About Us
Citizens Securities, Inc. (“CSI,” “We” or “Us”) is a corporation organized under the laws of
Rhode Island that was established in September 1995. We have been registered with the SEC
as a broker/dealer and have been a member of the Financial Industry Regulatory Authority
(“FINRA”) since May 1996. In March 2003, we registered with the SEC as an investment
adviser under the Investment Advisers Act of 1940. Prior to that time, we were registered as
an investment adviser under the laws of the states in which we operated. We are 100%
directly owned by Citizens Bank, N.A. (“Citizens Bank”), a national banking association,
and by its parent company, Citizens Financial Group, Inc., a bank holding company.
The Advisory Services We Offer
We offer investment advisory services to both existing and prospective clients through two
primary advisory offerings: (1) the Citizens Advisory Solutions Managed Account Program
(the “Managed Account Program”) and (2) the Digital Advisory Program. The Managed
Account Program, which is described in this Brochure, is a Turnkey Asset Management
Program (“TAMP”) comprised of two different variations. The standard option is sponsored
and administered by Envestnet Asset Management, Inc., an unaffiliated investment advisory
firm. The Citizens Advisory ConnectTM Program (“Connect”) is sponsored by CSI and
administered by SigFig Wealth Management, LLC (“SigFig”).
References to the “Platform Manager” in this Brochure refer to Envestnet and/or SigFig, as
applicable. Although you will continue to interact with your Financial Advisor (“FA”), in the
Connect variation of the Managed Account Program your primary method of receiving
communications relating to your accounts and the services provided under the Program will be
electronically through e-mail, designed websites, mobile applications or other digital interfaces
that CSI makes available from time to time (collectively, the “Site”). Participation in the
Connect Program is conditioned on your consent to electronic delivery. If you do not wish to
consent to electronic delivery to receive communications through the Site, you should not
select the Connect variation of the Managed Account Program. In addition, you should
understand that the Connect variation of the Managed Account Program offers a more limited
range of investment strategies.
The Digital Advisory Program, which is described in further detail in the Digital Advisory
Program Wrap Fee Program Brochure, is a digital advisory offering in which an unaffiliated
investment advisory firm acts as a sub- adviser. For the avoidance of doubt, the information in
this Wrap Fee Program Brochure pertains to the Managed Account Program.
We do not provide legal, tax, or accounting advice.
Citizens Advisory Solutions Managed Account Program
We offer the Managed Account Program in connection with a Platform Manager, an
independent investment adviser that is not affiliated with us. You will receive, and should
review, a copy of the Platform Manager’s Form ADV, Part 2 (the “Brochure”), which contains
additional information regarding the Platform Manager’s services, processes, policies, and
conflicts of interest.
Under the Managed Account Program, you and your FA compile your pertinent personal
and financial information to develop an investment management program based on your
financial goals and objectives. The process includes the following steps:
• You and your FA complete a Risk Tolerance Questionnaire (“RTQ”) designed to identify
your investment needs, objectives, time horizon, risk tolerance, and other pertinent
information
• The information compiled in the RTQ is used to create a risk-appropriate asset allocation
model and/or to identify asset managers appropriate for your investment management
account.
• Your FA will generate an investment proposal and an Investment Management
Agreement (“IMA”) for your review that will include a recommended Managed Account
Program and investment strategy.
• Upon your acceptance of the recommended Managed Account Program and investment
strategy, you will sign the IMA.
• The IMA establishes your investment management account, evidences your approval, and
grants investment discretion and discretionary trading authority to the Platform Manager
and certain asset managers over your account.
• After your investment management account has been established, the assets in your
account will be managed in accordance with your individual goals and objectives.
• You are responsible for notifying your FA in the event there are changes to the personal
information you originally disclosed to help determine whether the Managed Account
Program and investment strategy is still appropriate for you. The Platform Manager and
the asset managers you select in the Managed Account Program are also provided with
this information to assist in this determination. Your FA will contact you to review your
account, at least annually, to discuss any changes to your personal situation.
Our Managed Account Options
Based on the information you provide to us regarding your financial circumstances, investment
objectives, and risk tolerance, we will provide you with a recommendation concerning whether
one or more of the Managed Account Program Options is appropriate for you.
1. Citizens Integrated Portfolios
Citizens Integrated Portfolios is a program where you hold a single unified managed account
(“UMA”) that offers access to a broadly diversified portfolio of eligible mutual funds, ETFs,
separately managed accounts, and wrap strategist portfolios. The Platform Manager defines
the available risk-based asset allocation models. We make recommendations to you regarding
the appropriate asset allocation model and underlying investment vehicles to meet your needs.
