Our Owners and Principals
We are a Michigan corporation formed in 1993. We are required to disclose the persons
owning twenty-five percent (25%) or more of our firm’s common stock. Ronald Yolles and
Thomas Post, each a Partner of our firm owning more than twenty-five percent (25%) of our
firm’s common stock.
Our Advisory Services
Investment Management
We offer personalized discretionary investment management services to you based on
your investment goals, financial objectives and risk tolerance. If you engage us to provide you
with investment management services, we will work with you to establish an investment planning
summary that is reasonable and documents your investment objectives and expectations. We use
this information to build a portfolio of investments for you based on the principles of broad
diversification and a long-term allocation of assets among equities, fixed income and cash,
consistent with your investment planning summary. We choose specific investments within your
portfolio keeping minimization of transaction costs as a key goal. Once the portfolio is
established, we monitor and reconcile your account held at your custodian on a regular basis. If
your financial needs, circumstances or objectives change or if any changes to the investment
planning summary is necessary, please let us know promptly, in writing. We act under the
fiduciary duty of care and loyalty applicable to a registered investment adviser. Our duty of care
means we provide investment advice, based on the client’s objectives, in the best interest of our
client. Under the duty of loyalty, we must eliminate or make full and fair disclosure of our
conflicts of interests which might incline us — consciously or unconsciously — to render advice
which is not disinterested. We perform our investment management service for you pursuant to
the terms and conditions we establish in our written investment advisory agreement that we both
sign at the beginning of our relationship. As described in further detail below in the “ITEM 16:
INVESTMENT DISCRETION” section beginning on page 19, we manage your accounts on a
discretionary basis, which means that we determine the securities to buy and sell for your account
without obtaining your specific consent prior to each transaction. However, you may place
reasonable restrictions on our discretionary authority or place limitations on the types of
investments for your account in writing.
If we manage a joint account on your behalf (e.g., husband and wife, parent and child,
etc.), our services will be based upon the identified financial needs and objectives that all or any
one of the persons executing our agreement (collectively, the “Joint Clients”) communicate to
our Wealth Advisor. Joint Clients are collectively responsible for determining and advising us if
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only one or more of the Joint Clients is permitted to give us instructions, authorizations, or to
otherwise control the account. Unless we are directed otherwise in writing, we are permitted to
rely upon any authorization, instruction, or direction from any one of the Joint Clients until this
authority is limited or revoked in a written notice delivered to us signed by all Joint Clients.
Additional Services
If clients request, we may provide additional discretionary investment advice for certain
outside accounts these are primarily retirement accounts, for an additional fee (see ITEM 5:
FEES AND COMPENSATION for the specific fees for this service). We regularly review the
available investment options in these accounts, monitor them, and rebalance in the same way we
do other accounts, though using different tools as necessary. We use a third party platform to
facilitate the management of these “held-away accounts.”
Clients using this service are provided with their own log-in credentials by the platform
and will link their account to the platform. By linking the accounts on the platform, we are
allowed to view the account allocation, and when deemed necessary by us, rebalance the outside
accounts. We do not have access to clients’ credentials and therefore, do not have custody of the
assets held in these accounts. We are not affiliated with the third-party platform in any way, and
do not receive any compensation from the platform. If you would like us to provide this
additional service, you will sign an addendum to your current agreement or, for new clients, a
separate schedule of our investment advisory agreement which explains this service.
Recommendation of Other Professionals
In addition, when requested and in conjunction with our investment management services,
we will advise you on issues related to wealth management. To implement our advice, we
may
recommend that you work with other professionals, such as attorneys or accountants, or utilize
various financial products, such as insurance. If our services to you include the recommendation
of other professionals, you will typically sign an agreement with them in addition to the advisory
agreement you sign with us. You are under no obligation to act upon any of our
recommendations. We do not receive any compensation from the professionals or from any
financial products we recommend to you.
Investment Management to Retirement Investors
We have special and additional fiduciary responsibilities under the Title I of Employee
Retirement Income Security Act of 1974 (“ERISA”) and/or the Internal Revenue Code Section
4975 (“IRC 4975”), as applicable, when we provide investment advice or investment
management services to individual retirement account owners, ERISA plans, and ERISA plan
participants. As such, we are subject to specific duties and obligations that include, among other
things, prohibited transaction rules which are intended to prohibit fiduciaries from acting on
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conflicts of interest. We must either avoid or eliminate the conflict or rely upon a prohibited
transaction exemption.
We are a fiduciary, when, for example, our Wealth Advisor recommends a distribution or
transfer (a “rollover”) of your tax-qualified ERISA-governed account including an IRA, to us for
management. If you accept the recommendation, Diversified Portfolios and our Wealth Advisor
will receive compensation that we would not otherwise receive. Therefore, the recommendation
creates a conflict of interest. To address this conflict we must comply with the impartial conduct
standards that require us to:
Always act in your best interest by:
oMeeting a professional standard of care when making investment
recommendations (give prudent advice);
oNever putting our financial interests ahead of yours when making
recommendations (give loyal advice);
Avoid misleading statements about conflicts of interest, fees, and investments;
Follow policies and procedures designed to ensure that we give advice that is in
your best interest;
Charge no more than is reasonable for our services; and
Give you basic information about conflicts of interest.
A retirement investor leaving an employer has four options regarding an existing
retirement plan (and under certain circumstances may engage in a combination of the following
options). We will provide general education, for discussion purposes, regarding the “pros and
cons” to each of these choices: (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 IRA, or (iv) cash out the account value (which could, depending upon the
client’s age, result in adverse tax consequences). If we recommend a roll over from a retirement
plan account or a transfer of an IRA account into an account to be managed by us, such a
recommendation creates a conflict of interest if the retirement investor accepts the
recommendation as we earn a fee on the market value of the rollover or transferred IRA which
would not be earned if the money was not placed under our management.
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Investment Management for Qualified Plans
As part of our services to qualified ERISA plans, we may act as a fiduciary as defined in
Sections 3(21)(A) and 3(38) of ERISA. If you engage us as a 3(21) advisor, we will make
recommendations, but it is ultimately up to you, as the plan fiduciary, to decide whether and how
to act. As a 3(21) advisor, we will not have discretion to invest and reinvest your assets without
your prior consent. Thus, as a 3(21) advisor, we will share responsibility for the selection of
investments. If we act as a 3(38) investment manager, the plan fiduciary gives us discretionary
authority to manage the plan’s assets. This means that the plan fiduciary shifts its fiduciary
responsibility to us for the selection of the plan’s investments.
For qualified plan clients, we assist you with creating and maintaining your investment
planning summary, upon request. Your investment planning summary or other written investment
objectives may place restrictions on the types of investments the plan assets may invest in. We
adjust the asset allocation to ensure that the investment mix reflects the objectives of the chosen
strategy. We continually monitor the performance of all investment options.
Assets Under Management
As of December 31, 2023, we had $1,523,884,885 in client assets managed on a
discretionary basis and $22,660,062 on a non-discretionary basis.