARs offer are PSP and financial planning, described in a separate brochure. Also, in their capacity as an insurance or brokerage representative, they offer mutual funds, a limited number of insurance products and variable annuities. If your Virtual IAR recommends, or if you request, a different advisory service (e.g., PruChoice or PruUMA) or a brokerage or insurance product the Virtual IAR does not offer, you will be referred to a Traditional IAR for those services. For example, Virtual IARs are directed to refer you to a Traditional IAR if, at any point in your relationship, the Virtual IAR determines that PruChoice or PruUMA is in your best interest. For clients comfortable communicating with their IARs virtually and working with a team member who will change occasionally based on availability but can be available upon request, a Virtual IAR may be appropriate and will normally allow you to invest in PSP at substantially lower cost, as described in “PSP Client Fee.” Clients also may prefer to use a Virtual IAR because they are compensated by a salary plus a bonus based on individual and team sales goals, but also a discretionary annual bonus based on qualitative leadership attributes. The individual and team sales goals consist of asset flows into PSP accounts, brokerage accounts, and annuities, and first-year life insurance premiums. Virtual IARs only receive team bonuses after reaching a pre-set percentage (50%) of their individual sales goal. Therefore, Virtual IARs have an incentive to recommend sales sufficient to reach this level, while Traditional IARs are compensated by the traditional system of commissions and fees applicable to insurance agents, broker-dealer representatives and IARs. Please see “COMPENSATION OF YOUR IAR” for information about the conflicts of interest associated with how we compensate your IAR or Virtual IAR for their services. B. Selection of an Advisory Service Prior to investing in a Program, you will discuss with your financial professional, among other things, your personal and financial situation, goals and objectives; risk tolerance; anticipated personal and financial needs; and the attributes/features/benefits (i.e., guaranteed income, tax deferred growth, death benefit guarantees, etc.) that are important to you in meeting your needs. As part of this process, you will also answer questions in a Risk Tolerance Questionnaire (“RTQ”) about your investment objectives for the Assets, time horizon and risk tolerance. The financial professional will provide a profile to you reflecting your responses. Your financial professional will discuss the costs and expenses of the options that are available to you and work with you to assess which product types are in your best interest, including whether a Program or a financial plan would be appropriate and could assist you in meeting your investment needs. If your financial professional determines that a Program, service or product he or she does not offer is in your best interest, he or she will refer you to another financial professional that does offer that Program, service or product. Alternatively, your financial professional will choose to recommend another Program, service or product to you. Please see “COMPENSATION OF YOUR IAR” for information about the conflicts of interest that affect your financial professional’s recommendation or referral. If your financial professional determines a Program offered in this Brochure is in your best interest, your IAR uses your RTQ to recommend options within the Program that best align with your investment objectives, time horizon and risk tolerance for your Assets based on your financial needs and circumstances as well as the information you provide in the completed RTQ. You will decide whether you should participate in a Program and whether the recommendation to participate is suitable for your investment objectives, risk tolerance and time horizon for your Assets. In PruChoice, you also are responsible for deciding whether to accept your IAR’s individual investment recommendations. After you make your choices, a Statement of Investment Selection (“SIS”) is generated. The SIS outlines, among other things, your risk tolerance for the Assets, your planned initial investment amount, any reasonable investment restrictions you request for the Assets, the wrap fee you will pay (“Client Fee”), and the Program options selected. It is your responsibility to furnish your IAR with complete, accurate, and current information about your personal and financial circumstances, goals and preferences because it will be the basis for the recommendations and advice you receive. Neither PFPS nor your IAR independently verifies the information you provide. We do not automatically take into consideration other information you provide or make available to us, or our affiliates, in connection with other Prudential products and services. You are responsible for furnishing all information to your IAR that you would like PFPS to consider in formulating its investment recommendations. C. Program Considerations The Programs offered in this Brochure are designed for clients who prefer to pay an annual fee charged quarterly based on total assets under management. They generally are more appropriate for investors with an intermediate to long-term investment time horizon. You should consider whether a Program is appropriate in light of, among other things: the costs and potential benefits; your need and desire for professional money management service; whether you are comfortable giving investment discretion to a professional money manager (as in PruUMA Strategist UMA Portfolio Model and/or PSP) or to your IAR (as in PruUMA IAR Portfolio Model) or would prefer to participate in the decisions with your IAR (as in PruChoice); your investment objectives, risk tolerance and time horizon for the Assets; your financial circumstances; and whether investing in securities is appropriate for you. Because the Account is intended for use only with your Assets, the risk profile and investment objective designated for your Account must substantially align with the risk tolerance and investment objective in your SIS for that Program. When your SIS and the Account do not align, initially or at a later time, the Account’s designations will be updated to match as closely as possible to the SIS. Your IAR will provide you with a copy of this Brochure and the IAR’s Brochure Supplement. The Envestnet Form ADV Brochure will be provided with all Programs. For the PSP and PruUMA Programs, you also will receive a Form ADV Brochure for your Model Provider or Strategist, as applicable and as defined below. Brochures describe each entity’s business and services and other important information pertaining to each entity, including material conflicts of interest and disciplinary history, if any. The IAR’s Brochure Supplement describes the IAR’s background information, Compensation, and disciplinary history, if any. Please review these Brochures carefully before selecting a Program and service provider(s). II. PROGRAM SERVICES A. PruStrategist Portfolios (“PSP”) PSP is a discretionary investment advisory program. PFPS and Envestnet are co-advisors in the Program and Envestnet has discretion over your Account. You may invest in a variety of Funds through an investment strategy (each a “Strategy” and collectively, “Strategies”). A Strategy is an asset allocation model developed by an investment manager (“Model Provider”). Each Strategy has investment objectives and is comprised of a unique asset class mix, some of which, in turn, consist of multiple investment styles. Investments in a Strategy may include: i) Funds managed and distributed by a PFPS affiliate (“Proprietary Funds”); ii) Funds that are advised by investment managers not affiliated with PFPS; or iii) a mix of these Funds. Each Model Provider recommends Funds, available through Envestnet and National Financial Services, LLC (“NFS”), to Envestnet for a Strategy. Envestnet implements these recommendations and periodically updates and rebalances the Strategy according to the Model Provider’s recommendations. PFPS may, from time to time, replace existing Model Providers or add other Model Providers available through Envestnet and NFS and cannot guarantee that a Strategy will always be available. PFPS’s Registered Investment Advisory Committee (the “Committee”) makes the final decision on which Strategies and Model Providers will be available in PSP, but limits its consideration to Strategies and Model Providers that Envestnet pre-screens and approves for the Committee’s consideration subject to certain exceptions as described in “Envestnet and PMC” and “Transition List.” The Committee approves the Strategists and Strategies available in PSP, but not the specific Funds available in the Strategies. Please refer to Envestnet’s Brochure for additional information regarding the arrangements Envestnet has with Model Providers available through its platform and made available to wrap fee program sponsors, such as PFPS. Envestnet refers to a Strategy as a “Model” in its Brochure. In constructing Strategies, third-party Model Providers generally give preference to Funds that are advised, sponsored or distributed by that Model Provider’s affiliates (“Model Provider Funds”), even when a similar Fund is available with lower costs or better performance. Please see “Funds and Third-Party Model Providers” for information about this conflict of interest. It is our expectation that, other than PGIM Models (defined below), Model Providers are unlikely to use Proprietary Funds in PSP. The Committee makes Strategies provided by Portfolio Management Consultants (“PMC”), a division of Envestnet, available in PSP and PruUMA IAR Portfolio Model. Please see “Envestnet and PMC” for information about our incentive to select and retain these Strategies over other Strategies. PFPS and Envestnet also make available in PSP Strategies created by PGIM Investments LLC (“PGIM Investments”), an affiliate of PFPS (“PGIM Models”). PGIM Investments primarily uses Proprietary Funds in the PGIM Models unless there is no Proprietary Fund consistent with the desired asset allocation or investment strategy for the PGIM Model or, in PGIM Investments’ discretion, a different mutual fund or exchange-traded fund is preferred. As a result, PGIM Models typically include Proprietary Funds even when a similar Fund is available with lower costs or better performance. PGIM Models are expected to consist of at least a majority of Proprietary Funds but can consist of up to 100% Proprietary Funds. In creating the PGIM Models, PGIM Investments’ and PFPS’ affiliate, PGIM Quantitative Solutions, LLC, provides certain services, such as asset allocation, to PGIM Investments. For additional information on the construction of the PGIM Models, please see PGIM Investments’ Brochure. PGIM Investments receives fees from utilization of their Proprietary Funds, which creates an incentive for PGIM Investments to select Proprietary Funds for inclusion in the PGIM Models. If you select a PGIM Model to be used in your PSP Account, you will pay management and other fees as a shareholder of any Proprietary Funds held in your Account. Such fees are separate from the Client Fee you pay to participate in the Program. PFPS, however, will reduce the Client Fee payable on your Account by a Credit Amount (defined below) to offset certain of these fees. See the “FEES AND EXPENSES” section for additional details. PGIM Investments will pay a portion of the fees it receives from the Assets invested in Proprietary Funds through PSP to PFPS. The PGIM Models are subject to different considerations than are other Strategies and Model Providers that are included in PSP. Given the affiliated relationship between PFPS and PGIM Investments, the PGIM Models are not subject to the same reviews as Strategies provided by unaffiliated Model Providers included in PSP. Instead, PGIM Investments was identified, on the basis of its affiliation with PFPS, to provide the PGIM Models to be made available in the PSP program. Moreover, unlike other Strategies made available in PSP, the PGIM Models are not included on PMC’s approved rated list of Model Providers to third-party wrap fee program sponsors (although they have recently become available on the Envestnet platform for distribution by other sponsors). However, PGIM Investments will include a Proprietary Fund in a PGIM Model only if it has at least a three-year performance history. Please see “PGIM Investments as Model Provider” for more information about this conflict of interest and how we seek to mitigate it. Prudential receives a reputational benefit from having assets managed according to the PGIM Models, and in certain circumstances will receive additional revenue as a result of your investment in the Proprietary Funds through the PGIM Models. Accordingly, you should be aware that, because of PGIM Investments’ affiliation with PFPS, the Committee is more inclined to include, and your IAR is more likely to recommend that you select and keep, the PGIM Models over other Strategies. Please see “PGIM Investments as Model Provider” for more information about this conflict of interest and how we seek to mitigate it. When the allocation mix of your Account does not match the allocation mix of your Strategy within certain thresholds, Envestnet will rebalance the Funds in your Account back toward the allocation mix of your Strategy. This will happen when the amount of cash in the Sweep Vehicle is above or below your Cash Target, as defined below, the value of your Funds has changed, or the Model Provider changes its Strategy. Rebalancing means that Envestnet will buy more shares of certain Funds and sell shares of other Funds and will adjust the cash in your Sweep Vehicle, as defined below, towards your Cash Target. Any trades in your Account, including those that result when a Strategy’s asset allocation is changed, may result in taxable events to which capital gains (or other) taxes apply. PFPS, IARs, Model Providers, and Envestnet do not provide tax or legal advice, and you should consult with your own tax or legal advisor. B. PruUMA Program PruUMA is a discretionary “unified managed account” program that offers a combined portfolio of investments, allocated according to an asset allocation model, that can hold many types of investments in a single Account. Benefits of holding many types of investments in a single account include consolidated reporting and billing and a single tax document across all Assets in your Account. Clients enroll in the Program through their PFPS investment adviser representative (“IAR”). Your IAR can recommend either (1) the IAR Portfolio Model or (2) the Strategist UMA Portfolio Model, each of which is described in more detail below. Both the IAR Portfolio Model and the Strategist UMA Portfolio Model offer access to Envestnet Asset Management’s (“Envestnet”) platform of diversified multi-asset allocated portfolio investment solutions, which can invest in a mix of Funds (i.e., mutual funds and ETFs), stocks, bonds, separately managed accounts, and strategies, all in a single account across five risk-based portfolio profiles. Both PFPS and Envestnet are co-advisers in the Program with discretion over aspects of the management of your advisory accounts depending on whether you invest in the IAR Portfolio Model or the Strategist UMA Portfolio Model. A main difference between the IAR Portfolio Model and the Strategist UMA Portfolio Model is who creates your asset allocation model. In the IAR Portfolio Model, the IAR creates your asset allocation model and chooses investments. In the Strategist UMA Portfolio Model, the IAR selects an investment manager (“Strategist”) and a portfolio model created by the Strategist; the Strategist delivers the portfolio model to Envestnet which has discretion to place trades in Client’s Accounts except for certain fixed-income Separately Managed Accounts. The Strategist UMA Portfolio Model generally requires a substantially higher investment minimum than the IAR Portfolio Model. See “Minimum Investment Requirements” below. After you open an Account in the IAR Portfolio Model, your IAR will consult with you before changing your Account to the Strategist UMA Portfolio Model. Similarly, your IAR will consult with you before changing your Account from the Strategist UMA Portfolio Model to the IAR Portfolio Model. 1. IAR Portfolio Model The IAR Portfolio Model allows Clients to access multiple Model Providers (and their Strategies and Separately Managed Accounts defined below) and Funds representing various asset classes chosen by the IAR. Your IAR will, without prior consultation and in agreement with your risk profile and Program requirements: (i) create your initial IAR Portfolio Model; (ii) provide rebalance instructions to Envestnet so that the allocation of Assets in your Account remains generally consistent with the IAR Portfolio Model; (iii) adjust the allocation percentages within the IAR Portfolio Model, when appropriate; (iv) add sub-asset classes to your IAR Portfolio Model (at times, your IAR may not allocate Assets to each of the sub-asset classes in your IAR Portfolio Model); and (v) remove or replace an investment with another appropriate investment. The IAR builds your IAR Portfolio Model for you based on an Overlay Model, developed by Envestnet, that aligns with your risk profile. Each Overlay Model contains asset classes, and allocations to the asset classes, based on risk tolerance levels. The IAR can use the Overlay Model “as is.” Alternatively, your IAR can adjust the Overlay Model’s allocation percentages, within PFPS’s permitted ranges, among the broad-based asset classes in the Overlay Model. Asset classes include domestic equity, international equity, fixed income, and, if applicable, alternatives. To complete the IAR Portfolio Model, your IAR then will select investments to fulfill each asset class and its allocation percentage. Within the allocation, your IAR may choose to include a sub-portfolio comprised of individual equity positions selected by your IAR. This is a sub-portfolio and will appear as one allocation on your SIS. The percentage of each asset class in your IAR Portfolio Model may drift slightly because of market fluctuation. This market fluctuation may also cause the risk tolerance level of the IAR Portfolio Model to drift slightly from your risk profile. The IAR’s investment style can affect the performance of your IAR Portfolio Model. For example, frequently changing asset allocations or changing investments in the IAR Portfolio Model will likely result in more frequent trading in your Account. That can have tax consequences for your Account and result in transaction fees imposed by a Fund that are described in “Mutual Funds and ETFs.” If your IAR Portfolio Model includes an allocation to a Model Provider that “trades away,” additional fees and expenses typically are charged that are described in “Trading Through Other Broker- Dealers.” Please see “IARs as Portfolio Managers” for further information about how your IAR manages your IAR Portfolio Model. The IAR Portfolio Model can be made up of some or all of these investment options: (i) Strategies (i.e., an asset allocation model that invests in Funds); (ii) investment styles designed by third-party Model Providers that invest in individual securities and Funds (“Separately Managed Accounts”); (iii) Funds; and (iv) a sub-portfolio of individual equities managed by your IAR. The Strategies and Separately Managed Accounts in PruUMA are provided by Model Providers that are not affiliated with Prudential. Depending on the particular Separately Managed Account selected by your IAR, a Model Provider will either have discretion over the Assets allocated to them, or will provide instructions to Envestnet, which will have discretion to make trades in your Account. For example, certain fixed-income Separately Managed Accounts have the ability to implement their strategies and place orders for trades directly. For all other Strategies and Separately Managed Accounts, Envestnet places trades and implements your IAR’s investment instructions and the Model Providers’ recommendations. For Funds and individual equity securities, Envestnet places trades and implements your IAR’s investment instructions. Envestnet also rebalances your Account upon instructions from your IAR or based on the PruUMA Program’s rebalancing rules. The Model Providers, their Separately Managed Accounts, their Strategies, and the Funds are selected by your IAR from PMC’s approved lists. The Committee makes the final decision on which Model Providers, Strategies, Separately Managed Accounts, and Funds will be available in the IAR Portfolio Model. The Committee limits its consideration to options that Envestnet (through its due diligence research division, PMC) pre-screens and approves for the Committee’s consideration. The Committee’s approval is subject to certain exceptions as described in “Envestnet and PMC” and “Transition List.” In the IAR Portfolio Model, the Committee reviews and approves the Separately Managed Account(s), Strategies, and the menu of Funds available for selection by IARs, but does not approve the individual Funds held within the Strategies; or the Funds or individual securities held within Separately Managed Accounts; or the equities in the sub-portfolio managed by your IAR. However, the Committee does approve, and periodically reviews, the standards and factors used by due diligence providers to determine what should be made available in the IAR Portfolio Model. If your IAR manages a sub-portfolio of individual equities in your IAR Portfolio Model, the IAR will choose individual equities for you consistent