A. Describe your advisory firm, including how long you have been in
business. Identify your principal owner(s).
Founded in 1997, Dearborn Partners LLC (“Dearborn”) is a Chicago-based investment
adviser. We have discretionary investment authority over most of the client accounts we
manage. We also serve as the adviser to a Registered Investment Company called the
Dearborn Partners Rising Dividend Fund.
The principal owners of Dearborn are Michael Andelman, Carol Lippman, Brian Payne,
Peter Deakos, and John Celentani. Our headquarters are located at 200 W. Madison Street,
Suite 1950, Chicago, Illinois 60606.
B. Describe the types of advisory services you offer. If you hold yourself
out as specializing in a particular type of advisory service, such as
financial planning, quantitative analysis, or market timing, explain the
nature of that service in greater detail. If you provide investment advice
only with respect to limited types of investments, explain the type of
investment advice you offer, and disclose that your advice is limited to
those types of investments.
Individual Clients
Dearborn tailors investment advisory services, including financial planning, to the specific
needs of Individual Clients through a general planning and discussion process with the
client. Individual Clients may impose restrictions on investing in specific securities or types
of securities.
Dearborn currently utilizes two sub-advisers for Individual Clients, Janus Capital
Management (“Janus”), for its non-US Rising Dividend strategy, and ARK Investment
Management LLC (“ARK”), for its ARK Disruptive Innovation strategy. Both Janus and
ARK are offered through an advisory platform maintained by Greenrock Research Inc.
Dearborn’s selection of the sub-adviser is based on the Individual Client’s investment
needs and is discussed with each client. For sub-advised accounts, Dearborn provides the
client with the sub-adviser’s brochure, which these clients should review in addition to this
Brochure. Clients should direct any questions they have about sub-advisers to Dearborn.
As further described below, sub-advising of Individual Client accounts with Janus or ARK
will cause clients to pay an increased or additional advisory fee, in addition to Dearborn’s
fee.
Dearborn does not currently engage in business activities other than investment
management services.
Rising Dividend Clients
Dearborn began managing Rising Dividend Strategy accounts (“Rising Dividend
Accounts”) in September 2011. Through its Rising Dividend Strategy, Dearborn seeks to
outpace inflation, over the longer term, by investing in companies it believes will increase
their dividends. The Rising Dividend Strategy currently consists of three portfolios – the
Core Rising Dividend Portfolio, the High & Rising Dividend Portfolio, and the
Environmental, Social, Governance (“ESG”) Portfolio. Both the Core Rising Dividend
Portfolio’s and High & Rising Dividend Portfolio’s creation and inception date was
September 30, 2011. The Environmental, Social, Governance (“ESG”) Portfolio’s
inception and creation date was June 30, 2021. Generally, the Rising Dividend Strategies
are managed through separately managed accounts. However, client investments may be
managed through the Dearborn Partners Rising Dividend Fund, a mutual fund registered
as an investment company under the Investment Company Act of 1940, as amended (the
“Rising Dividend Fund”), for which Dearborn is the investment manager. The Rising
Dividend Strategy also provides a model portfolio service of its products, for a fee, for
other investment advisers.
For additional details regarding the Rising Dividend Strategy, see Item 8, below. Investors
in the Dearborn Rising Dividend Fund should carefully review the fund’s Prospectus and
any supplements (the “Rising Dividend Prospectus”) before investing.
Carol M. Lippman, who joined Dearborn as a Managing Director in August 2011, manages
the Rising Dividend Strategy, which she began formulating in 1993 while at another
investment management firm. In its original form, the strategy involved a recommended
list of securities from which early clients of the strategy would self-direct investment.
Michael Andelman, managing director, serves as co-portfolio manager for the Rising
Dividend Strategy. At Dearborn, the Rising Dividend Strategy is the basis for active
management of Rising Dividend Accounts, taking into consideration the client’s needs,
objectives, tax situation, financial condition and capital inflows to or outflows from the
account.
Balanced Clients
Dearborn began managing four Balanced Separately Managed Accounts (“Balanced
SMAs”) in September 2017. The portfolios are designed for clients seeking rising income
with the decreased risk and decreased volatility historically attributed to adding fixed
income to all-equity portfolios. For the equity allocation of the Balanced accounts,
Dearborn utilizes its existing Rising Dividend Strategy, created in September 2011, seeking
out companies that have the potential to consistently increase dividends. For the fixed-
income allocation of the Balanced accounts, Dearborn uses bond laddering (through
defined maturity exchange traded funds) along with several fixed income asset classes to
control interest rate and credit risk. Dearborn will continuously monitor the shape of the
yield curve, relative yields (also known as spreads to the nearest Treasury bond), default
rates, and other market factors. The bond laddering provides clients with direct visibility
to automatic fixed income reinvestment, thus reducing the portfolio’s reliance upon interest
rate forecasting. Each of the four balanced accounts will be managed to within a 10%
tolerance of its stated asset allocation, as described in the bullet points below.
