A. Description of the Advisory Firm
This firm has been in business since 1994 and has been SEC registered since April 10,
2000; the principal owners are Andrew Y. Wasa and Henry J. Ferry.
B. Types of Advisory Services
Focus Investment Advisors, Inc. (hereinafter “FIA”) offers the following services to
advisory clients:
Investment Supervisory Services
FIA offers ongoing portfolio management services based on the individual goals,
objectives, time horizon, and risk tolerance of each client. FIA creates an Investment
Policy Statement for each client, which outlines the client’s current situation (income, tax
levels, and risk tolerance levels) and then constructs a plan (the Investment Policy
Statement) to aid in the selection of a portfolio that matches each client’s specific
situation. Investment Supervisory Services include, but are not limited to, the following:
• Investment strategy • Personal investment policy
• Asset allocation • Asset selection
• Risk tolerance • Regular portfolio monitoring
FIA evaluates the current investments of each client with respect to their risk tolerance
levels and time horizon. Risk tolerance levels are documented in the Investment Policy
Statement, which is given to each client.
Selection of Other Advisors
FIA may direct clients to third party money managers. Before selecting other advisors
for clients, FIA will always ensure those other advisors are properly licensed or
registered as investment advisor.
LPL Financial Sponsored Advisory Programs
FIA may provide advisory services through certain programs sponsored by LPL Financial LLC
(LPL), a registered investment advisor and broker-dealer. Below is a brief description of each
LPL advisory program available to FIA. For more information regarding the LPL programs,
including more information on the advisory services and fees that apply, the types of
investments available in the programs and the potential conflicts of interest presented by the
programs please see the program account packet (which includes the account agreement and
LPL Form ADV program brochure) and the Form ADV, Part 2A of LPL or the applicable
program.
Advisory Services
Manager Access Select Program
Manager Access Select offers clients the ability to participate in the Separately Managed
Account Platform (the “SMA Platform”) or the Model Portfolio Platform (the “MP Platform”).
In the SMA Platform, [Advisor] will assist client in identifying a third party portfolio manager
(SMA Portfolio Manager) from a list of SMA Portfolio Managers made available by LPL, and
the SMA Portfolio Manager manages client’s assets on a discretionary basis. [Advisor] will
provide initial and ongoing assistance regarding the SMA Portfolio Manager selection process.
In the MP Platform, clients authorize LPL to direct the investment and reinvestment of the
assets in their accounts, in accordance with the selected model portfolio provided by LPL’s
Research Department or a third-party investment advisor.
A minimum account value of $50,000 is required for Manager Access Select, however, in certain
instances, the minimum account size may be lower or higher.
Optimum Market Portfolios Program (OMP)
OMP offers clients the ability to participate in a professionally managed asset allocation
program using Optimum Funds shares. Under OMP, client will authorize LPL on a
discretionary basis to purchase and sell Optimum Funds pursuant to investment objectives
chosen by the client. [Advisor] will assist the client in determining the suitability of OMP for
the client and assist the client in setting an appropriate investment objective. FIA will have
discretion to select a mutual fund asset allocation portfolio designed by LPL consistent with the
client’s investment objective. LPL will have discretion to purchase and sell Optimum Funds
pursuant to the portfolio selected for the client. LPL will also have authority to rebalance the
account.
A minimum account value of $10,000 is required for OMP. In certain instances, LPL will permit
a lower minimum account size.
Personal Wealth Portfolios Program (PWP)
PWP offers clients an asset management account using asset allocation model portfolios
designed by LPL. Advisor will have discretion for selecting the asset allocation model portfolio
based on client’s investment objective. Advisor will also have discretion for selecting third party
money managers (PWP Advisors), mutual funds and ETFs within each asset class of the model
portfolio. LPL will act as the overlay portfolio manager on all PWP accounts and will be
authorized to purchase and sell on a discretionary basis mutual funds, ETFs and equity and
fixed income securities.
A minimum account value of $250,000 is required for PWP. In certain instances, LPL will permit
a lower minimum account size.
Model Wealth Portfolios Program (MWP)
MWP offers clients a professionally managed mutual fund asset allocation program. FIA will
obtain the necessary financial data from the client, assist the client in determining the suitability
of the MWP program and assist the client in setting an appropriate investment objective. FIA
will initiate the steps necessary to open an MWP account and have discretion to select a model
portfolio designed by LPL’s Research Department consistent with the client’s stated investment
objective. LPL’s Research Department, a third-party portfolio strategist and/or Advisor,
through its IAR, may act as a portfolio strategist responsible for selecting the mutual funds or
ETFs within a model portfolio and for making changes to the mutual funds or ETFs selected.