with certain parameters established by PFPS, as described in “Selection and Review of Program Providers, Funds and Equities.” The investment options that comprise your IAR Portfolio Model are added and removed based upon the process described in Item 6. A Model Provider is likely to use Model Provider Funds, and certain Model Providers give preference to Model Provider Funds (over Funds that are not advised, sponsored or distributed by the Model Provider’s affiliates), even when a similar Fund is available with lower costs or better performance. Model Providers receive fees from Model Provider Funds, which creates an incentive for Model Providers to select Model Provider Funds for inclusion in their respective Models. Please see “Funds and Third-Party Model Providers” for information about this conflict of interest and the “FEES AND EXPENSES” section for additional details. In the PruUMA IAR Portfolio Model, the Committee makes available Strategies managed by PMC and Separately Managed Accounts managed by QRG Capital Management, Inc. (“QRG”), which is an affiliate of Envestnet. Please see “Envestnet and PMC” for additional information about this conflict of interest and how we seek to mitigate it. 2. Strategist UMA Portfolio Model The Strategist UMA Portfolio Model allows your IAR, in accordance with your risk profile and Program requirements, to select a Strategist and an asset allocation model developed by the Strategist (“Strategist UMA Portfolio Model”). The IAR can also, without prior consultation and in accordance with your risk profile and Program requirements, remove and replace a Strategist or the Strategist UMA Portfolio Model in your Account, provided there is no increase in fee. The Strategist (i) recommends investment options and allocations in the Strategist UMA Portfolio Model, (ii) provides rebalance recommendations to Envestnet so that the allocation of Assets in your Account remains generally consistent with the Strategist UMA Portfolio Model, and (iii) recommends adjustments to the allocation percentages within the Strategist UMA Portfolio Model. The Strategist provides the Strategist UMA Portfolio Model to Envestnet. Envestnet has discretionary trading authority to place trades in your Account and to implement the Strategist’s recommendations, with the exception of certain fixed-income Separately Managed Accounts whose trades are generally placed by the SMA Manager. The Strategist UMA Portfolio Model can be made up of some or all of these investment options: (i) Strategies; (ii) Separately Managed Accounts; and (iii) Funds. The Strategies and SMAs are provided by Model Providers that are unaffiliated with Prudential, but in most cases will be affiliated with the Strategists. Unlike the IAR Portfolio Model, your IAR cannot choose to include a sub-portfolio comprised of individual equity positions selected by your IAR. The percentage of each asset class in your Strategist UMA Portfolio Model may drift slightly from the Strategists’ recommended allocation because of market fluctuation. This market fluctuation may also cause the risk tolerance level of the Strategist UMA Portfolio Model to drift slightly from your risk profile. The asset classes available in Strategist UMA Portfolio Models can include domestic equity, international equity, fixed income, and alternatives. Unlike the IAR Portfolio Model where the Model Providers, the Model Providers’ Separately Managed Accounts, the Model Providers’ Strategies, and the Funds are selected by your IAR from PMC’s approved lists (subject to final decision by the Committee as described in “IAR Portfolio Model” above), in the Strategist UMA Portfolio Model, the Strategist recommends all the investment selections to Envestnet, who has discretion to implement the recommendations. Depending on the particular Separately Managed Account recommended by your Strategist, a Model Provider will either have discretion over the Assets allocated to them, or will provide investment recommendations to Envestnet, which will have discretion to make trades in your Account. For example, certain fixed- income Separately Managed Accounts have the ability to implement their strategies and place orders for trades directly. For all other Separately Managed Accounts, Strategies, and Funds, Envestnet places trades and implements the Model Providers’ recommendations. The Strategist’s investment recommendations are not based on PMC’s approved lists. PMC only approves the Strategists and their Strategist UMA Portfolio Models, not the underlying investments options (i.e., the Funds; the Funds held within the Strategies; or the Funds and individual securities held within the SMAs). The Committee does approve, and periodically reviews, the standards and factors used by due diligence providers to determine what Strategists and Strategist UMA Portfolio Models should be offered and made available for your IAR to select from in the Strategist UMA Portfolio Model. The Strategist and Strategist UMA Portfolio Models available in the Strategist UMA Portfolio Model program are added and removed based upon the process described in Item 6. In recommending the investment options, the Strategists will generally recommend Funds that are advised, sponsored, or distributed by the Strategists or their affiliates (“Strategist Proprietary Funds”). The Strategist will generally recommend Strategies that invest in Strategist Proprietary Funds and Separately Managed Accounts that are created by the Strategists or their affiliates (“Strategist Proprietary SMAs”). The Strategists do not charge a separate fee as a “Strategist” (i.e., at the “Strategist level”), but your Account will ultimately bear the fees charged by the Funds and the Separately Managed Accounts at the underlying investment level, whether or not they are affiliated with the Strategist. For example, if your Account is invested entirely in Strategist Proprietary Funds, the Strategists or their affiliates are compensated by the fees received from the Strategist Proprietary Funds (as detailed in the Strategist Proprietary Fund’s prospectus). Although you do not pay a separate fee at the Strategist level, your Account will ultimately bear the cost of the fees charged by the underlying Strategist Proprietary Funds. Similarly, if your Account is invested in Strategist’s Proprietary SMAs, you do not pay a separate fee to the Strategist at the Strategist’s level but you will pay the Model Provider fee for the Proprietary SMAs held in your Account. See “PruUMA Client Fee” for additional information about Client Fees. Clients should discuss any questions with or request further information from their IAR concerning the use of Strategist Proprietary Funds and Strategists’ proprietary Separately Managed Accounts. The Strategist’s investment style can affect the performance of your Account. Frequently changing investments in the Strategist UMA Portfolio Model will likely result in more frequent trading in your Account. That can have both tax consequences for your Account and result in transaction fees imposed by a Fund that are described in “Mutual Funds and ETFs.” The Strategist acts as a Model Provider for your Strategist UMA Portfolio Model. Envestnet exercises discretion as a fiduciary in implementing the Strategist UMA Portfolio Model. Envestnet may, from time to time, replace existing Strategists or hire others to create Strategist UMA Portfolio Models and cannot guarantee the continued availability of any Strategist UMA Portfolio Models created by any particular Strategist. C. PruChoice Program PruChoice is a non-discretionary Fund program where you make all investment decisions for your Account, except as otherwise delegated to Envestnet. The Program is a long-term investment program that gives you the ability to personalize your asset allocation model for the Program and invest in a wide range of Funds that are available through Envestnet and NFS. PFPS and your IAR provide you with investment advisory and related services. Envestnet is the co-advisor for the Program and will have limited trading discretion over your Account. The Committee makes the final decision on which Funds will be available in PruChoice. However, the Committee limits its consideration to options that Envestnet makes available on its platform. The Committee also relies on unaffiliated due diligence providers such as PMC, to perform due diligence on the Funds as described in “Selection and Review of Program Providers, Funds and Equities.” For example, PFPS engages Morningstar Research Services LLC (“Morningstar Research Services”), a registered investment adviser and subsidiary of Morningstar, Inc. (together, with its affiliates and subsidiaries, “Morningstar”), to provide supplemental due diligence and monitoring of certain Funds. Your IAR will make recommendations of particular Funds to represent each asset class in your asset allocation model. As discussed in Item 6, the IAR may only recommend Funds for your Account from among those approved by the Committee. However, IARs are permitted to recommend Funds for addition to the existing list. Please see “COMPENSATION OF YOUR IAR” for information about the conflicts of interest that affect your IAR’s recommendations of particular Funds and families of Funds. You should consider the conflicts of interest and the additional costs that you will bear when deciding on Fund recommendations from your IAR. Subject to the rules of the applicable Fund, you may buy or sell mutual fund shares within and across fund families, without being subject to transaction fees imposed by a Fund as described in “Mutual Funds and ETFs.” Envestnet will periodically rebalance your Account so that the allocation of Funds and/or cash remains closely aligned with the allocation and rebalancing frequency you selected, if any. You may choose quarterly, semi-annual or annual rebalancing. Additionally, you may request a rebalance at any time. However, if your Account is already aligned to the allocation, a rebalance, whether scheduled or requested, will not result in trades. Because Envestnet will sell investments to rebalance your Account, there may be tax consequences for you, which you should discuss with your tax advisor. At times PFPS and/or your IAR may recommend a different asset allocation for reasons such as: (i) you tell your IAR that your investment objectives have changed; (ii) PFPS decides that significant long-term changes in market or financial conditions justify a different allocation based on capital markets assumptions from PMC, a division of Envestnet; or (iii) a Fund is added or removed from the Program. PFPS will follow your instructions about changes to your existing allocation. For information on PFPS’ review of the Funds available in PruChoice, see “Selection and Review of Program Providers, Funds and Equities.” If your IAR recommends for you a Fund that is unavailable or closed to new investment for your Account, the monies you designated for the purchase will be invested in the Sweep Vehicle. If PFPS does not receive instructions to replace a Fund removed from the Program, the investment will be converted to cash and held in the Sweep Vehicle. You may at any time instruct your IAR to invest any portion of the Sweep Vehicle in Funds available in the Program. D. Termination of a Model Provider, Strategist, Strategist UMA Portfolio Model, or Fund; Requests to Change your Account PFPS may remove any Model Provider (any Strategist, any Separately Managed Accounts), Account, Strategy, Strategist UMA Portfolio Model, any Fund, or Envestnet from a Program, and any of these may end its participation in the Programs, at any time and in any manner. In all Programs except PruUMA, PFPS will notify you of removals and terminations of an investment option and if a new investment option is available, ask you to select an investment option. In PruChoice, if you do not (i) select a new investment option within the time required by the notice or (ii) provide other instructions, or if PFPS cannot timely notify you about a removal or termination, the affected Assets will be sold, and the proceeds will be invested in the Sweep Vehicle until you provide investment instructions. You will be notified of these transactions through trade confirmations, unless suppressed, in which case they will appear on your next Account statement. In PSP, if you do not (i) select a new investment option within the time required by the notice or (ii) provide other instructions, or if PFPS cannot timely notify you about a removal or termination, the account will be terminated and the affected Assets will be transferred to a retail brokerage account. You will be notified of these transactions on your next Account statement. You may terminate your active strategy in PSP at any time with written notice to PFPS. In PruUMA, you will generally not be notified of removals and terminations of investment options (including removal and termination of Strategists), and it is your IAR’s responsibility to take the appropriate action on the Account. Your IAR will be given approximately 30 days to find a replacement or move the position to a non- managed account. If no action is taken in that time, Client Fee billing will be stopped. If your IAR continues to not take action, your Advisory Agreement will be terminated in accordance with its Termination provisions, your participation in PruUMA will end, and your remaining Assets will be transferred in-kind to a retail brokerage account. You will no longer receive advisory services from PFPS and will receive a pro-rated refund of your Client Fee for the remainder of the quarter. Please refer to the Advisory Agreement for additional information. If you request a change to the management of your Account (for example, a change in Strategies, Strategist, Strategist UMA Portfolio Model, Separately Managed Accounts, Funds, individual equities, or allocations among those options, as applicable), your IAR will address and process such change request in a reasonable time and, to the extent applicable, transmit the request to Envestnet for implementation. Any resulting trades will be processed by Envestnet in accordance with Envestnet’s trading policies. Depending upon a number of factors, including the time at which your request is submitted, your instructions may not be implemented immediately, and it may take several days to fully effect your request. Any sale of Assets may cause a taxable event. Please speak with your own tax advisor for tax-related questions. E. Tax Harvesting The Programs offer a tax loss and gain harvesting service at no additional cost. To utilize this service, you must initiate a request through your IAR. You must request a dollar amount over $500 for tax harvesting. If Envestnet sells securities at a loss, it will then buy them back after a 30-day “wash” period. Envestnet will not consider assets held outside of your Account or Unsupervised Positions. If you or your spouse have other taxable or non-taxable accounts and hold in those accounts any of the securities held in your Account, you should discuss any wash sale implications for those “outside” assets with your tax advisor. None of PFPS, its IARs, or Envestnet make any guarantee that tax “harvesting” will be successful or provide any tax advice with respect to your Assets, and you should consult with your tax advisor about all tax issues. This tax harvesting service is unrelated to the services described in “Tax Overlay Management and Impact Services” which are available in PruUMA. Certain Strategies and Models available in PSP and PruUMA may also be managed as tax-efficient or tax-aware strategies by the applicable Model Providers. If you select a tax-efficient or tax-aware Strategy or Model for your account, you should discuss with your IAR whether the tax loss and gain harvesting service is appropriate in that circumstance. III. FEES AND EXPENSES A. Program Fees You pay an annual Client Fee, generally according to the schedules shown below, for each Program. Fees are subject to change upon notice to you in accordance with your Advisory Agreement. Client Fees for similar services vary among PFPS’s offices or IARs, but will never exceed the maximum amounts shown below. Some IARs charge a higher Client Fee than others for similar services. Please see “COMPENSATION” and “COMPENSATION OF YOUR IAR” for information about the conflicts of interest that affect the Client Fee you pay. 1. PSP Client Fee You pay an annual Client Fee, consisting of amounts that compensate PFPS (the “Firm Fee”), Envestnet and, where applicable, the Model Provider (the “Manager Fee”), and an amount that compensates both PFPS and your IAR (the “Advisor Fee”) for their services. The Client Fee generally can range between 1.97% and 0.27% depending on the amount of Assets in the Account, associated Manager Fee and the Advisor Fee. The Manager Fee is between 0.37% and 0.02%. The Manager Fee varies by Strategy, and the Manager Fee for all Strategies can be found in the SIS. The Manager Fee is paid to Envestnet and, in certain cases, to the Model Provider. The Manager Fee is set by Envestnet and is based on Envestnet’s negotiations with the Model Providers for the right to use the Strategy(ies) the Model Providers create and maintain and to compensate Envestnet for providing related services. The Firm Fee is between 0.40% and 0.25%, depending on the level of Assets in the PSP Program. The Advisor Fee is the only portion of the Client Fee that is negotiable. The Advisor Fee is between 1.20% and 0.0%. It is lower if you invest in PSP through a Virtual IAR than a Traditional IAR. The maximum Advisor Fee is 1.20% if you invest in PSP through a Traditional IAR and 0.50% if you invest in PSP through a Virtual IAR. The lower Advisor Fee reflects anticipated cost savings to Prudential when communicating with you exclusively through video, telephonic or electronic channels and when offering a limited menu of investment options. The lower Advisor Fee also reflects anticipated cost savings to PFPS from the team staffing model, which is expected to allow Virtual IARs to service the same number of PSP clients as Traditional IARs in less time. In addition, PFPS retains a greater percentage of the Advisor Fee when paying Virtual IARs with a salary and bonus, rather than the customary system of commissions and fees applicable to Traditional IARs. The lower Advisor Fee for Virtual IARs also reflects the lack of in-person meetings with a Virtual IAR and the centralized service model which offers additional opportunities for cost savings on items such as office space and training. Please see “Selection of a Financial Professional” for more information about these and other differences, which can affect the quality of service and advice when investing in PSP with a Virtual IAR than with a Traditional IAR. The sum of the Firm Fee and the Manager Fee is the “Sponsor Fee” as shown in the SIS. PFPS uses some of the Firm Fee to pay Envestnet and NFS for their services. PFPS also shares its portion of the Firm Fee with its affiliates for certain administrative services. In certain cases, Envestnet retains a portion of the Manager Fee as a compensation component for certain of its services, including providing administrative support to the Model Provider. See “COMPENSATION” for more details. The Client Fee also is applied to Assets in your Sweep Vehicle. If you select a PGIM Model to be used in your PSP Account, PFPS will reduce the Client Fee by a quarterly “Credit Amount” equal to the sum of an estimated amount of the (i) total net management fees attributable to Proprietary Funds during the period in which your account is invested in any Proprietary Funds included in the PGIM Model, based on the value of your PSP Account as of the last business day of the previous calendar quarter; and (ii) a small additional amount (a “cushion”) designed to address any minor fluctuations in the fees attributable to the Proprietary Funds. You will not be responsible for repaying any part of the Credit Amount if the Credit Amount exceeds the net management fees Prudential receives from the use of Proprietary Funds in your Account based on the value of your Account as of the last business day of the previous calendar quarter. This Credit Amount will not offset other expenses you pay as a shareholder of a Proprietary Fund, including fees paid to PGIM Investments or its affiliates by the Proprietary Funds included in the PGIM Model (such as transfer agency or sub accounting fees). With respect to an Account that is an employee benefit plan that is subject to ERISA, or an Individual Retirement Account (“IRA”), or any other account that is subject to Section 4975 of the Code, including but not limited to Archer MSAs, HSAs or Coverdell savings accounts, this fee reduction process is intended to assure compliance with Pruco’s duties under ERISA or the Code. For additional details about the fees and expenses associated with investing in a Proprietary Fund, please review such Fund’s prospectus. 