You are responsible for confirming acceptance of the recommended asset allocation model
and underlying investment vehicles for your account. In addition, you must authorize any
changes in the asset allocation model or underlying investment vehicles used to pursue the
strategy. You grant discretionary trading authority to the Platform Manager, which trades the
account based on instructions from the relevant investment managers. We do not exercise
investment discretion or discretionary trading authority, except in accordance with its limited
discretion policy. We, or a third-party service provider that we retain, conduct ongoing due
diligence and screening of the investments available in the Citizens Integrated Portfolios
program. Based on this review, we may add or remove mutual funds and ETFs from the list of
eligible funds for the program. You grant us limited discretionary authority to add, remove
and/or substitute specific mutual funds or ETFs held in your account without prior notice to
you in connection with changes to the list of eligible funds or as a result of certain actions by
offered fund families.
2. Fixed Income Solutions
The Fixed Income Solutions Program provides individual investors with direct access to global
investment managers. Utilizing an SMA vehicle, you directly own securities in their portfolio.
Fixed Income strategies are available for you across the duration, credit, and liquidity
spectrum in taxable and tax-exempt versions. An SMA can serve clients with specific
objectives in terms of tax exposure, risk tolerance, and liquidity needs. SMAs typically have
minimum investment levels that begin at $100,000.
3. Citizens Advisory Connect Program (the “Connect Program”)
The Connect Program is an investment advisory program under which you receive investment
recommendations and discretionary investment management of the assets held in your
advisory account (“Account”) based on models provided by one or more unaffiliated
investment managers (“Model Providers”). Your Financial Advisor (“FA”) will assist you in
developing an investment management program based on your investment goals and risk
tolerance. Although you will interact with your FA to obtain investment advice, you
understand and agree that your primary method of receiving communications related to your
Account and the services provided under the Connect Program will be electronically through
the Site.
4. Discontinued Programs
As of October 8, 2018, CSI no longer offers its Wrap Strategist program to new clients;
however existing accounts are eligible to be maintained. Further, both new and existing clients
may invest their funds with wrap strategists through the Citizens Integrated Portfolios option.
As of March 7, 2019, CSI no longer offers its Separately Managed Accounts program to new
clients; however existing accounts are eligible to be maintained. Further, both new and
existing clients may invest their funds in separately managed accounts through the Citizens
Integrated Portfolios option.
As of November 7, 2022, CSI no longer offers its Custom Select Portfolios program. Existing
client accounts were transitioned in kind to the Integrated Portfolios UMA program on that
date.
The Assets We Manage
As of December 31, 2023, we managed $7,285,532,191 in assets.
Brokerage Practices
Broker Selection
In connection with your participation in the Managed Account Program, you will authorize the
Program Manager and/or any applicable Sub-Manager to instruct brokers, dealers, and banks
to purchase, sell, exchange, convert and otherwise trade in and deal with any security or cash
in your account. You will bear the risk of such transactions. Also, you will authorize the
Program Manager and us to designate NFS to provide trade execution and custodial services
for your Managed Account Program account. NFS does not provide investment advice or
investment advisory services in connection with the Managed Account Program. You should
note the following in connection with your participation in the Managed Account Program:
• You authorize the Program Manager to open broker/dealer accounts at applicable
executing brokers and authorize the Platform Manager as attorney-in-fact to give
instructions to an appropriate broker with regard to authorized trading in your account.
All transactions effected by Sub-Managers for your accounts shall be cleared and settled
with NFS.
• In effecting brokerage transactions, the Platform Manager, the Sub-Manager, or we may
consider not only available prices and commission rates (including that some transactions
effected through NFS are included in the Program Fee), but also other relevant factors
such as execution capabilities, research, and other services provided by the broker/dealer.
In such circumstances, you may not receive the benefit of the lowest trade price then
available for any particular transaction for your Managed Account Program account.
• Except as otherwise set forth in your IMA, the Platform Manager, the Sub-Managers, or
we are authorized to use a broker, dealer, or bank other than NFS for a transaction if the
Platform Manager, the Sub-Managers, or we (as applicable) determine that “best
execution” of the transaction may be obtained through such other broker, dealer, or bank.
The broker, dealer, or bank used for execution may be a broker/dealer affiliated with us,
the Platform Manager, or the Sub-Manager. Client agrees to furnish any such broker,
dealer, or bank such authorizations as any of them or Advisor may request to implement
the provisions of this Agreement.
• The Platform Manager anticipates trading exclusively through CSI for execution through
NFS within the Managed Account Program. We expect that any Sub-Managers you select
within the Managed Account Program will generally trade through CSI for execution
through NFS, as well. You understand that as a result of this trading arrangement, we, the
Platform Manager, and the Sub-Managers may not always be able to obtain the most
favorable execution for client transactions and it is possible you will receive less
favorable net prices as a result of your decision to direct brokerage to NFS. You should
understand that not all investment advisers recommend, request, or require their clients to
direct brokerage. The execution received by trading through CSI to NFS may not be as
favorable as execution that might be obtained if trades were placed through another
broker-dealer.
• None of the Platform Manager, any Sub-Manager, or us will be responsible for any action
or inaction taken by any broker, dealer, or bank or any loss incurred by reason of any
action or inaction of any broker, dealer, or bank.