The client will authorize LPL to act on a discretionary basis to purchase and sell mutual funds
and ETFs and to liquidate previously purchased securities. The client will also authorize LPL to
effect rebalancing for MWP accounts.
MWP requires a minimum asset value for a program account to be managed. The minimums
vary depending on the portfolio(s) selected and the account’s allocation amongst portfolios. The
lowest minimum for a portfolio is $25,000. In certain instances, a lower minimum for a portfolio
is permitted.
Small Market Solution (SMS) Program
Under SMS, LPL Research (a team of investment professionals within LPL) creates and
maintains a series of different investment menus (“Investment Menus”) consisting of a mix of
different asset classes and investment vehicles (“investment options”) for clients that sponsor
and maintain participant-directed defined contribution plans (“Plan Sponsors”). The Plan
Sponsor is responsible for selecting the Investment Menu that it believes is appropriate based
on the demographics and other characteristics of the Plan and its participants. LPL Research is
responsible for the selection and monitoring of the investment options made available through
Investment Menus. The investment options that are offered through SMS are limited to the
specific investments available through the record keeper that the Plan Sponsor selects. The Plan
Sponsor may only select an Investment Menu in its entirety and does not have the option to
remove or substitute an investment option.
In addition to the services described above, Plan Sponsor may also select from a number of
consulting services available under SMS that are provided by [Advisor]. These consulting
services may include, but are not limited to: general education, and support regarding the Plan
and the investment options selected by Plan Sponsor; assistance regarding the selection of, and
ongoing relationship management for, record keepers and other third-party vendors; Plan
participant enrollment support; and participant-level education regarding investment in the
Plan. These consulting services do not include any individualized investment advice to the Plan
Sponsor or Plan participants with respect to Plan assets.
Guided Wealth Portfolios (GWP)
GWP offers clients the ability to participate in a centrally managed, algorithm-based investment
program, which is made available to users and clients through a web-based, interactive account
management portal (“Investor Portal”). Investment recommendations to buy and sell
exchange-traded funds and open-end mutual funds are generated through proprietary,
automated, computer algorithms (collectively, the “Algorithm”) of FutureAdvisor, Inc.
(“FutureAdvisor”), based upon model portfolios constructed by LPL and selected for the
account as described below (such model portfolio selected for the account, the “Model
Portfolio”). Communications concerning GWP are intended to occur primarily through
electronic means (including but not limited to, through email communications or through the
Investor Portal), although [Advisor] will be available to discuss investment strategies, objectives
or the account in general in person or via telephone.
A preview of the Program (the “Educational Tool”) is provided for a period of up to forty-five
(45) days to help users determine whether they would like to become advisory clients and
receive ongoing financial advice from LPL, FutureAdvisor and [Advisor] by enrolling in the
advisory service (the “Managed Service”). The Educational Tool and Managed Service are
described in more detail in the GWP Program Brochure. Users of the Educational Tool are not
considered to be advisory clients of LPL, FutureAdvisor or [Advisor], do not enter into an
advisory agreement with LPL, FutureAdvisor or [Advisor], do not receive ongoing investment
advice or supervisions of their assets, and do not receive any trading services.
A minimum account value of $5,000 is required to enroll in the Managed Service.
Hybrid Advisors that are state-registered with Massachusetts are responsible for reviewing
the requirements of the Policy Statement issued by the Massachusetts Securities Division
titled “State-Registered Investment Advisers’ Use Of Third-Party Robo-Advisers.” In
addition, Advisors registered with the SEC should note that the SEC staff issued a Guidance
Update to “robo-advisors” in February 2017 (Release No. 2017-02). Advisors may consider
whether to include the additional sample disclosure below in their Part 2A brochure. The
sample disclosure below is not based on your particular business, should not be construed as
legal advice, and should not be relied upon. You should seek advice from your attorney as
needed in order to prepare disclosure specific to your business. LPL Financial is not
responsible in any way in connection with your use of this sample disclosure.
Features of the Educational Tool
Users of the Educational Tool (each, a “user”) agree to a terms of use (“Terms of Use”) and
complete an investor profile. An investment objective (“Investment Objective”) and Model
Portfolio is assigned to each user based upon factors in the investor profile, including risk
tolerance and the number of years remaining until the age of retirement (such time being
referred to herein as the “Retirement Age”). (See description in “Features of the Managed
Service” below for information regarding the design of the Model Portfolios.) Based on the
Investment Objective and Model Portfolio, the Educational Tool generates sample analysis,
advice and investment recommendations (“Sample Recommendations”).