2. PruUMA Client Fee You pay an annual Client Fee, consisting of (i) the Firm Fee that compensates PFPS and (ii) the Advisor Fee that compensates both PFPS and your IAR, and (iii) if your Account uses Separately Managed Account(s) and/or Strategies, the “Model Provider Fee” that compensates Envestnet for the necessary licenses to use Separately Managed Accounts(s) and Strategies. You will pay the Model Provider Fee only on your Assets invested in Separately Managed Account(s) and/or Strategies. The Client Fee generally can range between 2.30% and 0.27% depending on amount of Assets in your Account, associated Model Provider Fee, if any, whether or not you elect Tax Overlay Management and Impact Services, and the Advisor Fee, the only negotiable portion of the Client Fee. The Advisor Fee is between 1.20% and 0.0%. The Model Provider fee is generally between 0.60% and 0.02% and depends on the Separately Managed Accounts and/or Strategies chosen. A range of Model Provider Fees for each Strategist can be found in the SIS. The Model Provider Fee for all Separately Managed Accounts and Strategies can be found in the SIS. The Model Provider Fee is paid to Envestnet and, in certain cases, to the Model Provider. The Model Provider Fee is set by Envestnet and is based on Envestnet’s negotiations with the Model Providers for the right to use the Strategy(ies) and Separately Managed Account(s) the Model Providers create and maintain and to compensate Envestnet for providing related services. The Firm Fee is between 0.40% and 0.25%, depending on the level of Assets in the PruUMA Program. The Client Fee also is applied to Assets in your Sweep Vehicle. The Firm Fee and the Model Provider Fee are combined into the “Sponsor Fee.” PFPS uses some of the Firm Fee to pay NFS and Envestnet for their services. PFPS also shares its part of the Firm Fee with its affiliates for their administrative services. Envestnet keeps some of the Model Provider Fee as compensation for supporting the Model Providers and the Strategists. See “COMPENSATION” for more details. Optional Tax Overlay Management and Impact Services Fees Tax Overlay Management and Impact Services are only available in PruUMA. The same fee is applied when selecting either or both services. For PruUMA the actual fee you pay is a blended fee based on the amount of Assets in each tier as set out below. The additional fee is added to the Client Fee and is charged on all Assets in your Account. Envestnet sets and is paid the fee for these services. Please see “Adjustments” for information about adding or removing Tax Overlay Management and Impact Services to or from your PruUMA Account mid-quarter. AUM Fee First $0 - $9,999,999 0.10% Next $10,000,000 - $24,999,999 0.08% Next $25,000,000 and above 0.05% 3. PruChoice Client Fee You pay PFPS a maximum annual Client Fee of 2.00% of the value of Funds, including Funds that are money market funds, but excluding any Assets held in your Sweep Vehicle. The 2.00% is the net of a 2.75% maximum Client Fee that can be charged and a simultaneous credit of 0.75%. This credit is provided to offset the advisory fees that PFPS affiliates receive from Proprietary Funds in the Program. The Client Fee is made up of the Advisor Fee and the Firm Fee. The Advisor Fee is negotiable between you and your Advisor and is shared between PFPS and your IAR. The Advisor Fee is between 1.60% and 0.0%. The Firm Fee is between 0.40% and 0.25%, depending on the level of Assets in the PruChoice Program. PFPS uses some of the Firm Fee to pay NFS and Envestnet for their services. PFPS also shares its part of the Firm Fee with its affiliates for their administrative services. See “COMPENSATION” for more details. 4. How Client Fees are Calculated and Paid Envestnet calculates your Client Fee. In PSP and PruUMA, the Client Fee is based on the total market value of the securities and Funds in your Account plus any Assets invested in a Sweep Vehicle. In PruChoice, the Client Fee is based on the total market value of the Funds in your Account and is not charged on any of your Assets invested in a Sweep Vehicle. In PruUMA, if any portion of your Assets is invested in a Proprietary Fund, then the Client Fee is not charged on those Assets. PruChoice fees include Assets invested in Proprietary Funds, but a 0.75% credit on the Client Fee is given to all clients. In PSP, if you select a PGIM Model to be used in your Account, PFPS will reduce the Client Fee payable on your Account by the Credit Amount, as discussed. Although Model Providers other than PGIM Investments are not expected to use Proprietary Funds in the Strategies available in PSP, if your PSP Account holds a Proprietary Fund outside of a PGIM Model, the Client Fee is not charged on those Assets. Any valuation is not a guarantee of the value of those Program Assets. Your Client Fee is payable quarterly in advance except for the first payment. Your initial Client Fee is based on the value of your Assets on the first date that your Assets are traded in a Program. Thereafter, your Client Fee is based on the value of your Assets calculated as of the last business day of the previous calendar quarter. The initial Client Fee will cover the period from the first trade date through the last calendar day of the then-current calendar quarter and will be prorated accordingly. Thereafter, the quarterly Client Fee will cover the period from the first calendar day through the last calendar day of the then-current calendar quarter. NFS will debit the Client Fee and any applicable Account service fees and charges from your Sweep Vehicle or another Pruco Securities account you designate. If there are insufficient Assets in your Sweep Vehicle or other account, Envestnet will sell Assets in your Account in its discretion to generate sufficient cash to pay for any unpaid fees and charges, and this may result in a tax liability. NFS will deduct your initial Client Fee shortly after the first trade date for the initial investment, and thereafter NFS will deduct the quarterly Client Fee shortly after the end of each subsequent calendar quarter for the next quarter. Please notify PFPS promptly if you discover an error in your Client Fee as shown in your Account statement. All deductions from the Account by NFS will be shown in your Account statements and Quarterly Performance Review (as defined below). However, if you use another Pruco Securities account to pay fees, the Client Fee will not be shown in your Quarterly Performance Report and your Account’s overall performance reflected in this report will, as a result, appear higher. Adjustments: Your Client Fee will not be adjusted within a calendar quarter for: (i) appreciation or depreciation in the value of your Assets during that quarter; (ii) merely adding or removing Tax Overlay Management and Impact Services from your PruUMA Account without an accompanying change described in the next paragraph. Your Client Fee will be adjusted for: (i) replacement of a Strategy in your PSP Account; (ii) changes in the providers of Separately Managed Accounts and/or Strategies used in your PruUMA Account (including changes to the Strategist); (iii) changes in the allocation of assets to Separately Managed Accounts and/or Strategies used in your PruUMA Account; (iv) deposits or withdrawals greater than $10,000 during the quarter in any Program account; and (v) adding or removing Tax Overlay Management and Impact Services from your PruUMA Account at the same time as (ii), (iii) or (iv). Your Client Fee will also be adjusted in instances where PFPS has determined that your IAR has not fulfilled certain obligations with respect to a Program. You will be notified when this occurs. Adjustments to your Client Fee will be calculated pro rata for the remainder of the quarter after the change is implemented. If the result of a change is that your Client Fee is reduced, you will receive a credit back to your Account for the applicable quarter. If the result of a change is that your Client Fee is increased, you will be charged the additional amount of the Client Fee for the applicable quarter. Sweep Vehicle: In PSP and PruUMA, your Client Fee is also charged on any cash held in your Sweep Vehicle (unless you have been allowed to maintain a proprietary money market sweep). In PruChoice, your Client Fee is not charged on any cash held in your Sweep Vehicle. Therefore, to the extent your IAR recommends a lower allocation to cash in PruChoice, the higher your overall Client Fee will be. Changes to your Client Fee: Client Fees or any component of a Client Fee may change, but will not exceed the maximum rates reflected in this Brochure from time to time. You will receive notice of any change to the Firm Fee or Advisor Fee components of your Client Fee. You will generally not receive notice of a change to the Model Provider Fee component of the PruUMA Client Fee. PFPS or Envestnet may remove and replace a Strategist, Model Provider, or Fund in a Program, and the replacement may have higher or lower fees. If you change your risk profile, your asset allocation or investment options, your Client Fee may change, but it will not exceed the maximum rates shown above. 5. Negotiating Fees PFPS may reduce or waive Client Fees for clients at any time. PFPS may reduce or waive the Client Fee for its employees, associated persons, agents, independent contractors or any of their qualified immediate family members, or those of its affiliates to the extent permitted by applicable law. In addition, you and your IAR may negotiate and amend the Advisor Fee in the PruChoice, PruUMA and PSP Programs. This may occur at any time through mutual written consent for an increase in the Advisor Fee, as long as the fee does not exceed the maximum range set by PFPS in effect at the time of the negotiation, as reflected in this Brochure. Your IAR can negotiate an Advisor Fee that is lower than the minimum rate stated above and will consider a number of factors, including, but not limited to, the amount of your Assets and the number and the size of related accounts you maintain at PFPS or Pruco Securities. PFPS, in its sole discretion, may lower a client’s Advisor Fee for any reason. The Firm Fee and Manager Fee/Model Provider Fee components of the Client Fee in PSP and PruUMA, and the Firm Fee in PruChoice, are not negotiable. 6. Unsupervised Positions Assets transferred into your Account will generally be sold, unless such Assets are used to fulfill an allocation within your Account. There are two circumstances in which the Assets transferred into your Account will be maintained outside of your selected Program (“Unsupervised Positions”). The most common circumstance is when Assets transferred into the Account are not part of the model holdings and cannot be liquidated for some reason, for example, because they are illiquid or cannot otherwise be sold through Envestnet’s normal processes (i.e., as part of an account rebalance). The less common circumstance is when a Client has requested, to maintain certain Assets in their Account outside of the selected Program, a client directed Unsupervised Position. PFPS no longer allows clients to direct us to maintain an Unsupervised Position. Unsupervised Positions will not be included in the Assets used to calculate your Client Fee, provided that such assets are categorized as Unsupervised Positions before being transferred into your Account or that the Unsupervised Positions are identified by Envestnet before an Account is incepted. If the Unsupervised Position is accepted into your Account after the Account has been incepted, then such Assets will be included in your Client Fee for the remainder of the initial quarter that the Unsupervised Positions are being held in your Account, but not again after that. Unsupervised Positions will not be included in determining whether you have met the required minimum investment for your Program, and advisory services will not be provided with respect to Unsupervised Positions. Any information your IAR or PFPS furnishes you is for educational purposes only and not intended as a recommendation. Neither your IAR nor PFPS will monitor your Unsupervised Positions, and Unsupervised Positions will not be taken into consideration by your IAR, PFPS, Envestnet, or any Service Provider when deciding how to invest the Assets in your Account that are subject to the Program or whether your Account is consistent with your risk tolerance. Neither PFPS nor your IAR will have the discretion to sell Unsupervised Positions without your instruction. Because PFPS and IARs are not compensated on Unsupervised Positions, PFPS and its IAR have an incentive to encourage you to liquidate an Unsupervised Position and reinvest the proceeds as quickly as possible in your Account. If you hold Unsupervised Positions in your Account, such holdings will be reported along with your Program Assets on your statements from NFS. They will also be listed separately on the Quarterly Performance Review (defined below), but they will not be taken into consideration in calculating the performance of your Program Assets. The Account is not a replacement for a retail brokerage account. The only options with respect to Unsupervised Positions are to (1) liquidate the position(s) and have the proceeds invested according to the allocation used in your Program; or (2) transfer the Unsupervised Positions into a separate retail brokerage account. PFPS generally will only allow you to maintain Unsupervised Positions in your Account for 120 days, but PFPS can alter the time limit in its sole discretion. PFPS no longer allows clients to direct us to maintain an Unsupervised Position. IV. COST COMPARISON The Client Fee may be more or less than the fees and charges you would pay if you paid separately for investment advice, brokerage or other services. A Client Fee and its components may be higher or lower than comparable programs of other advisory program sponsors or other advisory programs that PFPS or its affiliates offer. Your Client Fee may be higher or lower than other clients’ Client Fees in the same Program. The individual securities and Funds held through the Program are also available to you outside the Program through a brokerage account without participating in a Program or paying the Client Fee. However, in a standard Pruco Securities brokerage account, you will not benefit from the features of a Program including, but not limited to, portfolio management services, ongoing investment advice, account monitoring, and account rebalancing (if selected for PruChoice). You will also pay custodial fees and any transaction-based sales charges and fees imposed by the broker-dealer and, if applicable, the Fund. Factors that bear upon the cost of the Program compared to buying the same services separately include, among other things, the types of securities that you transfer into and hold in your Account, the historical and/or expected size and number of trades expected to occur in your Account, the number and range of other services that you expect to receive that are not covered by the Client Fee, and the total market value of your Assets. A copy of the fee schedule for a standard Pruco Securities brokerage account is available via our website. V. ADDITIONAL COSTS In addition to the Client Fee, you will pay other fees and costs when investing in a Program. Some of these fees and costs directly affect our Compensation, and others do not. Compensation includes not just payments (as described in “FEES AND EXPENSES” and “Compensation through Client Fee”), but also the ability to avoid costs and to receive free (or discounted) services or goods (collectively, “Compensation”). This section describes fees and costs you pay that do not directly affect the Compensation that we receive when you participate in the Programs. For a discussion of the circumstances in which you will pay fees and costs that directly affect our Compensation, please see “COMPENSATION” and “COMPENSATION OF YOUR IAR.” A. Other Costs Your Client Fee does not include costs associated with incidental services you request or incur such as express postage and handling charges, mailgrams, transfer taxes, legal transfer fees for stock certificates registered in street name, and any expense associated with converting non-U.S. securities into ADRs or GDRs, if applicable. The Client Fee also does not include other fees and charges that NFS reserves the right to pass through to us, such as exchange or other clearing corporation fees, and execution or other handling fees imposed by an execution provider. In addition, you will pay fees to NFS (such as a liquidation fee) and fees assessed by third parties such as foreign exchange fees; Securities and Exchange Commission fees; charges assessed by other broker-dealers; markups, markdowns or spreads; or other fees mandated by law. Please refer to the Command Account and Investor Account Fee Schedule. Please see “Ancillary Services Fees” for information about other costs and fees you pay, in addition to the Client Fee, that do increase our Compensation. B. Fund Fees When your Account invests in Funds, including money market funds, you will pay two levels of fees—the Client Fee plus your share of the Fund’s internal fees and expenses (except that, if your Account is invested in Proprietary Funds, certain special fee provisions may apply, as discussed under “How Client Fees are Calculated and Paid”). These Fund fees and expenses include management fees, 12b-1 and shareholder service fees, and other expenses such as custody, legal, and accounting fees. These fees and expenses are paid out of Fund assets and are reflected in a Fund’s share price. These fees and expenses are an additional cost to you and are not included in the Client Fee and any other applicable fees and expenses shown in your Account statements. Fund fees and expenses are shown in a Fund’s prospectus or offering documents, which you should review. Fees and expenses reduce a Fund’s net asset value and its performance. When fees and expenses are added to the Client Fee, they increase your total costs. Investing in Funds through a Program costs you more money (which lowers your investment returns) than if you bought the Funds directly without participating in the Program. Please see “Mutual Funds and ETFs” and “Sweep Vehicle” for more information about these fees and expenses, as well as other fees that Funds charge upon certain transaction activity in accordance with their prospectuses. In constructing Strategies, third-party Model Providers generally give preference to their Model Provider Funds over Funds that are not advised, sponsored or distributed by affiliates of the Model Provider. These Model Providers have an incentive to use their own Model Provider Funds, as this allows the Model Provider to receive a reputational benefit from increased distribution of their Funds and, in certain circumstances, to also receive, through the fees and expenses you pay at the Model Provider Fund level, higher total Compensation than they would from the use of Funds which are not Model Provider Funds. Clients should expect that third-party Model Providers will use their own Model Provider Funds, even when a similar Fund is available with lower costs or better performance. In PruUMA Strategist UMA Portfolio Model, Strategist will generally use their Strategist Proprietary Funds even when a similar Fund is available with lower costs or better performance. The Strategists are compensated by the fees it receives from the Strategist Proprietary Funds. You should consider the opportunity cost, and the potentially higher fees and expenses, as part of the Compensation you pay for Program services when evaluating the reasonableness of the Client Fee. C. Markups, Markdowns and Spreads You will pay a spread, in addition to the Client Fee, when your Account transacts in securities primarily traded in dealer markets. These include fixed-income securities (e.g., bonds or structured products) and over-the-counter stocks. In a dealer market, securities are directly purchased from, or sold to, a financial services firm that acts as a dealer or principal. The spread is the difference between the best “bid” (i.e., price at which the dealer or principal will buy) and the best “ask” (i.e., the price at which it will sell) that is available to the broker when executing the trade. A markup or markdown is a separate fee you may pay in addition to the spread. It covers a dealer’s additional costs associated with executing an order, including technology costs. The amount is referred to as a “markup” on securities the dealer sells, and a “markdown” on securities it buys. The amount varies based on nuances of the issuer or order such as bond type, maturity date, quantity, etc. The trade confirmation will not show the spread, and will not show the markup or markdown, that you pay. NFS has agreed not to add a markup or markdown to the execution price for orders in fixed income securities placed through the Programs. However, you will still pay the spread, as well as any markup or markdown added by the dealer trading opposite NFS, even when executing trades through NFS as part of the Programs. D. Trading through Other Broker-Dealers The Client Fee covers investment advice, portfolio management services and trade execution services placed through NFS only. Envestnet and Model Providers with discretionary authority over your Account can execute trades through a broker-dealer other than NFS when they reasonably believe that another broker-dealer may effect trades at a price, including any commissions or dealer markup or markdown, that is more favorable to your Account than would be the case if Pruco Securities traded them through NFS. Even if the price is not more favorable, Envestnet or Model Provider(s) may “trade away” from NFS based on other relevant factors in selecting a broker- dealer, including execution capabilities, speed, efficiency, confidentiality, familiarity with potential buyers or sellers, and available inventory. If Envestnet or the Model Provider(s) effects trades through another broker-dealer, you typically will pay additional fees to compensate that broker-dealer for its services, including a commission, commission equivalent, markup/markdown, order handling fees, or fees imposed by an execution provider, Exchange or clearing corporation, or other fees mandated by law. Those fees are in addition to your Client Fee (and to the spread on securities traded in dealer markets) and will increase your overall