The “Balanced Income 60/40” portfolio consists of approximately 60% equity
and 40% fixed-income. The 60% equity is invested in Dearborn’s Core Rising
Dividend strategy and the 40% fixed-income portion is invested in Dearborn’s
fixed-income strategy.
The “Balanced Income 80/20” portfolio consists of approximately 80% equity
and 20% fixed-income. The 80% equity is invested in Dearborn’s Core Rising
Dividend strategy and the 20% fixed-income portion is invested in Dearborn’s
fixed-income strategy.
The “Concentrated Balanced Income 60/40” portfolio consists of
approximately 60% equity and 40% fixed-income. The 60% equity is invested
in Dearborn’s High & Rising Dividend strategy and the 40% fixed-income
portion is invested in Dearborn’s fixed-income strategy.
The “Concentrated Balanced Income 80/20” portfolio consists of
approximately 80% equity and 20% fixed-income. The 80% equity is invested
in Dearborn’s High & Rising Dividend strategy and the 20% fixed-income
portion is invested in Dearborn’s fixed-income strategy.
Dearborn manages the Balanced SMAs through separately managed accounts and provides
a model portfolio service of its product, for a fee, for other investment advisers. Peter
Deakos, who joined Dearborn as a Portfolio Manager in April 2017, serves as the portfolio
manager for the Balanced strategy.
Multi Asset Clients
Dearborn began managing Multi-Asset Separately Managed Accounts (“Multi-Asset
SMA”) in September 2017. Through its Multi-Asset SMA, Dearborn seeks to generate
above average income while also emphasizing growth in income. Growth in income is
generated largely by investing in stocks of companies it believes will increase their
dividends over the long term. Dearborn has the ability to purchase multiple asset classes
within the Multi-Asset SMA. Dearborn may purchase asset classes which they believe
present the best value for investors and may change asset allocations as necessary (i.e., a
go-anywhere asset allocation). Dearborn manages the Multi-Asset SMA through separately
managed accounts and provides a model portfolio service of its product, for a fee, for other
investment advisers. Peter Deakos, who joined Dearborn as a Portfolio Manager in April
2017, serves as the portfolio manager for the Multi Asset strategy.
Fixed Income Clients
Dearborn provides advice and execution of fixed income
securities for various clients.
Clients may have portfolios based solely on fixed income products or on a mix of fixed
income and other products to create a balanced portfolio tailored to meet each individual
client’s objectives.
Institutional Clients
Dearborn advisory services are tailored to the specific needs of Institutional Clients through
a general planning and discussion process. Institutional Clients generally may impose
restrictions on the specific securities or types of securities that are to be bought for their
accounts.
Dearborn provides most of its institutional strategies through sub-advisers (that is, other
SEC-registered investment advisers) selected by Dearborn to manage the account and
subject to Dearborn monitoring and supervision. Dearborn’s selection of the sub-adviser is
based on the client’s investment needs and is discussed with each client. For sub-advised
accounts, Dearborn provides the client with the sub-adviser’s brochure, which these clients
should review in addition to this Brochure. Clients should direct any questions they have
about sub-advisers to Dearborn. As further described below, sub-advising of Institutional
Client accounts does not cause clients to pay any increased or additional advisory fee.
Dearborn’s Disciplined Duration Management strategy is managed by Dearborn personnel
and without sub-advisers.
Benefit plan clients governed by the Employee Retirement Income Security Act (“ERISA”)
should note that both Dearborn and the sub-adviser are “ERISA fiduciaries” and manage
the relevant accounts in compliance with ERISA.
Dearborn provides a variety of investment strategies designed to meet the needs of most
institutional investors. The strategies include the following:
1. Equity
Large Cap Value – Dearborn Partners’ Large Cap Value product (sub‐advised by Aristotle
Capital Management) employs a traditional value strategy that seeks to provide
competitive returns in strong markets and outperform in more difficult markets. Aristotle
relies on internally generated research, focusing on the valuation of individual securities
rather than predictions of economic trends or market trends. Aristotle believes this process
can help to identify exceptional businesses selling at reasonable valuations and reasonable
businesses selling at exceptional valuations. Aristotle believes its research‐intensive value
approach identifies companies that are priced to provide excellent long‐term results.