The Educational Tool provides Sample Recommendations that may assist users in determining
whether to utilize the Managed Service. Access to the Educational Tool is generally limited to a
period of forty-five (45) days. The Educational Tool is intended to be used for educational and
informational purposes only. The Educational Tool does not provide comprehensive financial
planning and is not intended to constitute legal, financial or tax advice. There may be other
relevant factors and financial considerations (e.g., debt load or financial obligations) that LPL,
FutureAdvisor and [Advisor] do not take into consideration in formulating any Sample
Recommendations provided. The Sample Recommendations made are meant solely as a
sample of the types of recommendations available through the Managed Service. LPL,
FutureAdvisor and [Advisor] are not responsible for any actions taken with respect to the
Sample Recommendations, and users are solely responsible for making their own investment
decisions. The Educational Tool is only one of many tools that users may use as part of a
comprehensive investment analysis process. Users should not rely on the Educational Tool as
the sole basis for investment decisions.
Although LPL is an investment adviser and broker-dealer registered with the SEC and a
member of the Financial Industry Regulatory Authority, and FutureAdvisor is an investment
adviser registered with the SEC, in providing access to the Educational Tool, LPL, Future
Advisor and FIA do not intend to establish an advisory relationship, or in the case of LPL, a
brokerage relationship, with users of the Educational Tool. Users are not charged an advisory
fee or any other fee or expense to use the Educational Tool. The scope of any investment
advisory relationship with LPL, Future Advisor and FIA begins when users enroll in the
Managed Service. The output that users receive by using the Educational Tool, including the
Sample Recommendations, may differ materially from the advice users would receive as an
advisory client of LPL, FutureAdvisor and FIA
None of LPL, FutureAdvisor or FIA provides ongoing investment management or trading
services for assets of users of the Educational Tool, makes any determination as to whether the
website through which the Program is accessed or the Educational Tool is appropriate for any
user, can access any assets in any accounts users aggregate in the Educational Tool, places any
trades on behalf of users of the Educational Tool, or provides ongoing supervision of assets of
users of the Educational Tool. The Sample Recommendations provided are intended as an
informational preview of the Managed Service, and the Sample Recommendations are being
provided to demonstrate the types of analysis, advice and recommendations provided by the
Managed Service.
Features of the Managed Service
Investors participating in the Managed Service (“clients” and each, a “client”) complete an
account application (the “Account Application”) and enter into an account agreement (the
“Account Agreement”) with LPL, FIA and FutureAdvisor. As part of the account opening
process, clients are responsible for providing complete and accurate information regarding,
among other things, their age, risk tolerance, and investment horizon (collectively, “Client
Profile”). LPL, FIA and FutureAdvisor rely on the information in the Client Profile
in order to
provide services under the Program, including but not limited to, determination of suitability of
the Program for clients and an appropriate Investment Objective and Model Portfolio for
clients. The Model Portfolios have been designed and are maintained by LPL or, in the future, a
third-party investment strategist (as applicable, the “Portfolio Strategist”) and shall include a
list of securities holdings, relative weightings and a list of potential replacement securities for
tax harvesting purposes. FutureAdvisor, FIA and clients cannot access, change or customize the
Model Portfolios. Only one Model Portfolio is permitted per account.
Based upon a client’s risk tolerance as indicted in the Client Profile, the client is assigned an
investment allocation track (currently Fixed Income Tilt, Balance Tilt or Equity Tilt), the
purpose of which is to slowly rotate the client’s equity allocation to fixed income over time.
LPL Research created these tracks using academic research on optimal retirement allocations,
the industry averages as calculated by Morningstar for the target date fund universe, and input
from FutureAdvisor.
Within the applicable allocation track and based upon a client’s chosen Retirement Age in the
Client Profile, the client will be assigned a Model Portfolio and one of five of LPL’s standard
investment objectives:
• Income with capital preservation. Designed as a longer term accumulation account, this
investment objective is considered generally the most conservative. Emphasis is placed
on generation of current income with minimal risk of capital loss. Lowering the risk
generally means lowering the potential income and overall return.
• Income with moderate growth. This investment objective emphasizes generation of current
income with a secondary focus on moderate capital growth.
• Growth with income. This investment objective emphasizes modest capital growth with
some focus on generation of current income.
• Growth. This investment objective emphasizes achieving high long-term growth and
capital appreciation. There is little focus on generation of current income.
• Aggressive growth. This investment objective emphasizes aggressive growth and
maximum capital appreciation, with no focus on generation of current income. This
objective has a very high level of risk and is for investors with a longer timer horizon.