cost to participate in a Program. For this reason, among others, Envestnet or Model Provider(s) may find that placing trades through Pruco Securities for execution by NFS is often the more favorable trading option. It is expected that many of the equity (stock) trades will be placed through Pruco Securities and executed by NFS. However, there are certain Model Providers in PruUMA that have historically directed most, if not all, of their trades to outside broker-dealers. These Model Providers include, but are not limited to, those that offer municipal, corporate and convertible fixed-income Separately Managed Accounts. If you transfer securities to fund your Account, Envestnet may use an outside broker-dealer to sell those securities that are fixed income, hard to value, illiquid, or thinly traded, or to sell other securities that NFS cannot sell. The fees described above will be charged to you. Envestnet or the Model Provider(s), as applicable, selects broker-dealers and is responsible for meeting its best execution obligations to the client. You should carefully review a Model Provider’s or Envestnet’s Brochure to learn whether and when it uses broker-dealers other than NFS to effect any trades. You also should carefully review all trading for your Account to understand the frequency of trading through other broker-dealers and any additional trading costs that may be incurred. You should discuss these trades and any associated trading costs with your IAR. Clients are encouraged to review the important information on the ‘Trading Away’ by visiting: www.prudential.com/links/about/pruco-securities- updates. You should visit this page periodically while participating in a Program to get updated information. You should also visit this page any time a new Separately Managed Account and/or Strategy is added to or changed in your Account. E. Tax Overlay Management and Impact Services Clients in PruUMA, whose Portfolio Model contains at least one equity Separately Managed Account and satisfies certain assets under management requirements, may select Impact Services and/or Tax Overlay Management services for an additional fee. Envestnet provides both services in its role as overlay manager. You may choose and terminate these services at any time. An IAR is not permitted to elect these services on your behalf. You must provide a separate approval to use Tax Overlay Management and Impact services. When purchasing Tax Overlay Management and/or Impact Services, you should consider carefully whether the additional fee, which is charged on your full Account balance, is justified by the benefit of the services. Tax Overlay Management and Impact Services are only available with respect to certain types of strategies within your PruUMA Account, and if you select Tax Overlay Management or Impact Services, they will only be applied to eligible portions of your Account. If your IAR removes the equity Separately Managed Accounts from your PruUMA IAR Portfolio Model, your Account will no longer benefit from the services and you and your IAR should direct Envestnet to terminate the services for your Account. Please see “Adjustments” and “Optional Tax Overlay Management and Impact Services Fees” for more information on how the additional fee is calculated. Impact Services: Choosing Impact Services allows you to select from a list of impact restrictions (such as socially responsible or environmental restrictions). Impact Services will only apply to your Assets in an equity Separately Managed Account(s). Tax Overlay Management Services: The Tax Overlay Management service may be appropriate if you seek to mitigate the effect of taxes on your Account. Envestnet evaluates proposed trades in your account and determines if the activity will have an acceptable level of taxable impact to you, based on tax settings you provide to Envestnet through your IAR. The gains and losses realized with the trading of Strategies and/or Funds (including ETFs) are considered as part of the Tax Overlay in the Separately Managed Account. Certain Separately Managed Accounts may also be managed as tax-efficient or tax-aware strategies by the applicable Model Provider. If you or your IAR select a tax-efficient or tax-aware Separately Managed Account, you should discuss with your IAR whether the Tax Overlay Management service is appropriate in that circumstance. Neither your IAR nor Envestnet guarantees that your tax liability will be reduced or that any indicated limits or mandates will be met, and none of them provide tax advice with respect to your Assets. Please speak with your own tax advisor for tax-related questions. F. Funding Your Account If you are depositing securities into the Account, they will be sold unless (1) they are Program eligible investments that will remain in your allocation or (2) they are maintained as Unsupervised Positions upon being deposited. For a full description of Unsupervised Positions, please see Section III.A. PFPS has no discretion and charges no Client Fee for Unsupervised Positions, subject to the following provision: if assets are not categorized as Unsupervised Positions at time of deposit or before a billing event, the Client Fee will be charged for a pro-rated portion of that quarter, but not in subsequent periods that they remain “unsupervised". Program eligible investments generally includes shares of mutual funds that are included in the Program but are not the same share class as the shares you deposit. See the section “Mutual Funds and ETFs” for more information. In certain circumstances, special handling may be required to process the liquidation of non- program assets. Such special handling may delay or prevent the full investment of your Assets into the selected allocation until the position(s) is liquidated. The sale of the investments may cause a taxable event. Please speak with your own tax advisor for tax-related questions. If you plan to fund your Account with proceeds from the sale of funds, the surrender of an insurance product, early withdrawal from a certificate of deposit, or the sale of any other financial product, you should consider the cost of any sales charges or commissions you previously paid or will pay upon sale, or any penalties you may pay upon surrender. It may be costly or inappropriate to invest through a Program in this manner. You should not fund your Account with proceeds from loans (including any cash advance or line of credit from a credit card), a margin account or a reverse mortgage. If you buy shares of mutual funds outside of a Program, you might pay a sales load, and if you transfer such shares into your Account, and the shares were accepted into your Program and managed, then you will pay the Client Fee on those shares as well as the sales load you already paid. If you buy shares of mutual funds outside of a Program that are subject to a contingent deferred sales charge (“CDSC”) and transfer such shares into your Account, if the shares are subsequently liquidated, you will pay whatever CDSC, redemption fee or short-term trading fee that is owed at that time. Please see “Mutual Funds and ETFs” for more information. If you terminate your Account, some or all of the Program mutual funds or fund share classes may not be held outside of the Program or you may not be able to buy more shares through a standard brokerage account. If you cannot hold shares outside of the Program, these shares will be sold, and the proceeds transferred as you direct. VI. COMPENSATION Our primary source of revenue and success comes from our ability to attract and retain our clients. We do this by offering quality investment advice that is reasonably designed to help clients achieve their financial goals through our Programs and other products offered by us and our affiliates. When we maximize returns to Prudential by placing your interests first, our interests are aligned with yours. Our overarching incentive to achieve your satisfaction is unchanged by the conflicts of interest described in this Brochure, all of which should be considered material (either individually or in the aggregate). We want to meet or exceed your expectations for transparency. As described in this section, we supplement the Compensation we earn from your Client Fee by engaging in what we believe to be longstanding industry practices, not unique to Prudential, that provide complementary sources of Compensation. If these practices were all eliminated, we would need to consider raising Client Fees in order for Prudential to provide its full range of services and achieve its own financial goals. Instead, we have retained these sources of Compensation and fully disclose them, so clients can understand their own expenses and how we are compensated. A. Our Compensation PFPS receives Compensation when you participate in the Programs that we recommend to you. The amount of the Compensation that PFPS and its affiliates receive depends on a number of factors. It is generally greater when a client invests in the Programs than when a client purchases financial planning services and/or brokerage products and services. In any of the Programs, we maximize our Compensation when we obtain for free or at discounted prices the services we (or our affiliates) are responsible for providing you and when we avoid penalties, fees or extra charges we (or our affiliates) are responsible for bearing. We earn Compensation by entering into arrangements pursuant to which a third party who is not a client provides an economic benefit to us (or our affiliates) for providing our advice or other advisory services. Please read this section carefully for important information about these arrangements and other business relationships we have, and Compensation that we receive, directly or indirectly, from the investment advisers and other service providers we recommend, select or approve for clients. PFPS maintains policies and procedures for reviewing Compensation that seek to ensure our incentive arrangements do not interfere with our fiduciary duty under the Advisers Act to all clients and our fiduciary obligations, where applicable, under ERISA and parallel provisions of the Code. When Compensation to Prudential varies based on what we recommend, select or approve for clients, this presents a material conflict of interest. We have an incentive to make the decision that maximizes our Compensation, or the Compensation to Prudential Companies, rather than to give disinterested advice. Our IARs have an incentive to make the decision that maximizes their Compensation, either directly (in the form of salary or commissions, bonus, prizes, rebates, etc.) or indirectly as further discussed in “COMPENSATION OF YOUR IAR.” In some cases, the decision that benefits us, our affiliates or our IARs will result in additional expenses or opportunity costs to clients, which reduce your returns. Generally, the higher our Compensation resulting from a service or product recommended by an IAR, the higher the cost of that product or service is to you. In each of the cases described in this Brochure, to the extent consistent with applicable law, we and our affiliates take into consideration our financial interest in maximizing Compensation when making decisions, even when that results in additional expenses or opportunity costs to you. Clients should consider the Compensation we receive, as well as the costs that clients bear, when evaluating whether to accept a recommendation and the reasonableness of the Client Fee. B. Relationships with Other Advisers Our incentives to recommend a Program or Fund depend on the Compensation we receive (directly or indirectly through our affiliates) from, and our business relationships with, the investment advisers we recommend, select or approve for clients. In the wrap fee programs, PFPS is deemed to recommend or select the Model Providers, Strategists, Morningstar (in PruChoice) and Envestnet to the extent that the Committee of PFPS approves them and can remove any Model Provider (and any associated Separately Managed Accounts and/or Strategies), any Strategist (and any associated Strategist UMA Portfolio Models), Fund, Morningstar, or Envestnet from a Program. In MIS, PFPS is deemed to select the research providers that the Committee relies upon when approving the target asset allocation ranges and particular Funds to represent each asset class in the asset allocation model for the Annuity. The research providers in MIS include Envestnet and PMC, Morningstar, and SIRG. This section describes the Compensation we receive (directly or indirectly) from, and our business relationships with, the investment advisers we recommend, select or approve for clients. It also describes how those business relationships result in additional expenses or opportunity costs to clients, which reduce your returns. In the circumstances described below, to the extent consistent with applicable law, we approve, and our IARs recommend, the selection and retention of the investment advisers (and their Strategies, Separately Managed Accounts, Overlay Models, Strategist UMA Portfolio Models, etc.) that will generate greater Compensation to us or our affiliates, over other options that generate less Compensation. Moreover, in making this recommendation, your IAR takes into consideration his or her financial interest in maximizing Compensation, either directly (in the form of salary or commissions, bonus, prizes, rebates, etc.) or indirectly (as an employee or agent of Prudential) when making recommendations. Each of these practices presents a material conflict of interest. Please see “Our Compensation” and “COMPENSATION OF YOUR IAR” for more information about these conflicts. 1. Envestnet and PMC Envestnet is an investment management firm founded in 1999 that provides investment management and investment advisory services through investment advisors, like PFPS. Envestnet also serves institutional clients such as pension or profit-sharing plans, trusts, estates, and corporations and provides advisory and research services. The Programs generally are made available by Envestnet through each PFPS IAR (with the exception of Virtual IARs, all of whom only offer PSP). In addition to the Envestnet advisory services offered in the wrap fee programs, Envestnet also offers PFPS many advisory service tools, whereby Envestnet provides only administrative and technology services and investment research and due diligence. Services for the Programs. Envestnet provides services, including the technology platform, to PFPS and clients in all of the Programs. In MIS, Envestnet primarily provides operational and administrative services such as performance reports, website services, client proposals, and fee calculation services. In the other Programs, PFPS retains Envestnet to serve as the co-adviser and/or to place trades and rebalance the Accounts of advisory clients. For example, in PSP, Envestnet acts on recommendations from Model Providers, adjusts asset allocations for your Account, rebalances your Account, and places trades. In PruUMA IAR Portfolio Model, Envestnet rebalances your Account (based on instructions from your IAR or Model Provider) and implements investment recommendations and places trades for your IAR and, with limited exceptions for certain fixed-income Separately Managed Accounts that have discretion to trade as described in “PruUMA Program,” also for your Model Provider. In PruUMA Strategist UMA Portfolio Model, Envestnet places trades and rebalances your Account based on the Strategist UMA Portfolio Model. In PruChoice, Envestnet is the Program’s co-advisor and places trades for your Account and rebalances your Account. Envestnet also provides Tax Overlay Management services and Impact Services in PruUMA. Envestnet develops the recommended Overlay Models available within each risk profile in PruUMA IAR Portfolio Model and PruChoice. Envestnet also creates and maintains the RTQ used in the Programs and creates the logic to map the results of the RTQ to a risk profile. In the Programs (other than PruUMA Strategist UMA Portfolio Model), Envestnet (through its research division PMC) conducts due diligence services for PFPS on the Funds, Strategies and Separately Managed Accounts available in each Program (other than certain third-party Funds available in PruChoice). In PruUMA Strategist UMA Portfolios Model, PMC conducts due diligence services for PFPS on the Strategists and Strategist UMA Portfolio Models, but not the Strategies, Separately Managed Accounts, and the Funds that the Strategist recommends. The Committee limits its consideration of investment options to the Model Providers, Funds, Strategies, Separately Managed Accounts, Strategists, and Strategist UMA Portfolio Models (as applicable) that Envestnet (through PMC) pre-screens and approves for the Committee’s consideration, subject to limited exceptions. These exceptions are the PGIM Models (in PSP), certain Strategies (in PruUMA IAR Portfolio Model) and certain third-party and Proprietary Funds (in PruChoice) and investment options placed on the “Transition List”, as described in Item 6. With respect to each exception, the Committee (rather than PMC) identified the investment option to be made available in the Program and requests that PMC performs due diligence in certain cases. However, PMC generally does not include these investment options on PMC’s approved list of Strategies (in PSP and PruUMA IAR Portfolio Model) and Funds (in PruChoice) that PMC recommends to other third-party wrap fee program sponsors (although the investment options may be available on the Envestnet platform for distribution by other sponsors). Please refer to Envestnet’s Brochure for additional information on how Envestnet works with firms for any due diligence services. For information about Envestnet’s conflicts, and how it manages them, please refer to Envestnet’s Brochure. PMC, a division of Envestnet, provides PFPS with yearly capital markets assumptions (expected return, standard deviation and correlations). PFPS uses these capital market assumptions and asset allocation models provided by PMC in computer software programs used by IARs to develop financial plans. The capital market assumptions are also used by Envestnet in developing the recommended Overlay Models for PruUMA IAR Portfolio Model and PruChoice and asset allocation models for MIS. The Committee makes available certain Strategies for which PMC is a Model Provider in PSP and PruUMA IAR Portfolio Model and certain Separately Managed Accounts for which QRG is a Model Provider in PruUMA IAR Portfolio Model (subject to due diligence performed by SIRG as summarized below). Separately, the Committee engages PMC to perform due diligence on the PGIM Models offered by our affiliate, PGIM Investments. Conflicts of Interest. PFPS pays Envestnet a portion of the Client Fee in exchange for providing the foregoing services, including the services furnished by PMC and the capital market

