A. Steigerwald, Gordon & Koch Inc. (“SGK”) is a Virginia corporation formed on June 17,
1996. SGK became registered as an investment adviser in June 1996. John S. Steigerwald
is SGK’s principal owner. SGK’s officers are John S. Steigerwald, Chief Executive Officer;
Jeffrey A. Gordon, President; Darren A. Koch, Vice President; and Karen Showalter,
Secretary/Treasurer.
B. As discussed below, SGK offers to its clients (generally: individuals, high net worth
individuals, business entities, trusts, estates and charitable organizations, etc.) investment
advisory services, and, to the extent specifically requested by a client, financial planning
and related consulting services.
INVESTMENT ADVISORY SERVICES
Clients can engage SGK to provide discretionary investment advisory services on a fee-
only basis. SGK’s annual investment advisory fee is based upon a percentage (%) of the
market value of the assets placed under SGK’s management. Before engaging SGK to
provide investment advisory services, clients are required to enter into an Investment
Advisory Agreement with SGK setting forth the terms and conditions of the engagement
(including termination), describing the scope of the services to be provided, and the fee that
is due from the client.
SGK’s annual investment advisory fee compensates for investment advisory services, and,
to the extent specifically requested by the client, financial planning and consulting services.
While SGK believes that it is important for the client to address financial planning issues
on an ongoing basis, SGK’s fee, as set forth at Item 5 below, will remain the same
regardless of whether the client determines to address those issues with SGK. If SGK
determines in its sole discretion that the client requires extraordinary planning and/or
consultation services, SGK may seek to charge for those services under the terms and
conditions of a stand-alone Financial Planning and Consulting Agreement.
Before SGK provides such investment advisory services, an investment adviser
representative will coordinate with each client to develop their investment objectives. Then,
SGK will allocate client investment assets consistent with the designated investment
objectives. Once allocated, SGK provides ongoing monitoring and review of account
performance and asset allocation as compared to client investment objectives and may
execute account transactions based on those reviews or other triggering events.
FINANCIAL PLANNING AND CONSULTING SERVICES (STAND-ALONE)
To the extent requested by a client, SGK may determine to provide financial planning
and/or related consulting services regarding matters such as tax and estate planning,
insurance, etc. on a stand-alone basis per the terms and conditions of a separate written
agreement and fee, the fee for which shall generally be based upon the individual providing
the service and the scope of the services to be provided. Prior to engaging SGK to provide
planning or consulting services, clients are generally required to enter into a Financial
Planning and Consulting Agreement with SGK setting forth the terms and conditions of the
engagement (including termination), describing the scope of the services to be provided,
and the portion of the fee that is due from the client prior to SGK commencing services.
MISCELLANEOUS
Limitations of Financial Planning and Non-Investment Consulting/Implementation
Services. To the extent requested by a client, SGK may provide financial planning and
related consulting services regarding non-investment related matters, such as estate
planning, tax planning, insurance, etc. as part of the investment advisory engagement or
according to the terms and conditions of a stand-alone Financial Planning and Consulting
Agreement. SGK does not serve as an attorney, accountant, or insurance agency, and no
portion of its services should be construed as legal, accounting, or insurance
implementation services. Accordingly, SGK does not prepare estate planning documents,
tax returns or sell insurance products. Unless specifically agreed in writing, neither SGK
nor its representatives are responsible to implement any financial plans or financial
planning advice; provide ongoing financial planning services; or provide ongoing
monitoring of financial plans or financial planning advice. The client is solely responsible
to revisit the financial plan or financial planning advice with SGK, if desired. SGK’s
financial planning and consulting services are completed upon communicating its
recommendations to the client. Upon client request, SGK may recommend the services of
other professionals for certain non-investment implementation purposes (i.e. attorneys,
accountants, insurance agents, etc.). Clients are under no obligation to engage the services
of any recommended professional, who shall be solely responsible for the quality and
competency of the services they provide. If the client engages any unaffiliated
recommended professional, and a dispute arises related to the engagement, the client should
seek recourse exclusively from and against the engaged professional.