Both the client and [Advisor] are required to review and approve the initial Investment
Objective. As a client approaches the Retirement Age, the Algorithm will automatically adjust
the client’s asset allocation. Any change to the Investment Objective directed by a client due to
changes in the Client’s risk tolerance and/or Retirement Age will require written approval from
the client and FIA before implementation. Failure to approve the change in Investment
Objective may result in a client remaining in a Model Portfolio that is no longer aligned with the
applicable Client Profile. The Investment Objective selected for the account is an overall
objective for the entire account and may be inconsistent with a particular holding and the
account’s performance at any time and may be inconsistent with other asset allocations
suggested to client by LPL, FIA or FutureAdvisor prior to client entering into the Account
Agreement. Achievement of the stated investment objective is a long-term goal for the account,
and asset withdrawals may impair the achievement of client’s investment objectives. A Client
Profile that includes a conservative risk tolerance over a long-term investment horizon may
result in the selection of an Investment Objective that is riskier than would be selected over a
shorter-term investment horizon. Clients should contact [Advisor] if they believe the
Investment Objective does not appropriately reflect the Client Profile, such as their risk
tolerance.
By executing the Account Agreement, clients authorize LPL and FutureAdvisor to have
discretion to buy and sell only exchange-traded funds (“ETFs”) and open-end mutual funds
(“Mutual Funds”) (collectively, “Program Securities”) according to the Model Portfolio selected
and, subject to certain limitations described in the Account Agreement, hold or liquidate
previously purchased non-model securities that are transferred into the account (“Legacy
Securities”). In order to be transferred into an account, Legacy Securities must be Mutual Funds
with which LPL has a full or partial selling agreement, ETFs or individual U.S. listed stocks.
Securities that are not Program Securities included within the Model Portfolio will not be
purchased for an account, and FutureAdvisor, in its sole discretion, will determine whether to
hold or sell Legacy Securities, generally, but not solely, with the goal of optimizing tax impacts
for accounts that are subject to tax. Additional Legacy Securities will not be purchased for the
account. Clients may not impose restrictions on liquidating any Legacy Securities for any
reason. Clients should not transfer in Legacy Securities that they are not willing to have
liquidated at the discretion of FutureAdvisor.
In addition, uninvested cash may be invested in money market funds, the Multi-Bank Insured
Cash Account (“ICA”) or the Deposit Cash Account (“DCA”), as applicable, as described in the
Account Agreement. Dividends paid by the Program Securities in the account will be
contributed to the cash allocation and ultimately reinvested into the account based on the
Model Portfolio once the tolerance within cash allocation is surpassed.
Pursuant to the Account Agreement, FutureAdvisor is authorized to perform tax harvesting
when deemed acceptable by the Algorithm based on the Legacy Securities’ respective tax lot
information. If tax lot information is missing for a Legacy Security, the Legacy Security will be
retained in the Account while FutureAdvisor and FIA use reasonable efforts to obtain the
missing information. If the information cannot be obtained within a reasonable timeframe
(generally no longer than 30 days), the Legacy Security will be sold and replaced with a
Program Security in the Model Portfolio. LPL, [Advisor] and clients cannot alter trades made
for tax harvesting purposes. In order to permit trading in a tax-efficient manner, the Account
Agreement also grants FutureAdvisor the authority to select specific tax lots when liquidating
securities within the account. Although the Algorithm attempts to achieve tax efficiencies, by
doing so a client’s portfolio may not directly align with Model Portfolio. As a result, a client
may receive advice that differs from the advice received by accounts using the same Model
Portfolio, and the client’s account may perform differently than other accounts using the same
Model Portfolio.
During the term of the Account Agreement, FutureAdvisor will perform a daily review of the
account to determine if rebalancing is appropriate based on tolerance thresholds established by
LPL and/or FutureAdvisor. At each rebalancing review, the account will be rebalanced if at
least one of the account positions is outside such thresholds, subject to a minimum transaction
amount established by LPL and/or FutureAdvisor. In addition, LPL and/or FutureAdvisor
may review the account for rebalancing in the event that the Portfolio Strategist changes a
Model Portfolio. FutureAdvisor may delay placing rebalancing transactions for non-qualified
accounts by a number of days, to be determined by FutureAdvisor, in an attempt to limit short-
term tax treatment for any position being sold. In addition, trading in the account at any given
time is also subject to certain conditions, including but not limited to, conditions related to trade
size, compliance tests, the target cash allocation and allocation tolerances. LPL, [Advisor] and
clients can alter the rebalancing frequency.