assumptions and asset allocation models that we use in developing financial plans. The fee payable to Envestnet depends on the overall assets under management by PFPS in the Programs, and is also reduced for individual accounts over a particular size. This creates an incentive for PFPS to recommend that you increase the Assets you maintain in your Account, as increased Assets in your Account will allow PFPS to retain more of the Client Fee for itself (in addition to the general increased dollar amount of the Client Fee resulting from your maintaining more Assets in your Account). Because Envestnet provides different services in MIS than in the wrap fee programs, the fee rate we pay to Envestnet is expected to be lower on assets you invest through MIS than on assets under management in the wrap fee programs. All else being equal, paying a lower fee rate to Envestnet allows us to retain more of your Client Fee. This creates an incentive for us to encourage clients to invest more in MIS, than in the wrap fee programs. Envestnet discounts or waives certain of the fees it would otherwise charge, and arranges or pays vendors, for us to receive the other services described above at nominal or no cost. These arrangements are based on the overall size of our relationship with Envestnet, among other factors. In addition, as described in “Joint Marketing, Conferences and other Business Support,” Envestnet provides us with Compensation in the form of reimbursement of our conference expenses. Our affiliates (including, for example, Jennison, as defined below) also have business relationships with, and receive Compensation (directly or indirectly) from, Envestnet. Jennison makes models available on the Envestnet platform for use by investment advisers (outside of the Programs) in providing investment advisory services (such models, the “Jennison Models”). Jennison receives Compensation from Envestnet in connection with each Jennison Model on the Envestnet platform, in an amount equal to a percentage of the assets invested in the Jennison Model, less the flat fees retained by Envestnet for initial model setup and ongoing model maintenance. Most recently, Prudential has engaged Envestnet, and a company in which Envestnet, Inc. has a financial interest, to provide the essential operational and investment infrastructure that would enable PFPS to offer variable annuities issued by Prudential Insurance as investment options in an advisory program. The relationships between our affiliates and Envestnet, including those that are unrelated to the Programs and our financial planning services, create an incentive to select and retain Envestnet and PMC over other firms. The relationships also deter us from considering other investment advisers and service providers. In PruUMA and PSP, we have an incentive to favor, and allow Envestnet to favor, Model Providers affiliated with Envestnet, when doing so incentivizes Envestnet to provide us with the types of Compensation described in “Joint Marketing, Conferences and other Business Support.” Envestnet receives reputational and, in some cases, financial benefits when the Committee approves, and your IAR selects and retains for you, a PMC Strategy or QRG Separately Managed Account. For example, Envestnet receives additional Compensation when Assets are invested in Strategies for which PMC is the Model Provider and Separately Managed Accounts for which QRG is the Model Provider. In that case, Envestnet retains the portion of the Model Provider Fee (in PruUMA) and Manager Fee (in PSP) that Envestnet otherwise pays to a third-party Model Provider to license the Strategy or Separately Managed Account. In PruUMA, there is an additional incentive to favor Separately Managed Accounts, including those managed by QRG, for your IAR Model Portfolio. When your IAR uses Separately Managed Accounts in your IAR Model Portfolio, you are more likely to purchase the Tax Overlay Management and Impact Services, which generates an additional asset- based fee for Envestnet. Please refer to the brochures of Envestnet and QRG for more information about the benefits to Envestnet when the Committee approves, and your IAR selects and retains for you, a Model Provider affiliated with Envestnet. Mitigation of Conflicts. To mitigate our incentive to favor Envestnet, Pruco Securities reviews Envestnet to assess whether Envestnet continues to meet its obligations to PFPS for the Programs. In the wrap fee programs, we mitigate our incentive to favor Strategies managed by PMC and Separately Managed Accounts managed by QRG by engaging our affiliate, SIRG, to perform additional research services on these Strategies and Separately Managed Accounts. PFPS’ Committee will subject Model Providers affiliated with Envestnet to the same standards as it applies to all other Model Providers in selecting and retaining Strategies for PSP and PruUMA and Separately Managed Accounts for PruUMA. Engaging SIRG to perform due diligence on PMC’s Strategies presents a conflict of interest because we also engage PMC to due diligence PGIM Models. This conflict is mitigated by SIRG’s research process, which is significantly quantitative, meaning it is driven by SIRG’s review of the PMC’s Strategies’ and Separately Managed Accounts’ investment performance and selection of underlying investments. With respect to the PGIM Models, PGIM Investments seeks to mitigate this conflict by SIRG’s selection and weightings process for the underlying investments in the PGIM Models, which does not take into account any information, consideration or recommendation from PMC or Envestnet. You should review PMC’s Brochure to learn how PMC addresses and mitigates conflicts related to model portfolios, including any incentive for Envestnet to give preference, when identifying and recommending options for the Committee’s consideration, to Strategies managed by PMC and Separately Managed Accounts managed by QRG. As referenced in Item 2, Pruco will no longer use the services of Envestnet and PMC, beginning in the latter part of 2024 due to the anticipated conversion with LPL Financial. 2. Funds and Third-Party Model Providers In all of the Programs, we approve, and our IARs recommend, (i) the selection and retention of Funds and/or Model Providers (and their Strategies and Separately Managed Accounts) or (ii) the selection and retention of Strategists and Strategist UMA Portfolio Models that generate more Compensation for us, over other options that generate less Compensation, at least some of the time. o Funds. In the wrap fee programs, the Funds are ETFs and mutual funds, shares of which are held through your Account. In MIS, the Funds that we approve, and our IARs recommend, are insurance-dedicated mutual funds, the shares of which are held through an insurance-dedicated sub-account underlying the Annuity. o Model Providers. In PruUMA, Model Providers create and update the Separately Managed Accounts that allow you to invest in individual equities and/or fixed income securities (and, in some cases, Funds) based on a particular investment style. In PruUMA and PSP, Model Providers create and update the Strategies that allow you to invest in Funds based on a particular investment style. Please see “Our Compensation” and “COMPENSATION OF YOUR IAR” for more information about these conflicts and how we seek to address them. The Compensation is in addition to (and does not offset) the other Compensation described throughout this Brochure. Joint Marketing, Conferences and other Business Support. We enter into joint marketing activities with, or ask for conference or marketing support fees or training arrangements from, our affiliates and Model Providers, Strategists, Funds, insurance companies, Separately Managed Account and Fund managers, sponsors or distributors, Envestnet, NFS, and/or their affiliates or subsidiaries (all “Sponsors”). Sponsors also invite IARs and PFPS personnel to attend trainings that they provide or pay for some or all of their training costs and/or cover some or all of the IARs’ travel, lodging and/or meal expenses. Sponsors’ representatives generally meet with and train PFPS personnel and IARs at these events. Sponsors at times will also pay for some or all of PFPS’ costs to host sales conferences, training conferences or client meetings. Sponsors also help pay for the marketing, or training expenses of the PFPS’ sales force. Some Sponsors tie the amount of payment and/or their willingness to pay costs to the amount of Pruco Securities’ or PFPS’ product sales. Sponsors pay some or all of the cost of these activities and reimburse PFPS or its affiliates for expenses. Other Prudential Companies, including Pruco Life, solicit or accept Compensation from Sponsors in these circumstances as well as other circumstances. As a result, we have an incentive to favor Model Providers, Strategists, Strategies, Separately Managed Accounts, and Funds that are associated with the Sponsors that provide the most Compensation to us, our affiliates or our IARs. In addition, when the Compensation is based on maintaining or increasing asset thresholds or product sales, we have an incentive to make recommendations to clients that will help us meet those thresholds and production levels. Revenue Share from Model Providers. We and our affiliates can receive Revenue Share (directly or indirectly) from firms associated with Model Providers, Strategists, Strategies, Separately Managed Accounts, the Annuity, and Funds available through the Programs, creating an incentive to favor these options over others. We define Revenue Share as Compensation paid by a firm out of its revenue that is (1) expressly labeled “revenue share” and derived from providing services in the Programs or our financial planning services, or (2) not necessarily labeled “revenue share,” but either (a) based on assets invested in the Programs or (b) expected to result from a financial planning recommendation of a particular product type or service (“Revenue Share”). We consider Compensation to be Revenue Share, not a joint marketing payment or conference and other business support, if the Compensation satisfies this definition. Revenue Share does not include fees payable out of the assets of a Fund (i.e., fund-level fees) or Separately Managed Account (rather than from the revenue of service providers) directly to us, our IARs or our affiliates. Any Revenue Share that we, our IARs or our affiliates receive is in addition to the financial planning fees and Client Fee. Revenue Share is paid by a firm out of its revenue from providing services to you. The higher the fees you pay to a firm, the greater the revenue that is available to share with us, our affiliates and our IARs. Revenue Share typically is not paid on the lowest-cost, lowest-fee options (including certain insurance policies, families of mutual funds, specific funds, or share classes of a fund). This presents a material conflict, as Revenue Share creates an incentive to favor the investment options that have higher fees and costs (which will reduce your investment returns). In addition, when the rate or amount of the Revenue Share payment is based on maintaining or increasing asset thresholds or product sales, there is an incentive to make recommendations to you that will help meet those thresholds and production levels. Pruco Securities no longer receives Revenue Share from NFS on Funds held in the Program Accounts. Our affiliates have revenue sharing arrangements with many firms in the industry, including firms associated with Model Providers, Strategies, Strategists, Separately Managed Accounts, and Funds that are used in the Programs and in products or services used to implement our financial plans. In some cases, these revenue sharing arrangements qualify as Revenue Share because the Compensation is based on Assets invested in the Programs or expressly labeled “revenue share” and derived from providing Program services or our financial planning services. When our affiliates make revenue sharing payments to these firms, Model Providers have a financial incentive to use Proprietary Funds and our affiliated service providers in your Program account. When our affiliates receive revenue sharing payments from these firms, we have an incentive to favor the associated Model Providers, Strategists, Strategies, Separately Managed Accounts, and Funds when approving and/or recommending Model Providers Strategists, and Funds for use in the Programs. As a result, the revenue sharing arrangements of our affiliates create incentives for us, your Model Providers, and your Strategists that prevent us from providing disinterested advice in the Programs. Use of Funds Serviced by Affiliates. In all of the Programs, we have an incentive to favor Funds that provide the most Compensation or other benefits to Prudential. This includes, but is not limited to, the Funds of our affiliates (referred to as Proprietary Funds in the wrap fee programs and as Affiliated Funds in MIS). Some non-Proprietary Funds (in the wrap fee programs) and Unaffiliated Funds (in MIS) engage PFPS’s affiliates as a distributor, transfer agent, shareholder servicing agent, custodian, and/or investment adviser. PFPS’s affiliates are paid for their services, and payments vary depending on the amount of assets invested in or allocated to a Fund, creating an additional incentive to increase investment in these non-Proprietary Funds or Unaffiliated Funds. In PSP and PruUMA, we also have an incentive to favor Model Providers, Strategists, or Strategies that utilize these non-Proprietary Funds (or our Proprietary Funds). These fund-level fees are in addition to the Client Fee you pay and reduce your returns on assets invested in the Fund. We do not offset or reduce the Client Fee by the amount you pay at the Fund level when you invest in non-Proprietary Funds or Unaffiliated Funds. Please review the Fund’s prospectus or other offering documents for more on fees and expenses. Use of Model Provider Funds and Strategist Proprietary Funds. In PSP and PruUMA IAR Portfolio Model, we benefit by allowing third-party Model Providers to favor their own Model Provider Funds over other Funds, when allowing this incentivizes these Model Providers to provide us with the types of Compensation described in “Joint Marketing, Conferences and other Business Support.” In PruUMA Strategist UMA Portfolio Model, we similarly benefit by allowing Strategists to favor their own Strategist Proprietary Funds over other Funds. In MIS, we benefit by allowing the insurance company to favor the Funds that provide the insurance company with the most Compensation, when allowing this incentivizes your insurance company to provide us with the types of Compensation described in “Joint Marketing, Conferences and other Business Support.” Please also see “Fund Fees” for more information about this material conflict of interest. PFPS does not manage the Model Providers’ or Strategists’ or insurance companies’ conflicts of interest. In the wrap fee programs, PFPS does not consider whether the Model Providers fully offset the fees and expenses you pay at the Fund level by the value of reputational benefits and, in some cases, additional Compensation the Model Provider receives from these Funds or their affiliates. In MIS, there is no offset to you of the additional Compensation or benefits the insurance company (including Pruco Life) receives by choosing, among the broad universe of all insurance-dedicated funds, certain Funds that generate additional Compensation (or reputational benefits) for the insurance company and its affiliates (over others that would not). You should review the Model Provider Brochure, or the prospectus for the Annuity, to learn how the Model Provider or your insurance company addresses and mitigates these conflicts of interest. Mitigation of Conflicts. We mitigate our incentive to favor the third-party Model Providers, Strategists, Strategies, Separately Managed Accounts, and Funds that maximize our Compensation by applying the criteria and process described in “PORTFOLIO MANAGER SELECTION AND EVALUATION.” We also seek to mitigate these conflicts of interest by disclosing them to you. Please contact us at the address or telephone number shown on Page 1 of this Brochure for information about Revenue Share arrangements and a current list of Sponsors and Funds that have arrangements with us or our affiliates. In PruUMA and PSP, we credit or discount a portion of the Client Fee to partially offset the benefit to us when Proprietary Funds are used in your Account, as described in “Program Fees.” For the wrap fee programs, you can find additional information about each Separately Managed Account and Strategy in the Program Fact Sheets available through your IAR; information about each Model Provider is found in their Form ADV Brochure, which is available via www.adviserinfo.sec.gov or from your IAR. Envestnet refers to a Separately Managed Account and Strategy as a “Model” in the Envestnet Brochure. Model Providers are called “Managers” in the SIS and “SMA” in the Investment Proposal. 3. Morningstar, Inc. Morningstar is a global financial services firm. In PruChoice and MIS, PFPS uses some of the Client Fee to pay Morningstar for providing due diligence and monitoring of certain of the Funds your IAR may recommend in PruChoice and all the Funds your IAR may recommend in MIS. The fee payable to Morningstar in PruChoice and MIS is a fixed dollar amount annually for coverage of the first 100 Funds, with an option to purchase coverage of additional Funds in blocks of 25. In PruUMA IAR Portfolio Manager, PFPS uses some of the Client Fee to pay Morningstar for providing due diligence and research on the list of equities that IARs may recommend (the “List”). The fee payable to Morningstar in PruUMA is also a fixed amount per year. Morningstar discounts or waives certain of the fees it would otherwise charge us, based in part on the overall size of PFPS’ and its affiliates’ relationship with Morningstar. As a result, we have an incentive to use Morningstar over other research provider to minimize the fees we pay for the services that Morningstar provides, because the fees we pay to Morningstar directly reduce the portion of the Client Fee we retain. Separately, a subsidiary company of Morningstar, Morningstar Investment Services LLC, serves as a Model Provider in PruUMA IAR Portfolio Model and PSP. Morningstar receives additional Compensation when Assets are invested in Strategies for which Morningstar Investment Services LLC is the Model Provider. In that case, Morningstar retains a portion of the Model Provider Fee (in PruUMA IAR Portfolio Model) and Manager Fee (in PSP). The additional compensation to Morningstar does not directly affect the portion of the Client Fee we retain. However, the additional compensation to Morningstar could consciously or unconsciously affect its willingness to pay us marketing support and reimburse our conference expenses. As described in “Joint Marketing, Conferences and other Business Support,” our receipt of this Compensation incentivizes us to favor Morningstar as a Model Provider over other Model Providers (in PruUMA IAR Portfolio Model and PSP) and as a research provider over other research providers (in MIS and PruChoice). Morningstar provides us with Compensation in the form of reimbursement of our conference expenses. We and our affiliates have other business relationships with, and receive Compensation (directly or indirectly from), Morningstar and its affiliates. For example, Pruco Securities uses Morningstar’s Field Research Tool and SSO Protegent Data Feed and seeks to negotiate discounts, which are a form of Compensation. These relationships are not directly related to the Programs, our financial planning services, or MIS. However, they create an incentive to favor services and products offered by Morningstar and its affiliates, over other firms, to the extent that encourages Morningstar to reciprocate with us and our affiliates. The relationships also deter us from considering other investment advisers and service providers. Prudential Insurance engages Morningstar to provide operations, proprietary statistics, performance, portfolio, MPT statistics, and risk data on the investment companies which serve as investment options in MIS and other variable annuity and life insurance policies that Prudential Insurance issues to its policyholders. As referenced in Item 2, Pruco will no longer use the services of Morningstar, beginning in the latter part of 2024 due to the anticipated conversion with LPL Financial. C. Other Arrangements Our incentives to recommend a Program include other arrangements pursuant to which someone who is not a client provides an economic benefit to us, or our affiliates, for providing our advice or other advisory services. This section describes additional examples of those arrangements and how the Compensation we (or our affiliates) receive from non-clients varies based on the service providers and investments we (and our IARs) approve, select or recommend for you in a Program. It also describes how those arrangements result in additional expenses or opportunity costs to clients, which reduce your returns. When evaluating the reasonableness of our fees, clients should consider these drawbacks, as well as the additional fees and expenses borne by clients and Compensation to us, as part of our Compensation. In the circumstances described below, to the extent consistent with applicable law, we approve, and our IARs recommend, the selection and retention of investments and service providers that generate greater Compensation to us or our affiliates, over other options that generate less Compensation. Moreover, in making this recommendation, your IAR takes into consideration his or her financial interest in maximizing Compensation, either directly (in the form of salary or commissions, bonus, prizes, rebates, etc.) or indirectly (as an employee or agent of Prudential) when making recommendations. Each of these practices is a material conflict of interest. Please see “Our Compensation” and “COMPENSATION OF YOUR IAR” for more information about these conflicts and how we seek to address them. 1. Pruco Securities If you participate in a Program offered in this Brochure, you must appoint Pruco Securities as the introducing broker-dealer and use NFS as the clearing firm and custodian for your Account. Not all advisers require their clients to use a particular broker- dealer or custodian to participate in a managed account program. Pruco Securities was selected as introducing broker on the basis of its affiliation with PFPS. NFS was selected as the clearing broker and custodian based in part on our existing relationship with NFS, NFS’ financial strength, reputation, breadth of investment products, and the cost and quality of custody and brokerage services provided to you and our other clients, as well as the Compensation we receive. Requiring clients to use Pruco Securities and NFS allows us to receive considerable benefits, and avoid significant costs, which creates an incentive to use these firms over other firms that do not or would not provide us with this Compensation. Use of Pruco Securities and NFS will in some cases prevent the Programs from achieving the most favorable execution for client transactions, which results in higher costs and/or lower returns for you. Exclusivity. We have agreed not to engage another broker-dealer to provide the retail clearing services covered by Pruco Securities’ agreement with NFS, without NFS’ prior consent. As a result, we will be unable to recommend that clients custody their assets and place trades for Accounts at other broker-dealers without NFS’ approval. This contractual relationship is a conflict of interest in that we will select and retain NFS as the clearing broker and custodian for Accounts, even if other clearing brokers or custodians may be more beneficial for clients. Free or Discounted Services. When selecting NFS as the brokerage platform and custodian for client Accounts, we considered standard benefits that are available without cost to all investment adviser firms using the platform, including PFPS. These benefits include, but are not necessarily limited to, the following products and services which defray our costs of doing business: (i) the ability for Pruco Securities to serve as introducing broker on Accounts, receiving duplicate client statements and confirmations; (ii) research related products and tools; (iii) access to a trading desk serving; (iv) the ability to