Retirement Plan Rollovers – No Obligation / Potential for Conflict of Interest: A client or
prospective client leaving an employer typically has four options regarding an existing
retirement plan (and may engage in a combination of these options): (i) leave the money in
the former employer’s plan, if permitted, (ii) roll over the assets to the new employer’s
plan, if one is available and rollovers are permitted, (iii) roll over to an Individual
Retirement Account (“IRA”), or (iv) cash out the account value (which could, depending
upon the client’s age, result in adverse tax consequences). If SGK recommends that a client
roll over their retirement plan assets into an account to be managed by SGK, such a
recommendation creates a conflict of interest if SGK will earn new (or increase its current)
compensation an advisory fee on the rolled over assets. Whether SGK provides a
recommendation as to whether a client should engage in a rollover or not, SGK is acting as
a fiduciary within the meaning of Title I of the Employee Retirement Income Security Act
and/or the Internal Revenue Code, as applicable, which are laws governing retirement
accounts. No client is under any obligation to roll over plan assets to an IRA managed by
SGK or to engage SGK to monitor and/or manage the account while maintained at the
client’s employer’s plan or an existing IRA. SGK’s Chief Compliance Officer, John
Steigerwald, remains available to address any questions that a client or prospective
client may have regarding the potential for conflict of interest presented by such
rollover recommendation.
Portfolio Activity. SGK has a fiduciary duty to provide services consistent with the client’s
best interest. SGK will review client portfolios on an ongoing basis to determine if any
changes are necessary based upon various factors, including, but not limited to, investment
performance, market conditions, fund manager tenure, style drift, account
additions/withdrawals, and/or a change in the client’s investment objective. Based upon
these factors, there may be extended periods of time when SGK determines that changes to
a client’s portfolio are unnecessary. Clients remain subject to the fees described in Item
5 below during periods of portfolio inactivity. Of course, as indicated below, there can be
no assurance that investment decisions made by SGK will be profitable or equal any
specific performance level(s).
Other Assets. A client may:
• hold securities that were purchased at the request of the client or acquired prior to
the client’s engagement of SGK. Generally, with potential exceptions, SGK does
not/would not recommend nor follow such securities, and absent mitigating tax
consequences or client direction to the contrary, would prefer to liquidate
such securities. Please Note: If/when liquidated, it should not be assumed that the
replacement securities purchased by SGK will outperform the liquidated positions.
To the contrary, different types of investments involve varying degrees of risk, and
there can be no assurance that future performance of any specific investment or
investment strategy (including the investments and/or investment strategies
recommended or undertaken by SGK) will be profitable or equal any specific
performance level(s)In addition, there may be other securities and/or accounts
owned by the client for which SGK does not maintain custodian access and/or
trading authority; and,
• hold other securities and/or own accounts for which SGK does not maintain
custodian access and/or trading authority.
Corresponding Services/Fees. When agreed to by SGK, SGK shall: (1) remain available
to discuss these securities/accounts on an ongoing basis at the request of the client; (2)
monitor these securities/accounts on a regular basis, including, where applicable,
rebalancing with client consent;(3) shall generally consider these securities as part of the
client’s overall asset allocation; and, (4) report on such securities/accounts as part of regular
reports that may be provided by SGK; and, (5) include the market value of all such
securities for purposes of calculating advisory fee.
Cash Positions. SGK continues to treat cash as an asset class. As such, unless determined
to the contrary by SGK, all cash positions (money markets, etc.) shall continue to be
included as part of assets under management for purposes of calculating SGK’s advisory
fee. At any specific point in time, depending upon perceived or anticipated market
conditions/events (there being no guarantee that such anticipated market conditions/events
will occur), SGK may maintain cash positions for defensive purposes. In addition, while
assets are maintained in cash, such amounts could miss market advances. Depending upon
current yields, at any point in time, SGK’s advisory fee could exceed the interest paid by
the client’s money market fund.