Selection of FutureAdvisor as Third-Party Robo Advisor
Under FIA’s agreement with LPL, FIA was provided the opportunity to offer GWP, which
utilizes FutureAdvisor’s Algorithm as described herein, to prospective clients. FIA is not
otherwise affiliated with FutureAdvisor.] FutureAdvisor is compensated directly by LPL for its
services, including the Algorithm and related software, through an annual sub-advisory fee
(tiered based on assets under management by FutureAdvisor, at a rate ranging from 0.10% to
0.17%). As each asset tier is reached, LPL’s share of the compensation shall increase and clients
will not benefit from such asset tiers. No additional fee is charged for FutureAdvisor’s services.
FIA believes that certain clients will benefit from GWP’s advisor-enhanced advisory services,
particularly due to the relatively low minimum account balance and the combination of a
digital advice solution with access to an advisor. Unlike direct-to-consumer robo platforms,
FIA is responsible on an ongoing basis as investment advisor and fiduciary for the client
relationship, including for recommending the program for the client; providing ongoing
monitoring of the program, the performance of the account, the services of LPL and
FutureAdvisor; determining initial and ongoing suitability of the program for the client;
reviewing clients’ suggested portfolio allocations; reviewing and approving any change in
Investment Objective due to changes clients make to their Client Profile; answering questions
regarding the program, assisting with paperwork and administrative and operational details for
the account; and being available to clients to discuss investment strategies, changes in financial
circumstances, objectives or the account in general in person or via telephone. FIA can also
recommend other suitable investment programs if clients have savings goals or investment
needs for which GWP is not the optimal solution.
Financial Planning
Financial plans and financial planning may include, but are not limited to: investment
planning, life insurance; tax concerns; retirement planning; college planning; and
debt/credit planning. These services are based on fixed fees or hourly fees and the final
fee structure is documented in the Financial Planning Agreement.
Services Limited to Specific Types of Investments
FIA limits its investment advice and/or money management to mutual funds, equities,
bonds, fixed income, debt securities, ETFs, real estate, hedge funds, third party money
managers, REITs, insurance products including annuities, private placements, and
government securities. FIA may use other securities as well to help diversify a
portfolio when applicable.
FIA Fiduciary Duties
FIA advises clients that are subject to the requirements of the Employee Retirement
Income Security Act of 1974 as amended (“ERISA”), and as such, FIA acts as a
“fiduciary,” as defined in that Act. FIA’s fiduciary duties to ERISA clients are limited to
its investment supervisory services to the extent that FIA (i) has any discretionary
authority or control in the administration of the plan, (ii) exercises any authority or
control with respect to the management or disposition of plan assets, or (iii) renders
investment advice to a plan for a fee or other compensation, direct or indirect. FIA’s
financial planning services to ERISA clients does not implicate a fiduciary status.
Pension Consulting Services
FIA offers consulting services to pension or other employee benefit plans (including but
not limited to 401(k) plans). Pension consulting may include, but is not limited to:
o identifying investment objectives and restrictions
o providing guidance on various assets classes and investment options
o recommending money managers to manage plan assets in ways designed to
achieve objectives
o monitoring performance of money managers and investment options and
making recommendations for changes
o recommending other service providers, such as custodians, administrators and
broker-dealers
o creating a written pension consulting plan
These services are based on the goals, objectives, demographics, time horizon, and/or
risk tolerance of the plan and its participants.
Written Acknowledgement of Fiduciary Status
When we provide investment advice to you regarding your retirement plan account or
individual retirement account, we are fiduciaries 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. The way we make money
creates some conflicts with your interests, so we operate under a special rule that
requires us to act in your best interest and not put our interest ahead of yours. Under
this special rule’s provisions, we must:
• Meet a professional standard of care when making investment
recommendations (give prudent advice);
• Never put 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.
C. Client Tailored Services and Client Imposed Restrictions
FIA offers the same suite of services to all of its clients. However, specific client financial
plans and their implementation are dependent upon the client Investment Policy
Statement which outlines each client’s current situation (income, tax levels, and risk
tolerance levels) and is used to construct a client specific plan to aid in the selection of a
portfolio that matches restrictions, needs, and targets.
Clients may impose restrictions in investing in certain securities or types of securities in
accordance with their values or beliefs. However, if the restrictions prevent FIA from
properly servicing the client account, or if the restrictions would require FIA to deviate
from its standard suite of services, FIA reserves the right to end the relationship.
D. Wrap Fee Programs
FIA may recommend to clients various wrap fee programs if deemed appropriate. The
appropriate supplemental brochure describing the wrap fee program of the program
sponsor will be delivered to the client prior to investing in a wrap fee program.
E. Amounts Under Management
FIA has the following assets under management:
Discretionary Amounts: Non-discretionary Amounts: Date Calculated:
$ 388,917,800.00 $ 391,300,000.00 12/31/2023