aggregate securities transactions for execution and then allocate the appropriate shares to client accounts; (v) the ability to have advisory fees deducted directly from client accounts; (vi) access to an electronic communications network for client order entry and account information; and (vii) access to mutual funds with no transaction fees. Revenue Share and Other Benefits. PFPS’s business relationship with NFS also provides Pruco Securities and its affiliates with considerable other benefits, including favorable pricing with NFS, receipt of credits from NFS for business development and for net positive asset flows onto the NFS platform, receipt of a portion of interest payments on free standing credit balances, margin loans and non-purpose loans, receipt of a portion of fees paid for ancillary services incurred by client actions (as described in “Ancillary Services Fees”), and the ability to net profits on trade errors. In addition, NFS provides us Compensation as one of our Sponsors as described in “Joint Marketing, Conferences and other Business Support.” The receipt of such Compensation from NFS, including credits and discounts that reduce amounts we or our affiliates otherwise owe to NFS or others, creates a conflict of interest for PFPS. PFPS has an economic incentive to use NFS as its clearing firm for trade execution and custody over other firms that do not or would not provide such Compensation to PFPS or its affiliates, even if such other firms might be more beneficial to clients. Production-Based Pricing. Pruco Securities is able to negotiate preferred pricing with NFS based on a number of factors such as expected level of assets (e.g., in eligible Sweep Vehicles, including Fidelity money market funds) and number of accounts and IRAs custodied with NFS, an expected level of transactions, and the types of securities purchased (e.g., fixed income trades). If our demand for NFS’ services declines by greater than 10% (from September 2020 levels) with respect to one or more of these metrics, NFS can increase our fees to offset its loss of revenue. The fees we collect from you will not be impacted as a result. However, when fees charged to us depend on maintaining or increasing our demand for NFS’ services, we have an incentive to meet those production levels or asset thresholds. Business Development and Net Flows Credit. Our eight-year clearing/custodial agreement entitles us to receive an annual “business development credit” for utilizing NFS’ services and complying with the terms of the contract. In addition, NFS has agreed to pay us an incentive credit for each year (ending November 2027) in which contributions to, exceed withdrawals from, the assets custodied on NFS’ platform by Pruco Securities’ customers (the “net flows credit”). Your contributions to, and withdrawals from, an Account count towards this calculation of net “flows.” This presents a conflict of interest, as we have an incentive to encourage contributions to, and discourage withdrawals from, your Account rather than give you disinterested advice in order to maximize our net flows credit amount. The net flows credit is equal to the lesser of $3 million dollars and one-tenth of one percent of the net positive flows onto the NFS platform over the preceding twelve-month period. Deterrent to Replacing NFS. Importantly, we are subject to payback terms on the credits we receive if our agreement with NFS is terminated prior to the end of the contract’s eight-year term, or if we fail to comply with the terms of that contract during its term. In addition, if the contract terminates prior to July 2028, we must pay NFS an early termination fee (which decreases over time from $10 million in year 1, to $3 million in year 8). Even if the contract does not terminate early, we cannot replace NFS without paying all out-of-pocket deconversion costs and expenses to process any conversion, including costs and fees assessed by third-party vendors like transfer agents. The negative financial consequences of terminating (or not renewing) our contract with NFS present a material conflict of interest. We have an incentive to retain NFS for the duration of the agreement, and to renew the agreement, even if we believe another broker-dealer could provide more favorable execution and other services to clients. As referenced in Item 2, Pruco will no longer use the services of NFS, beginning in the latter part of 2024. 2. National Financial Services, LLC NFS will perform certain brokerage functions for your Account and act as a custodian for Assets held in your Account. NFS will handle the delivery and receipt of all securities, including Funds, bought or sold in your Account, value securities, receive and distribute all dividend and other distributions, and process exchange offers, rights offerings, warrants, tender offers, or redemptions. NFS will also send you trade confirmations (unless suppressed by you), periodic Account statements of all activities, and all shareholder communications it receives, unless shareholder communications are directed to Envestnet as described below. NFS will maintain custody of your Assets and perform other customary custodian services. NFS charges and collects fees, including the Client Fee, and processes deposits to and withdrawals from your Account. Asset-Based Fee. NFS charges us an asset-based fee in exchange for enumerated services that we are responsible for providing to clients in the Programs offered in this Brochure. The asset-based fee currently covers clearing and execution of transactions through NFS; printing, handling and delivery or e-Delivery of statements and trade confirmations; account verification; and a number of technology and product solution services. The asset-based fee is calculated as a percentage of the overall assets that Pruco Securities custodies with NFS on behalf of its customers, including Accounts in the wrap fee programs. The fee rate we pay to NFS decreases as the total assets custodied with NFS increase. As a result, we have an incentive to recommend that you increase your investment in your Account, as that allows us to pay NFS a lower fee rate and retain more of the Client Fee. Assets Excluded from the Asset-Based Fee. The asset-based fee we pay NFS does not apply to Sweep Vehicles, variable and fixed annuity contracts sold through the NTF Annuity Processing Program and assets that NFS identifies as “non-standard.” Non-standard assets include but are not limited to foreign securities, alternative investments and non-marketable securities. To the extent we do not pay an asset-based fee on these assets, we have an incentive to favor Model Providers, Strategists, Strategies and Separately Managed Accounts that allocate more of your Assets to securities that are excluded from the asset-based fee. 3. Ancillary Services Fees Your Client Fee does not cover the fees paid for ancillary services incurred by client actions (such as overdraft fees, wire transfer fees, bounced check fees, stop payment fees, transfer-of-assets fees (ACAT), and fees for safekeeping of physical stock certificates). In its role as introducing broker, Pruco Securities is responsible for setting the fee rate (or amount) paid by its customers for these ancillary services. Pruco Securities chooses to set the fee higher than NFS requires and keeps the difference between the fee you pay and the fee NFS retains. This presents a conflict, as setting a higher fee increases revenue for us, even though it will result in you paying higher fees if you engage in the relevant transactions. These markups are addition to the Client Fee you pay in a Program, and you should consider the additional revenue that we receive when you pay ancillary services fees as part of PFPS’s Compensation when evaluating the appropriateness of your Client Fee. Please see the “Command Account and Investor Account Fee Schedule” for your Account for the current list of ancillary services fees that you pay in addition to the Client Fee. For information about the portion of the markup we retain from the ancillary services fees, please call the number on the front of this Brochure. 4. Transaction Charges Although we have negotiated an asset-based fee, there are limited circumstances in which NFS would charge a transaction fee for making trades in your Account. For example, foreign securities are subject to additional fees related to the settlement, custody and execution of transactions in foreign marketplaces. Similarly, transactions in alternative investments or certain non-marketable securities are also subject to additional transaction-based fees. The amount of these charges varies based on the type of security being purchased or sold. PFPS is responsible for paying these transaction charges. As a result, we have an incentive to favor Strategist UMA Portfolio Models, Strategies and Separately Managed Accounts (and, in PruUMA IAR Portfolio Model, individual equity securities) that do not trigger transaction charges, allowing us to retain more of the Client Fee. In addition, because these fees are paid on a per-transaction basis, we have an incentive to favor Model Providers (and, in PruUMA, IARs and Strategists) that trade less frequently when investing in assets subject to transaction fees. We currently offer Strategies and Separately Managed Accounts that use foreign securities or other assets that trigger transaction charges. This decision creates an incentive to avoid Strategies and Separately Managed Accounts or securities that generate the transaction charges which reduces the amount of the Client Fee that we retain. We mitigate this conflict by disclosing it to you and by limiting the incentives of our Model Providers, Strategists, and IARs to avoid transaction charges. Model Providers, Strategists, and IARs are not charged for trades in your Account, their Compensation does not vary based on the number of trades or types of securities in your Account, and PFPS generally does not provide Model Providers, Strategists, or IARs with information on the trading costs PFPS pays relating to individual securities, Model Providers, Strategist UMA Portfolio Models, Strategies, or Separately Managed Accounts. 5. Mutual Funds and ETFs We pay the same asset-based fee, at identical rates, on all fund families, funds and share classes that NFS makes available in its Transaction-Fee Program (“TF Program”) and its Non-Transaction Fee Programs (“NTF Program”). The asset-based fee replaces the transaction-based clearing or execution charges (including surcharges) that NFS otherwise would charge us for purchases, sales, exchanges, or conversions effected in assets subject to the asset- based fee, including shares of the classes, funds and fund families in the TF Program. Paying an asset-based fee on Funds in both the TF and NTF Programs mitigates our incentive to avoid transacting in TF Program Funds in order to reduce transaction charges and retain more of our Client Fee. We still have an incentive to favor for your Account shares of the subset of fund families, funds and share classes that NFS designates “NTF Managed Accounts” within the NTF Program. For this subset of NTF Program Funds, NFS passes through to us any 12b-1 fees it receives, whereas NFS retains any 12b-1 fees you pay on other NTF (or TF) Program Funds. Our incentive to select NTF Managed Account Funds presents a conflict because funds and share classes in the NTF Program tend to have higher expense ratios. NFS charges fund families an asset-based fee to participate in the NTF Program, and fund families have an incentive to offer in the NTF Program their funds and share classes on which you pay 12b-1 fees in order to reduce the remainder which is borne by the Fund’s adviser or affiliates. Fund families generally pay all available 12b-1 fee revenue from the assets of the applicable share class to NFS. We also have an incentive to favor for your Account shares of the subset of fund families, funds and share classes that pay NFS service fees, recordkeeping fees, sub-transfer agency fees, and other fees payable from Fund assets (“fund-level fees”). NFS passes through to us all fund-level fees that NFS receives. All fund-level fees and 12b-1 fees are disclosed by a Fund in its offering document and borne by you, indirectly, as a shareholder of the Fund. Not all families of mutual funds, mutual funds or share classes of mutual funds that participate in the NTF Program, or are available to us on NFS’ platform, will charge 12b-1 fees and/or fund-level fees. Your returns would be higher if invested in the options that did not charge these fees. Some share classes of mutual funds that participate in NFS’ NTF Program can be purchased without a transaction fee in brokerage accounts (without participating in a managed account program like the Program). We approve for the Programs offered in this Brochure, and our IARs recommend, the selection and retention of Model Providers and Strategies that we expect to use Funds and share classes that pay us 12b-1 fees and other fund-level fees, when others are available that do not pay such fees. This is a conflict of interest, as selecting Funds and share classes that pay 12b-1 and fund-level fees increases the payments we are entitled to receive from NFS but reduces the Fund’s returns to you. We mitigate these incentives by directing NFS to credit to your Account any fees that NFS would otherwise pass through to us on your Assets. However, we do not credit amounts that NFS does not pass through, so your returns will still be negatively impacted any time that we receive less than the full amount you pay in 12b-1 fees and fund- level fees on your Assets. This occurs when NFS retains the 12b-1 fees (i.e., on all Funds that NFS has not designated as NTF Managed Accounts) or if NFS receives less than the full amount of 12b-1 fees and fund-level fees that were paid from your Fund’s assets. Any credit of 12b-1 fees or fund-level fees will appear in your Account statement. Please compare those credits against the offering document for the applicable Fund to determine whether your returns are impacted. Share Classes. In the Programs offered in this Brochure, you may only invest in certain share classes of mutual funds. Different fees are associated with purchases and redemptions of each share class. A share class may have some, all or none of the fees described in this section, each of which reduces your returns. The circumstances in which the fees will be charged, and may be waived, are disclosed by the Fund in its offering document. We have directed NFS to request for your Account any waiver on purchases and redemptions that a Fund or share class makes available to fee-based managed accounts. You will not pay any transaction-based fee on purchases of shares through the Program. The fees a Fund can charge upon purchase are “commissions” or “loads.” Generally, your Account may buy only institutional class shares and share classes of mutual funds designed for wrap fee advisory programs that are available through the Program. Institutional and wrap fee class mutual fund shares are “load-waived” or “no-load,” which means that you should not pay a sales load when purchasing shares of such mutual funds through a wrap fee account like the Program. If an institutional or wrap-fee share class is not available for a particular mutual fund in the Program, your Account will be invested in other share classes, which may include a sales load or “contingent deferred sales charges” (“CDSC”). You will pay a transaction-based fee upon redemptions of shares through the Program, if the Fund charges such a fee and NFS does not receive a waiver from the Fund. The principal fees a Fund may charge upon redemptions are CDSC, “short-term trading fees” and “redemption fees.” A CDSC is a commission you pay to the distributor that sold you the shares if redeemed within a certain number of years. A short-term trading fee is imposed by a Fund to deter excessive trading, usually defined as multiple purchases and redemptions by the same investor within a short period of time. A redemption fee is charged to offset the cost to the Fund of liquidating securities to meet the redemption request. CDSC, redemption fees and short-term trading fees are returned to the Fund or its distributor and are not paid to Pruco Securities or any affiliate. Share Class Conversions. Lower cost share classes are added by mutual funds on an ongoing basis. PFPS reviews share classes at least semi-annually for Funds available in PruChoice and the menu of mutual funds available for IARs to select amongst in PruUMA. If a more favorable share class is available to the Program, PFPS presents a conversion to the Committee for review and then processes the conversion to a lower cost share class. Therefore, you may hold a higher cost share class of a mutual fund in these circumstances for more than six months before PFPS converts your higher cost share class to a lower cost share class. You will not immediately be invested in the lowest cost share class available in these circumstances in PruUMA or PruChoice. Conversion to a lower cost share class does not occur unless PFPS reviews the share classes to determine that a more favorable share class has become available and then Pruco Securities implements the conversion, after presentation to the Committee. Until the conversion is implemented, we will continue to buy, as well as retain, shares of the less favorable class for your Account. Any conversion to a lower cost share class typically reduces the 12b-1 and fund- level fees that Pruco Securities is entitled to receive from NFS for investing client assets in higher cost share classes of the same Fund. For this reason, PFPS has an incentive to conduct its review of share classes infrequently. As discussed above, we mitigate the incentive by directing NFS to credit to your Account any 12b-1 and other fund- level fees that NFS would otherwise pass through to us on your Assets. If PFPS processes a share class conversion, you will be notified. The availability of individual Funds and share classes of those Funds for use in the Programs offered in this Brochure is dependent upon the agreements that NFS, as clearing broker, has with the individual Funds or Fund families. As a result, the lowest-cost share classes of Funds will not always be available in a Program. NFS has an incentive to favor on its platform the mutual fund families, mutual funds and share classes that result in the greatest Compensation to NFS, rather than the lowest cost to you. Unlike in PruChoice and the mutual fund menu in PruUMA IAR Portfolio Model, Model Providers or Strategists that offer Strategies in PSP or PruUMA (or that offer SMAs with mutual funds in PruUMA) are responsible for recommending the share class of each mutual fund to be used to fulfill the allocations. The Committee cannot require a Model Provider or Strategists to use the lowest cost share class available to the Program. However, the Committee takes into consideration, when selecting and retaining Model Providers and Strategists whether the Model Provider and Strategists consistently uses the lowest cost share class. The cost of any particular share class used by a Model Provider, or a Strategists is not determinative. The Committee expects to approve a Model Provider that does not use the lowest cost share class if justified by the potential upside opportunity (such as access to a Strategy that is not offered using the lowest cost share class). We review the share class selection practices of Model Providers or Strategists with mutual funds initially when adding the Model Provider and at least semi-annually thereafter. The Model Providers have an incentive to use a higher-cost share class if the Fund (or its affiliates) pay the Model Provider based on Assets invested in the higher-cost (but not the lower-cost) share class. PFPS has an incentive to allow Model Providers or Strategists to use a higher-cost share class, as higher-cost share classes generally entitle us to receive larger payments from NFS. As discussed above, we mitigate our incentive to allow Model Providers or Strategists to use a higher-cost share class by directing NFS to credit to your Account any 12b-1 and other fund-level fees that NFS would otherwise pass through to us. If you select a PGIM Model for use in your PSP Account, PGIM Investments is the Model Provider responsible for recommending the class of Fund shares to be used in the PGIM Models. PGIM Investments will typically recommend the lowest cost class of shares that is available to wrap accounts (there may, however, be lower cost shares available to other account types), and the share classes of Proprietary Funds that will be used in the PGIM Models do not pay 12b-1 fees to PFPS. Envestnet is responsible for all trading decisions for the Strategies used in PSP. Because different Fund families, Funds and share classes entitle us to different amounts of 12b-1 and other fund-level fees, your selected Model Provider’s recommendations and Envestnet’s trading will directly affect the amount of payments that Pruco Securities receives and can credit to your Account. Any mutual fund that you transfer into your Account that is available as a Fund through a Program but is not in a share class available through a Program is an ineligible security and will generally be sold, which may cause you to incur tax consequences. The sale proceeds will be used to buy the lowest cost share class of the same Fund that is available in the Program. At your request, if you transfer mutual fund shares of an ineligible class in your Account and do not want them sold, you may request that your IAR facilitate a share class conversion. A request for a share class conversion must be approved by NFS, the relevant Fund company, PFPS, and if applicable, the relevant Model Provider. PFPS will perform the share class reviews discussed in “Share Class Conversions” less frequently during 2024 due to the anticipated conversion to LPL Financial. 