Cash Sweep Accounts. Account custodians generally require
that cash proceeds from
account transactions or cash deposits be swept into and/or initially maintained in the
custodian’s sweep account. The yield on the sweep account is generally lower than those
available in money market accounts. To help mitigate this issue, SGK shall generally
purchase a higher yielding money market fund available on the custodian’s platform with
cash proceeds or deposits, unless SGK reasonably anticipates that it will utilize the cash
proceeds during the subsequent 30-day period to purchase additional investments for the
client’s account. Exceptions and/or modifications can and will occur with respect to all or
a portion of the cash balances for various reasons, including, but not limited to, the amount
of dispersion between the sweep account and a money market fund, an indication from the
client of an imminent need for such cash, or the client has a demonstrated history of writing
checks from the account. ANY QUESTIONS: SGK’s Chief Compliance Officer, John
Steigerwald, remains available to address any questions that a client or prospective client
may have regarding the above.
ESG: We don’t have or recommend a strategy:
Please Note: Socially Responsible (ESG) Investing Limitations. Socially Responsible
Investing involves the incorporation of Environmental, Social and Governance (“ESG”)
considerations into the investment due diligence process. ESG investing incorporates a set
of criteria/factors used in evaluating potential investments: Environmental (i.e., considers
how a company safeguards the environment); Social (i.e., the manner in which a company
manages relationships with its employees, customers, and the communities in which it
operates); and Governance (i.e., company management considerations). The number of
companies that meet an acceptable ESG mandate can be limited when compared to those
that do not, and could underperform broad market indices. Investors must accept these
limitations, including potential for underperformance. As with any type of investment
(including any investment and/or investment strategies recommended and/or undertaken
by SGK), there can be no assurance that investment in ESG securities or funds will be
profitable, or prove successful. SGK does not maintain or advocate an ESG investment
strategy, but will seek to employ ESG if directed by a client to do so. If implemented, SGK
shall rely upon the assessments undertaken by the unaffiliated mutual fund, exchange
traded fund or separate account manager to determine that the fund’s or portfolio’s
underlying company securities meet a socially responsible mandate.
WE DON’T RECOMMEND Cryptocurrency: For clients who want exposure to
cryptocurrencies, including Bitcoin, SGK, will advise the client to consider a potential
investment in corresponding exchange traded securities, or an allocation to separate
account managers and/or private funds that provide cryptocurrency exposure. Crypto is a
digital currency that can be used to buy goods and services, but uses an online ledger with
strong cryptography (i.e., a method of protecting information and communications through
the use of codes) to secure online transactions. Unlike conventional currencies issued by a
monetary authority, cryptocurrencies are generally not controlled or regulated and their
price is determined by the supply and demand of their market. Because cryptocurrency is
currently considered to be a speculative investment, SGK will not exercise discretionary
authority to purchase a cryptocurrency investment for client accounts. Rather, a client must
expressly authorize the purchase of the cryptocurrency investment. Please Note: SGK does
not recommend or advocate the purchase of, or investment in, cryptocurrencies. SGK
considers such an investment to be speculative. Please Also Note: Clients who authorize
the purchase of a cryptocurrency investment must be prepared for the potential for liquidity
constraints, extreme price volatility and complete loss of principal.
Client Obligations. In performing its services, SGK will not be required to verify any
information received from the client or from other designated professionals who provide
services to the client, and SGK is expressly authorized to rely thereon. Clients maintain
responsibility to promptly notify SGK if there is ever any change in their financial situation
or investment objectives for the purpose of reviewing, evaluating, or revising SGK’s
previous recommendations or services.
Reporting Services. SGK can also provide, for a separate fee (delete if no additional fee),
account reporting services, which can incorporate client investment assets that are not part
of the assets that SGK manages (the “Excluded Assets”). Unless agreed to otherwise, the
client and/or his/her/its other advisors that maintain trading authority, and not SGK,
shall be exclusively responsible for the investment performance of the Excluded
Assets. Unless also agreed to otherwise, SGK does not provide investment management,
monitoring or implementation services for the Excluded Assets. If SGK is asked to make a
recommendation as to any Excluded Assets, the client is under absolutely no obligation to
accept the recommendation, and SGK shall not be responsible for any implementation error
(timing, trading, etc.) relative to the Excluded Assets. The client can engage SGK to
provide investment management services for the Excluded Assets pursuant to the terms and
conditions of the Investment Advisory Agreement between SGK and the client.