Large Cap Growth –Dearborn Partners’ Large Cap Growth product (sub‐advised by Logan
Capital Management, Inc.) seeks long‐term growth of capital in large, established
corporations that offer attractive prospects of high total return. The initial universe consists
of U.S.‐traded, large capitalization stocks with superior past and prospective earnings
growth rates. A three‐component process that includes macroeconomic analysis,
fundamental analysis and technical research is used to select securities. The top‐down,
macro‐economic analysis seeks to identify sectors and industries poised to outperform in
the long‐term. The fundamental analytical process seeks to identify favorable stocks based
on the sustainability of earnings and financial strength of the underlying company.
Technical research seeks to avoid buying stocks on momentum spikes and to prevent
premature selling.
Small Cap Core - Dearborn Partners’ MVP Small Cap Core strategy (sub- advised by
Ziegler Capital Management, LLC) uses a fundamental, bottom- up approach designed to
identify underpriced securities with a strong potential for long-term appreciation. The
investment process begins with a deep fundamental analysis of the universe by sector
specialists, followed by the application of proprietary cash flow-based Price Discovery and
Relative Value models. The portfolio is then constructed using the most attractive stocks
by sector with a focus on risk control.
Small Cap Growth - - Dearborn Partners’ MVP Small Cap Growth strategy (sub- advised
by Ziegler Capital Management, LLC) uses a fundamental, bottom- up approach designed
to identify underpriced securities with a strong potential for long-term appreciation. The
investment process begins with a deep fundamental analysis of the universe by sector
specialists, followed by the application of proprietary cash flow-based Price Discovery and
Relative Value models. The portfolio is then constructed using the most attractive stocks
by sector with a focus on risk control.
Small Cap Dividend Value - The Dearborn Partners’ Small Cap Dividend Value strategy
(sub-advised by Keeley Teton Advisors) is a bottom-up, fundamental driven strategy. The
universe of all U.S. equities with a market cap between $200 million and $3.5 billion is
screened for companies that pay a dividend. Those equities are then evaluated for their
definition of: Quality, Timeliness, and Valuation. Portfolios are constructed on a sector
neutral basis, but sector weights are typically limited to within 5% (+/-) of the applicable
benchmark weight, in order to maintain a diversified portfolio of dividend paying stocks.
International Equity - The Dearborn Partners’ International Equity Strategy (sub‐advised
by Aristotle Capital Management) utilizes a fundamental, bottom‐up stock selection process
applied to a universe of companies with market capitalizations typically in excess of $2
billion at initial investment. Aristotle relies on internally generated research, focusing on
the valuation of individual securities rather than predictions of economic trends or market
trends. Aristotle believes this process can help to identify exceptional businesses selling at
reasonable valuations and reasonable businesses selling at exceptional valuations. Aristotle
believes its research‐intensive value approach identifies companies that are priced to
provide excellent long‐term results.
2. Fixed Income
Disciplined Duration Management – a customized, absolute return, duration management
strategy; uses U.S. treasury securities; seeks to produce a positive return over specific time
periods regardless of the directional move in interest rates; seeks to produce positive results
in both rising and falling interest rate environments by dynamically managing the duration
of the portfolio. This strategy is managed by Dearborn personnel and not through sub-
advisers.
Institutional Client strategies focus on publicly-traded equity and government debt
securities. The equity securities may include common stock, preferred stock and warrants
and shares of equity mutual funds. The debt securities are government and government
agency debt and money market mutual funds.
C. Explain whether (and, if so, how) you tailor your advisory services to
the individual needs of clients. Explain whether clients may impose
restrictions on investing in certain securities or types of securities.
For information about how Dearborn tailors its advisory services, see Item 4.B, above.
D. If you participate in wrap fee programs by providing portfolio
management services, (1) describe the differences, if any, between how
you manage wrap fee accounts and how you manage other accounts,
and (2) explain that you receive a portion of the wrap fee for your
services.
Dearborn provides some investment management services through wrap fee programs
sponsored by other firms and receives a portion of their wrap fee for these services. We do
not manage wrap fee accounts differently than other accounts.
E. If you manage client assets, disclose the amount of client assets you
manage on a discretionary basis and the amount of client assets you
manage on a non-discretionary basis. Disclose the date “as of” which
you calculated the amounts.
As of December 31, 2023, Dearborn managed approximately $3.8713 billion of client assets,
in approximately 4,500 accounts, predominantly in publicly-traded equity and fixed income
securities, which are managed on a discretionary basis at Dearborn’s sole discretion. As of
December 31, 2023, Dearborn also provides model portfolio management services to an
additional $6.9495 billion in third-party client assets. Dearborn does not manage nor does
it have discretion over these model management accounts.