6. Cash Target All the Programs offered in this Brochure have a “Cash Target,” meaning some of your Assets are required to be in cash. For PSP, PruChoice and PruUMA, the Cash Target ranges from 0.5% to 2.00% of your Assets. Envestnet will allocate some of your Assets to the Sweep Vehicle in accordance with the Cash Target. At times the amount of your Assets in the Sweep Vehicle will temporarily differ from the Cash Target. This may occur because a Fund has been sold in your Account, your contributions or withdrawals are being processed, your Account is buying its initial investments, or there are changes in market value of your Assets. Envestnet will rebalance the account to within the range of the Cash Target based on Program rules. Cash allocations are set at either the Program or Model Provider level. The Committee makes the final decision on whether to approve the Cash Target and rebalancing frequency for the Programs. Within PruChoice and PruUMA IAR Portfolio Model, your IAR does have flexibility to adjust the Cash Target within limits set by PFPS’s Committee and to direct more frequent rebalancing. In PSP and PruUMA Strategist UMA Portfolio Model, the Model Provider and the Strategist will set their respective cash allocations within the Strategy and the Strategist UMA Portfolio Model and do not have flexibility to adjust the Cash Target. Rebalancing frequency is dependent upon your Program, and rebalancing transactions are processed by Envestnet. Each Account will also be periodically rebalanced pursuant to the rebalancing rules of the applicable Program, irrespective of the cost to PFPS of such rebalancing. However, if you have a PruUMA Account that includes an equities sub-portfolio, IARs will make decisions as to the appropriate timing of rebalancing. 7. Sweep Vehicle In all the Programs offered in this Brochure, as part of the Account opening process, you will choose the bank deposit sweep program or a money market fund (“Sweep Vehicle”). Deposits and dividends awaiting investment, and/or cash allocations will be held in the Sweep Vehicle. For Accounts not electing a Sweep Vehicle, your cash will be held in a free-credit balance. NFS pays us the credit interest generated on your cash balance, less any amount we direct NFS to share with you (which is currently none). A Program may also charge the Client Fee on assets in the Sweep Vehicle or free-credit balance. The Sweep Vehicle is not intended to be a long-term investment for cash holdings but does provide liquidity for futures transactions within your account. Please refer to “Program Fees” for additional information. We are responsible for choosing the menu of Sweep Vehicles available in each Program, and, with respect to the bank deposit sweep program, determining the amount of Revenue Share payments that Pruco Securities is eligible to receive. We direct NFS to not pay us any Revenue Share from Accounts in a Program. In the event we change our agreement with NFS, we would update this Brochure and you would want to consider the Compensation we receive in connection with your Sweep Vehicle when evaluating the reasonableness of your Client Fee. Pruco Securities may remove or replace the bank deposit sweep program or a money market fund as a Sweep Vehicle option upon advance notice. Please refer to the Brokerage Agreement for additional information regarding these limitations. While we choose the menu of Sweep Vehicles available in the Programs, neither Envestnet nor PFPS recommend or select a particular Sweep Vehicle for you, and your IAR is instructed to provide only education, not recommendations, as to the choice of Sweep Vehicle. Money Market Mutual Funds. PFPS has selected two money market mutual funds sponsored by an affiliate of NFS as the money market Sweep Vehicle options. PFPS no longer offers as Sweep Vehicles proprietary money market funds managed and distributed by PFPS’ affiliates. If, however, your account was invested in proprietary money market funds previously offered as Sweep Vehicles in the Programs, you will be allowed to retain your position in these proprietary money market funds at your discretion, or until you terminate the account. Similarly, you may be allowed to retain your position in certain other money market mutual funds that were previously offered as Sweep Vehicles at your discretion, or until you terminate the account. If you are maintaining assets in a proprietary money market fund, those assets will be excluded from computation of the Client Fee. However, all investment in a money market mutual fund (including a proprietary money market fund) will be subject to the management and other fees and expenses you pay as a shareholder of such fund. In the case of a proprietary money market fund, these fees and expenses are paid to PFPS’ affiliates. Please refer to the money market fund’s prospectus for details. Only money market mutual funds that help us maintain our preferred pricing with NFS, as described in “Production- Based Pricing,” are offered by PFPS as Sweep Vehicles in Accounts. There are several other money market mutual funds, and multiple share classes of each money market fund, that would not help us maintain our preferred pricing. PFPS does not consider these other options, which have similar or identical investment objectives and will, in some cases, have lower expenses ratios (and, therefore, higher returns). Bank Sweep Deposit option. In selecting the bank sweep deposit program, PFPS has selected a bank sweep deposit option in which the amount of Revenue Sharing payments Pruco Securities receives for its brokerage accounts, but not for advisory accounts, is tied to the Targeted Fed Funds Rate. As the Targeted Fed Funds Rate increases, the rate at which Revenue Sharing is paid to Pruco Securities increases (up to 50% of the Targeted Fed Funds Rate). In its role as introducing broker, Pruco Securities is responsible for setting the interest rate that brokerage and advisory clients receive. Even though Pruco has directed NFS not to pay the Revenue Share to Pruco (to eliminate Pruco’s incentive to steer advisory clients to use the bank sweep), NFS does not rebate that amount. Therefore, the amount of the would-be Revenue Sharing payment in the bank sweep deposit program directly reduces the amount of interest payable to clients. Our ability to set the interest rate you receive presents a conflict of interest. We maximize our revenue from brokerage accounts by paying a lower interest rate on the bank sweep. However, because the same interest rate applies to advisory accounts, our decision to pay lower interest rates on brokerage accounts results in you earning less in interest on cash in the bank sweep in your Account. In low interest rate environments, the application of the Client Fee to the Assets in your Sweep Vehicle (in PSP and PruUMA) will exceed the return on your selected Sweep Vehicle, resulting in negative net yield. The interest rate payable on the bank deposit sweep program is lower than what is available directly from a bank. Please refer to the bank deposit sweep program disclosure from NFS for more information. 8. Margin and Overdraft Protection Pruco Securities, through NFS, allows customers to purchase securities on margin in certain non-managed brokerage accounts. If you have an unmanaged brokerage account, and elect to purchase securities on margin, you may be able to use one or more of your Accounts in a Program as collateral for margin loans entered into in your brokerage account. Accounts that are subject to ERISA, an IRA and any other Account that is subject to Section 4975 of the Code are not eligible for margin purchases or to be used as collateralization for a margin loan. You cannot hold margin debit balances in your Account, nor use the proceeds of a margin loan to invest in an Account. The PruChoice Program also offers a check writing service, and you may, at your discretion, opt to include overdraft protection on your PruChoice Account. Overdraft protection is a form of margin, as it allows you to secure a loan to cover a check with the securities in your PruChoice Account as collateral. If you elect to use your Account to collateralize a margin loan (whether for purchases in your unmanaged brokerage account or for overdraft protection), and there are insufficient funds in your Sweep Vehicle to meet a margin call or pay an outstanding check, NFS may sell any Assets in your Account, without prior notice to you, to satisfy such margin call or pay such check. NFS may sell Assets in your Account without regard to tax consequences to you, and without regard to how it may affect the overall asset allocation or investment performance of your Account. You will also pay interest on any margin loan you incur. If you are interested in using your Account to collateralize a margin loan, or in adding overdraft protection to your PruChoice Account, please discuss this with your IAR. Refer to the relevant Margin Agreement(s) with NFS for additional information regarding the terms of any use of margin, including information on relevant interest rates. Both PFPS and your IAR have a significant incentive to encourage you to use your Account to collateralize a margin loan rather than withdraw Assets from your Account because their Compensation is based on your Account value. If you maintain Assets in your Account, PFPS and your IAR will continue to collect the Client Fee on such Assets, whereas if you withdrew the Assets, then PFPS and your IAR would no longer collect such fees. Clients should understand that PFPS and its IAR take this incentive into consideration when advising you on whether to use your Account to collateralize a margin loan, which is a material conflict of interest. In addition, PFPS has a financial incentive for you to use your Account as collateral for margin loans provided by NFS, because Pruco Securities will receive a portion of the interest for the duration of the loan. NFS credits Pruco Securities with 100% of interest you pay on margin loans in excess of the National Financial Base Lending Rate (“NFBLR”) plus 50 basis points. (The NFBLR is a lending rate set by NFS based on its assessment of commercial lending rates, industry conditions regarding the extension of margin credit and general credit conditions.) In its role as introducing broker, Pruco Securities is responsible for setting the interest rate paid by its customers. Pruco Securities sets an interest rate that is higher than NFS requires and keeps the difference between the rate you pay and the rate NFS retains. This presents a conflict, as setting a higher interest rate increases revenue for us but results in higher costs for you when maintaining cash debit balances or margin loans. The rate schedule for margin interest charged by Pruco Securities is available upon request. You should consider the ability to continue earning advisory fees, and the additional revenue that we receive from interest on margin and cash debit balances, as part of our Compensation when evaluating the appropriateness of your Client Fee. PFPS does not share this interest payment with your IAR. Any interest and fees you pay on any debit balances held outside your Account will not be considered in computing the Account value or the performance of your Account as reflected in Account statements, performance reports or otherwise. The use of margin is not suitable for all investors, since it increases the leverage in your Account and therefore its risk. Please see the “Margin Disclosure Statement” and the “Account Terms and Conditions” for more details on the risks of margin use. 9. Non-Purpose Loans PFPS does not use leverage as an investment strategy for managed accounts. However, where appropriate, Pruco Securities may make available non-purpose loans offered through third parties. Non-purpose loans establish a revolving line of credit allowing an investor to borrow money using securities held in their investment portfolio as collateral without having to liquidate securities. Non-purpose loans typically allow the borrower to use loan proceeds for multiple purposes except to purchase or trade securities. These loans require the borrower to pay monthly interest payments and the loans remain outstanding until repaid. The maximum amount of the loan depends on the lending value of your investment portfolio assets, as set out in your agreement with the third-party lender. Non-purpose loans create additional risks for you. While the loan remains outstanding, if the lendable value of the securities pledged as collateral decreases, the third-party lender may provide notice requiring you to deposit additional funds, pay down a portion of the loan or sell securities in order to address the collateral shortfall. If you fail to respond to the notice, the third-party lender has the right to direct the sale of securities in your account and will not take into account your investment strategy when selling securities. As such, additional trades may need to be placed in order to re-align your account to the strategy stated in your SIS. Selling securities in your Account may result in tax consequences. Additionally, a decline in your Account’s value could cause your Account to fall below the minimum required to participate in a Program. The third-party lender will earn fees and interest on loans secured by the securities in your Accounts. Any fees and interest earned by the third-party lender are separate and in addition to Program fees you pay. PFPS will receive Compensation from the third-party lender at an annualized rate equal to 0.50% (50 basis points) of the balance of the outstanding loans, less any reduction in the interest rate that Pruco asks the third-party lender to charge clients. Currently, Pruco retains the full 0.50% of the outstanding balance. This presents a conflict because, if Pruco were to accept a lower fee rate, clients would receive a corresponding reduction in interest rates. The payment also presents a conflict, as we benefit from our clients using the third-party lender that we make available through the Program over other lenders. Pruco does not offer clients the option of using an Account to secure a financing arrangement with a different lender of the client’s choosing which may charge lower interest rates. The Compensation from the third-party lender is not shared with IARs. However, PFPS and its IARs have an incentive to encourage you to use your Account to collateralize a non-purpose loan rather than withdraw Assets from your Account because their Compensation is based on your Account value. Clients should understand that PFPS and its IARs take this incentive into consideration when advising you on whether to use your Account to collateralize a non-purpose loan, which is a material conflict of interest. You should consider the ability to continue receiving investment advisory fees, as well as the additional revenue that we earn from interest on non-purpose loans, as part of our Compensation when evaluating the appropriateness of your Client Fee. Prior to establishing a non-purpose loan, you should carefully review the disclosure form provided by the lender. VII. COMPENSATION OF YOUR IAR AND PLANNER Our ability to meet or exceed your expectations depends on the quality of our financial professionals. A failure to recruit and retain talented, qualified and motivated IARs might have an adverse effect on your client experience and result in the loss of your business for Prudential. Because our long-term success depends on attracting and retaining clients, we have an incentive to structure your IAR’s Compensation to encourage that. Our interests are aligned with yours when we seek to improve client satisfaction by offering competitive Compensation to your Traditional IAR, Virtual IAR or Planner, and our financial professionals similarly have an overarching incentive to ensure your satisfaction. These overarching incentives are not altered by the conflicts of interest described in this section. As described in “Our Compensation,” your IAR or Planner receives Compensation (which, if your IAR or Planner is an employee, includes bonuses, supplemental payments and discounted or free goods and services) as a result of your participation in a Program or purchase of financial planning services. The amount of the Compensation varies based on the products and services your IAR or Planner recommends or selects for you. Generally, the Compensation to your IAR is greater for products and services that we anticipate will have higher profit margins – and thus Compensation – to us or to Prudential Companies overall. When Compensation differs based on what your IAR or Planner recommend or selects, there is a conflict of interest that prevents your IAR or Planner from giving you disinterested advice. Your IAR may be affiliated with us in one of three ways: as either a statutory agent who receives certain benefits such as health insurance through Prudential or as an independent contractor who does not receive benefits from Prudential. Neither of these IARs is an employee nor receives a salary from us. The third way your IAR may be affiliated with us is as an employee of Prudential. Independent contractor IARs do not receive benefits such as retirement benefits or health insurance through Prudential, but they do receive compensation that is higher than an IAR who receives such benefits. Therefore, IARs who do not receive benefits have a conflict that prevents them from giving you disinterested advice, but have a proportionally higher incentive when recommending or selecting products for you. Virtual IARs have a Compensation structure that differs from that of Traditional (i.e., non-virtual) IARs, resulting in different conflicts and incentives, as discussed in “Payments to Your Virtual IAR.” In each of the circumstances described below, to the extent consistent with applicable law, your IAR takes into consideration his or her financial interest in maximizing Compensation, either directly (in the form of salary or commissions, bonus, supplemental payments, prizes, rebates, etc.) or indirectly (as an employee, agent or contractor of Prudential) when advising you, even when that results in additional expenses or opportunity costs to you. For additional circumstances in which this occurs, please see “Our Compensation,” “Cross-Referrals from Outside Professionals” and “Solicitation Arrangements.” Please consider the Compensation that we and your IAR receives, as well as the costs that you bear, when evaluating whether to accept a recommendation and the reasonableness of our advisory fees. PFPS maintains policies and procedures for reviewing Compensation that seek to ensure your IAR’s incentive arrangements do not interfere with our or their respective fiduciary duties under the Advisers Act to all clients and, where PFPS acts as an ERISA fiduciary to the Accounts, our fiduciary obligations under ERISA and parallel provisions of the Code. To mitigate the risk of inappropriate conduct or securities law violations, we review your IAR’s recommendations for appropriateness based on your risk tolerance, investment objectives and time horizon. We also educate IARs on the fiduciary duties of loyalty and care that we owe to clients when providing services as an investment adviser. A. Payments to your Traditional IAR For Traditional IARs, the primary source of Compensation is the customary system of commissions and fees applicable to insurance agents, broker-dealer representatives and investment advisory representatives. We pay your IAR a percentage of every dollar of revenue they generate for Prudential (“generated revenue”). The percentage we pay increases (to nearly double the baseline percentage of each dollar of generated revenue) as the IAR increases his or her total generated revenue (to exceed pre-set breakpoints). This ability to take home a larger fraction of every dollar, not just a larger number of dollars, of generated revenue as Compensation heightens an IAR’s incentive to maximize their total generated revenue by selling more advisory services (and more insurance and brokerage products). Certain IARs who choose not to receive benefits such as health insurance through Prudential, receive compensation that is higher than an IAR who receives such benefits. Therefore, IARs who do not receive benefits have the same conflicts that prevent them from giving you disinterested advice, but have a proportionally higher incentive when recommending or selecting products for you. The generated revenue associated with each type of product and service available through a financial professional who is a PFPS IAR (whether in that person’s IAR or non- IAR capacity) differs, thus creating an incentive for that person to recommend (or, where applicable, purchase on behalf of a client) types of products and services that maximize generated revenue. This presents a conflict because the greater the amount of generated revenue for an IAR that is associated with a product or service, the higher the cost of that product or service typically is to you. Fees and costs will reduce any amount of money you make on your investments over time. Incentive to Favor Programs over Brokerage. The Compensation available to your IAR is typically more, in the long term, if you participate in the Programs than if you purchased financial planning services alone or in conjunction with other Pruco Securities products or services. As a result, your IAR has a financial incentive to recommend a Program over other PFPS or Pruco