• emoney. In the event that SGK provides the client with access to an unaffiliated
vendor’s website such as emoney (change if a different vendor), and the site provides
access to information and/or concepts, including financial planning, the client, should
not, in any manner whatsoever, infer that such access is a substitute for services
provided by SGK. Rather, if the client utilizes any such content, the client does so
separate and independent of SGK.
Cybersecurity Risk. The information technology systems and networks that SGK and its
third-party service providers use to provide services to SGK’s clients employ various
controls, which are designed to prevent cybersecurity incidents stemming from intentional
or unintentional actions that could cause significant interruptions in SGK’s operations and
result in the unauthorized acquisition or use of clients’ confidential or non-public personal
information. Clients and SGK are nonetheless subject to the risk of cybersecurity incidents
that could ultimately cause them to incur losses, including for example: financial losses,
cost and reputational damage to respond to regulatory obligations, other costs associated
with corrective measures, and loss from damage or interruption to systems. Although SGK
has established its systems to reduce the risk of cybersecurity incidents from coming to
fruition, there is no guarantee that these efforts will always be successful, especially
considering that SGK does not directly control the cybersecurity measures and policies
employed by third-party service providers. Clients could incur similar adverse
consequences resulting from cybersecurity incidents that more directly affect issuers of
securities in which those clients invest, broker-dealers, qualified custodians, governmental
and other regulatory authorities, exchange and other financial market operators, or other
financial institutions.
Investment Risk. Different types of investments involve varying degrees of risk, and it
should not be assumed that future performance of any specific investment or investment
strategy (including the investments and/or investment strategies recommended or
undertaken by SGK) will be profitable or equal any specific performance level(s).
Disclosure Statement. A copy of SGK’s written Brochure as set forth on Part 2 of Form
ADV and Form CRS (Client Relationship Summary) shall be provided to each client prior
to, or contemporaneously with, the execution of the Investment Advisory Agreement or
Financial Planning and Consulting Agreement.
Availability Exchange Traded Funds. SGK utilizes exchange traded funds for certain client
portfolios. In addition to SGK’s investment advisory fee described below, clients will also
incur, relative to exchange traded fund purchases, charges imposed at the fund level (e.g.
management fees and other fund expenses).
Custodian Charges-Additional Fees. As discussed below at Item 12 below, when requested
to recommend a broker-dealer/custodian for client accounts, SGK generally recommends
that Schwab serve as the broker-dealer/custodian for client investment management assets.
Broker-dealers such as Schwab charge brokerage commissions, transaction, and/or other
type fees for effecting certain types of securities transactions (i.e., including transaction fees
for certain mutual funds, and mark-ups and mark-downs charged for fixed income
transactions, etc.). The types of securities for which transaction fees, commissions, and/or
other type fees (as well as the amount of those fees) shall differ depending upon the broker-
dealer/custodian (while certain custodians, including Schwab, do not currently charge fees
on individual equity transactions [including ETFs], others do). These fees/charges are in
addition to SGK’s investment advisory fee at Item 5 below. SGK does not receive any
portion of these fees/charges.
C. SGK provides investment advisory services specifically tailored to the needs of each client.
Prior to providing investment advisory services, an investment adviser representative will
ascertain each client’s investment objectives. Thereafter, SGK will allocate and/or
recommend that the client allocate investment assets consistent with the designated
investment objectives. The client may, at any time, impose reasonable restrictions, in
writing, on SGK’s services.
D. SGK does not participate in a wrap fee program.
E. As of December 31, 2023, SGK had $1,050,589,563 in assets under management on a
discretionary basis.