Securities products or services. For example, if you participate in any of the Programs, your IAR will earn generated revenue from the Advisor Fee for the duration of the time that you remain enrolled in the Program. In contrast, if you open a regular brokerage account or purchase a variable annuity in a brokerage relationship, your IAR will earn generated revenue from the transaction-based Compensation in his or her capacity as a registered representative of Pruco Securities and insurance agent, as applicable. The Compensation usually takes the form of a commission (including a “trail” commission) you pay directly or indirectly to place transactions. The difference in Compensation presents a conflict, because participating in the Programs, rather than investing in a brokerage account or brokerage relationship, generally maximizes Compensation to your IAR but can result in higher costs for you (depending on the volume and type of transactions generating commissions and the length of time you remain invested in the Program). The structure of the Compensation in the Programs also presents a conflict. The generated revenue your IAR receives from the Advisor Fee is based on the value of your Account (in PSP, PruChoice or PruUMA) and the value of your Annuity (in MIS). As a result, your IAR has an incentive to encourage you to increase (e.g., by making further deposits), and discourage you from decreasing (e.g., by making withdrawals from), that value. In addition, starting in 2023, the percentage of the Advisor Fee your IAR retains increases when the value of Accounts reaches $2.5 Million, increases further at $5 Million, and increases again when the value of Accounts managed by your IAR reaches $10 Million. Please see “Incentive to Favor Approved Products” for information about your IAR’s other financial incentives to gather and retain investment in the Programs. Incentive to Favor PruChoice. Your IAR also has an incentive to recommend PruChoice over other Programs to the extent that PruChoice offers the highest fee rate an IAR can negotiate with clients. Specifically, the negotiable range of the Advisor Fee is higher in PruChoice than in the other Programs. Although the potential Advisor Fee range for PruChoice is higher than the other Programs, the overall Client Fee you pay to participate in PruChoice can be higher or lower than the Client Fee you pay in other Programs, depending on a number of factors, including the applicable Manager Fee for any Strategies or Separately Managed Accounts used in your Account, and the fee for tax overlay management and impact services (if elected in PruUMA). Moreover, although the potential Advisor Fee range is higher in PruChoice, the Advisor Fee is negotiable, and must be agreed to by you prior to your enrollment in the Program. Disincentive to Refer Clients to PruUMA. Only certain specifically trained IARs may offer the PruUMA Program to their clients. IARs who are not authorized to manage PruUMA Accounts are encouraged to refer potential clients to another IAR who is qualified, if PruUMA is most appropriate for the client. However, IARs have an incentive not to refer a client to a qualified IAR because the referring IAR forgoes any Compensation that could be earned by enrolling the client in another Program. As a result, you may not be given the opportunity to enroll in PruUMA even if that Program is most appropriate for you. See “Payments Shared with a Team” for a further discussion of this conflict of interest. Incentive to Favor Sponsors. As described in “Joint Marketing, Conferences and other Business Support,” we receive Compensation from Sponsors to support marketing, training or licensing expenses of our employees and help sponsor conferences. Some Sponsors tie the amount of payment or their willingness to pay to the amount of Pruco Securities’ or PFPS’ product sales. PFPS at times will provide some or all of these marketing support fees or other financial support to IARs, as Compensation or reimbursement for expenses they incurred in holding client meetings and seminars. In addition, certain Sponsors provide Compensation directly to IARs. The Sponsors are associated with Model Providers, Strategies, Separately Managed Accounts, and Funds that IARs recommend for your Account or Annuity. IARs have an incentive to favor Model Providers, Strategies, Separately Managed Accounts, and Funds that are associated with the Sponsors that provide the most Compensation to them. In addition, when the Compensation is based on maintaining or increasing asset under management or product sales, IARs have an incentive to meet those thresholds and production levels. IARs have an incentive to recommend PFPS advisory programs supported by Sponsors or products of Sponsors because of the education and the exposure that IARs receive at the conferences and trainings, the Compensation and reimbursements for hosting client meetings and conferences IARs host on behalf of PFPS, the payment of their conference expenses, and/or the payment of marketing support, training or licensing expenses. This presents a conflict of interest that we seek to mitigate through disclosure. Please contact us at the address or telephone number shown on Page 1 of this Brochure for a current list of Sponsors and Funds that have arrangements with us. Incentive to Avoid Repayment. In some instances, your IAR received a bonus or loan from Prudential when joining Pruco Securities and will be credited with repayment of some or all of the amount if he/she satisfies overall total sales goals (including products and services offered by PFPS and Pruco Securities) and/or remains associated with Pruco Securities over time. For example, we commit to pay certain IARs a larger fraction of every dollar of generated revenue attributable to advisory accounts that transfer to PFPS within a designated number of months. Because the incentive is only offered on wrap fee accounts and continues for the duration of your investment in the account, your IAR has a greater incentive to encourage you to quickly open and then maintain a wrap fee account with PFPS, rather than consider other products and services that might be in your best interests over time. Other forms of transitional assistance include reimbursement of lost revenue or fees incurred by clients when transferring, discounts on administrative fees or free services and back-office support, business development support, or advances on future Compensation. When a bonus or credit toward repayment of a loan is conditioned on continued association with us, your IAR has an incentive to remain in good standing with us, which includes meeting minimum production standards, until any bonus payment is made or until any repayment obligation terminates. In addition, when loan repayment is credited on the basis of an IAR’s generated revenue (as described above), your IAR has an incentive to meet those thresholds and production levels. Incentive to Recommend and Implement Financial Planning and Transactions. IARs acting as financial planners receive a portion of the planning fees, which affects the overall Compensation and other benefits they receive from PFPS and/or its affiliates. As a result, IARs who are authorized to offer financial planning services have an incentive to recommend that you purchase these services in addition to opening a brokerage account. If your IAR is also licensed as a registered representative of Pruco Securities (i.e., a registered representative of a broker-dealer), then, acting in that capacity, he or she may also implement your financial plan. In that case, your IAR will also receive Compensation. The form of Compensation will vary based on how your IAR is affiliated with us. Your IAR may be affiliated with us in one of three ways: as either a statutory agent who receives certain benefits such as health insurance through Prudential or an independent contractor who does not receive benefits from Prudential. Neither of these IARs is an employee or receives a salary from us. The third way your IAR may be affiliated with us is as an employee of Prudential. IARs who are employees can receive Compensation in the form of salary, bonuses, retirement benefits or commissions, renewal commissions, “trail” commissions on insurance and securities products, and other benefits. IARs who are statutory agents can receive compensation in the form of retirement benefits or commissions, renewal commissions, “trail” commissions on insurance and securities products, and other benefits. IARs who are independent contractors can receive Compensation in the form of commissions, renewal commissions, “trail” commissions on insurance and securities products. The amount of Compensation varies based on the type of product or services purchased as well as the amount invested. You can implement your plan on your own, through your IAR acting in his or her capacity as a registered representative of Pruco Securities, or through another insurance or financial services professional. Pruco Securities’ and the IAR’s primary Compensation comes from the sale of insurance and investment products, not from financial planning fees. In developing your financial plan, your IAR has a financial incentive to recommend products and services that generate the most Compensation for him or her and to encourage you to implement the plan through him or her rather than another professional. Your IAR also has an incentive to recommend that you buy or sell, rather than maintain, your current holdings in order to generate more transaction-based Compensation, which increases your costs and reduces returns. Incentive to Favor Approved Products. IARs earn credit (“Credit”) towards additional “incentive” Compensation based on their success: (1) gathering and retaining investment in the Programs; and (2) selling (not retaining) other products that our Committee approves. No Credit is given for sales of unapproved products, and there is substantial overlap between “approved” and “proprietary” products, as described in “Incentive to Favor Proprietary Products.” When Compensation is based on maintaining investment in the Programs and increasing sales of approved products (including financial planning services), your IAR has an incentive to meet those thresholds and production levels. For example, Pruco Securities covers the cost of attending sales conferences for IARs with the greatest Credit and offsets or reimburses other business expenses, such as licensing fees and stationery, for IARs that exceed certain sales thresholds. If your IAR or Planner is not an employee, these expenses will be considered Compensation. In addition, Prudential Insurance provides IARs that have the most Credit with bonuses, and direct expense reimbursement to offset expenses incurred while writing and servicing approved products. Incentivizing your IAR to increase sales and maintain investment in the Programs presents a conflict because transacting more frequently, and paying fees to participate in a Program, reduces your investment returns. Incentive to Favor Proprietary Products. The list of approved products includes both affiliated and unaffiliated products. However, PFPS and its affiliates have a greater financial interest in the sale of Prudential proprietary products than in non-proprietary products and services. As a result, the Committee favors affiliated products and expects to select and retain all available affiliated products on the approved list. With respect to Accounts subject to ERISA or ancillary provision of the Code, where PFPS acts as an ERISA fiduciary to the Accounts, such affiliated products will only be recommended to the extent such products are in your best interest under regulations as promulgated by the Department of Labor. The Committee includes a more limited number of unaffiliated products in each of the broad categories. In some categories, such as variable life insurance policies, the approved list contains few (if any) unaffiliated products. A Planner is more likely to sell to you an affiliated product when the percentage of affiliated products is higher in a given category. As an employee of Prudential, your Planner has an indirect incentive to sell you an affiliated product over an unaffiliated product in order to maximize Compensation to us and our affiliates. Your Planner’s commission (i.e., generated revenue) does differ, and is greater, when recommending or selling the approved Prudential product, over the approved unaffiliated product, in the same product category for certain product categories (such as life insurance) but not others (such as variable annuities). Incentive to Favor MIS and Disincentive to Transfer the Annuity. Typically, more Compensation is available to your IAR, in the long term, if you hold a variable annuity in an advisory relationship (like MIS) than in a brokerage relationship. When you purchase the Annuity in MIS, your IAR forgoes receipt of the selling commission but will receive generated revenue from the Advisor Fee for the duration of the time you participate in MIS. The difference in Compensation presents a conflict, because holding an annuity in an advisory relationship, rather than a brokerage relationship, generally maximizes Compensation to your IAR but can result in higher costs for you, as described in the MIS Brochure. When replacing an existing Prudential annuity with a new annuity product, your IAR has an additional incentive to recommend the MIS Annuity over another annuity in a brokerage relationship. When replacing Prudential non-advisory annuities with advisory annuities, IARs receive full generated revenue from the Advisor Fee for the duration of the time you participate in MIS with no reduction in their payout. However, when replacing Prudential non-advisory annuities with other non-advisory annuities, IARs receive a reduced selling commission, which presents a conflict in that your IAR has greater incentive to replace a non-advisory annuity with an advisory annuity over another non-advisory annuity if you hold the advisory annuity for the long term. B. Payments to your Virtual IAR A Virtual IAR’s Compensation is structured as a salary plus a bonus based on individual and team sales goals, but also a discretionary annual bonus based on qualitative leadership attributes. The individual and team sales goals consist of asset flows into PSP accounts, brokerage accounts, and annuities, and first-year life insurance premiums. Virtual IARs only receive team bonuses after reaching a pre-set percentage (50%) of their individual quarterly sales goal. Therefore, Virtual IARs have an incentive to recommend sales sufficient to reach this level. As of January 2023, Virtual IAR discretionary bonus calculations no longer consider the number of financial planning discussions performed with clients. The plans delivered to clients by Virtual IARs are not the same as financial plans delivered by Traditional IARs, as described in a separate PFPS brochure. In addition, Virtual IARs offer free complimentary planning (“foundational planning”). Because Virtual IARs offer foundational planning as a brokerage service, not an advisory activity, PFPS does not engage in any monitoring related to these discussions. Clients are not charged for these planning discussions with Virtual IARs, and they constitute advice incidental to a brokerage relationship. Because sales performance is a component of a Virtual IAR’s Compensation, a Virtual IAR has an incentive to maximize the number of accounts he or she sells, including, for example, by:
• recommending that you open a PSP Account through him or her, and/or recommending that you invest in a PSP Account, variable annuity, or life insurance solution that he or she is able to offer, even when a different service or product (or no service or product at all) could better serve your needs; and/or
• allocating his or her time in a manner that prioritizes new sales over servicing existing PSP Accounts. Furthermore, as an employee of Prudential, a Virtual IAR has an incentive to make recommendations which maximize Prudential’s revenue and profits – for example, by recommending a PGIM Model for your PSP Account, or otherwise favoring proprietary products to the extent such products are more profitable to Prudential. Virtual IARs have a financial interest in ensuring sufficient demand for their services. As a result, your Virtual IAR has an incentive not to recommend PruChoice or PruUMA (or another advisory, brokerage or insurance service or product not offered by the Virtual IAR). As a result, you may not be given the opportunity to enroll in the Program, or purchase the product or service, that is most appropriate for you. By compensating Virtual IARs with a salary and bonuses, described above, rather than the customary system of commissions applicable to Traditional IARs, PFPS can retain more of the Advisor Fee. The ability to retain more of the Advisor Fee creates an incentive for PFPS to prefer that clients invest in PSP through a Virtual IAR rather than a Traditional IAR. We partially mitigate this incentive by charging a lower Advisor Fee for clients investing in PSP through a Virtual IAR. C. Payments Shared with a Team Traditional IARs are encouraged to “team” with other Traditional IARs who have particular expertise in products and services (such as financial planning services) that may be appropriate for a client. If one Traditional IAR (the “referring IAR”) refers you to another IAR for financial planning services or managed account services, the IAR who provides services to you will agree to split a portion of the Client Fee or the financial planning fee with the referring IAR. If you subsequently implement your financial plan through the IAR in his/her capacity as a Pruco Securities registered representative, IAR and/or insurance agent of Prudential, the referring IAR will also receive a split of the fees or commissions which the referring IAR is licensed to receive. Disincentive to Share with a Team. An IAR has an incentive not to make referrals and not to team with others, if the referring IAR could provide the services alone and avoid splitting the Client Fee, financial planning services fee or other fees or commissions. This presents a conflict, if your interest would be best served by the IARs working as a team or if the other IAR offers a program or service that is more appropriate for you. Disincentive to Negotiate Fees. Because the IAR providing services retains less of the Client Fee or financial planning fee for themselves, the IAR has an incentive not to negotiate a lower Client Fee or financial planning fee. IARs consider their reduced retention of fees and commissions (due to payments owed to team members) when negotiating your fees and are less likely to offer a discount. As a result, you typically will pay a fee that is higher than would be the case if your IAR were operating independently of a team. Unless operating as part of a “team” as described above, Pruco Securities registered representatives are not authorized to receive any portion of your advisory fees for referring you to an IAR, and IARs are not authorized to split fees or commissions generated from referring you to a Pruco Securities registered representative. D. Payments to Managers and Internal Consultants Managers of the IARs and Virtual IARs described above are compensated based on qualitative metrics, such as their leadership abilities (which include training, monitoring and oversight), as well as quantitative metrics, such as the performance (financial or otherwise) and productivity of the financial professionals they supervise. This Compensation arrangement creates a conflict of interest by incentivizing managers to encourage those they manage to act on their financial interest in maximizing Compensation, either directly (in the form of salary or commissions, bonus, prizes, rebates, etc.) or indirectly (as an agent or employee of Prudential). We address this conflict by disclosing it to you and by supervising the managers. Although your IAR has a fiduciary duty to act in your best interest, we pay internal consultants to educate and encourage your IAR to recommend Proprietary Funds and PGIM Investments (over other Funds and, in PSP, other Model Providers) and to recommend a Program (over brokerage or insurance products). The consultant can increase his or her bonus to up to three times the baseline amount, which is a sizable portion of his or her total Compensation, by increasing sales of financial planning services and net inflows into PSP, PruUMA, and PruChoice. PFPS financial planning services are discussed in a separate brochure. Your contributions to, and withdrawals from, PruUMA, PSP, or PruChoice count towards this calculation of net “inflows.” This presents a conflict, because our interest in encouraging your IAR to recommend PSP, PruUMA and PruChoice, which are more profitable to us and our affiliates than other investment products and services conflicts with your interest in receiving disinterested advice. In addition, to the extent the types of products recommended in your financial plan are more expensive than the other product or service you might have chosen, your returns will be reduced by those higher fees and expenses. The consultants can earn more credit towards their bonus when the net inflows are recommended by IARs who are new to the PFPS or by IARs whose clients have not historically invested in the Programs, which creates an incentive for consultants to emphasize PruUMA. PSP, and PruChoice to these IARs in particular. Because the consultants earn credit towards their bonus by increasing sales of financial planning services, they have an incentive to encourage IARs to increase the number of financial plans delivered to clients.