• You authorize us, the Platform Manager, and the Sub-Managers to instruct all brokers,
dealers, and banks executing securities transactions for your Managed Account Program
account to forward confirmations of transactions to us, the Platform Manager, or the Sub-
Managers.
Research and Soft Dollar Benefits
Sub-Managers may execute transactions through brokers, dealers, and banks that have
arrangements with the Sub-Managers under which the Sub-Manager will receive “soft dollar”
credit (towards the acquisition of research products and services) for brokerage placed with
the broker, dealer, or bank.
Order Aggregation
When the Platform Manager or a Sub-Manager deems a transaction to be in your best interests,
as well as the best interests of other applicable clients of the Platform Manager or the Sub-
Manager, to the extent permitted by applicable law and regulation, the Platform Manager or the
Sub-Manager will aggregate multiple client orders to obtain the most favorable price and/or
lower execution costs at the time of execution.
Custody
We do not maintain physical custody of your assets. NFS, as clearing broker and Managed
Account Program custodian, will provide regular written monthly statements to you showing
your securities positions and account activity. You should promptly and carefully review the
quarterly statements you receive from us and you should compare them with those provided by
NFS and notify us promptly in writing of any errors or discrepancies. Communications from us,
NFS, and/or the Platform Manager may be by electronic means.
Fee Schedules and Compensation
How the Firm is Paid for its Services
The Managed Account Program charges a single asset-based fee (“Program Fee”). Depending
on the specific program you select, the Program Fee covers our asset and investment style
allocation recommendations, manager research, brokerage, custody, performance reports,
periodic rebalancing of accounts, document processing, information systems, and other
administrative services. The Program Fee also covers the platform administration and
investment advisory services provided by the Platform Manager, and the services of any Sub-
Managers, who are compensated from the portion of the Program Fee paid to the Platform
Manager. You will incur transaction costs, fees, commissions, and other charges and expenses
in addition to the fees paid to us. In some cases, we, our employees, and affiliated companies
will also receive fees and compensation in addition to the fees paid directly by you, including
from mutual funds, third-party providers, and affiliates. Any portion of a Managed Account
Program account maintained in cash or in affiliated bank sweeps (as discussed below) is subject
to the Program Fee (see “Banking Activities”). For services provided under the Citizens
Integrated Portfolios Managed Account Program, you will pay the Program Fee on a quarterly
basis, calculated by applying the annual fee schedule for the account you maintain. As indicated
below, lower asset-based fees will apply as the level of assets maintained in a Managed
Account Program account increases to certain account balance tiers. For the services provided
under the Connect Program you will pay a monthly asset-based fee. (See Managed Account Fee
Billing section for more details).
Connect accounts are subject to a minimum investment of $2,000. If the account drops below this
defined minimum amount, the Program Manager will take certain actions to terminate its
management of the account.
Accounts in the non-Connect variation of the Managed Account Program may be combined
under the same Billing Group for the purpose of achieving an overall account balance reducing
asset-based fees, but only at the Managed Account Option level. For instance, Managed Account
Program accounts that invested in SMAs may be combined to achieve an account balance, but an
SMA could not be combined within an Advisor-Directed UMA. Due to technical limitations, the
Connect variation of the Managed Account Program does not offer the ability to household
multiple accounts for the benefit of receiving lower fees. In addition, while householding
practices may change over time, if you have accounts in both the Connect and non-Connect
variations of the Managed Account Program, you currently do not have the ability to household
Connect and non-Connect accounts for purposes of meeting higher breakpoints and receiving
lower fees.
See below under “Additional Compensation” and under “Code of Ethics, Participation or
Interest in Client Transactions and Personal Trading Participation or Interest in Client
Transactions.”
The current fee schedule for each offering within the Managed Account Program is set forth
below. Depending on the date of your initial investment, you may be subject to a legacy fee
schedule. Please contact your FA if you have questions about the fee schedule that applies to
your account.
How the Fees Are Calculated. The quarterly fee is determined by multiplying the market value
of the account at the end of the previous calendar quarter by one-fourth of the annual Program
Fee rate. Breakpoints are applied the incremental amount of assets in each account over each
threshold. For example, in the fee schedule below, if the market value of the account at the end
of a calendar quarter is $300,000, the fee for the subsequent quarter will be calculated at an
annual fee rate of 1.41% on the first $250,000 of the assets and at an annual fee rate of 1.26% on
the remaining $50,000 of the assets.
Citizens Integrated Portfolios UMA Fee Schedule
Account Balance *Annual
Program Fee
Program Fee
Portion Payable
to CSI
First $250,000 *1.41% 1.35%
Next $250,000 *1.26% 1.20%
Next $500,000 *1.11% 1.05%
Next $1,000,000 *1.06% 1.00%
Next $3,000,000 *1.01% 0.95%
$5,000,000 and
above
*0.96% 0.90%
* Represents minimum annual program fee. Additional manager fees may apply.
Fixed Income Solutions Program SMA Fee Schedule
Account Balance *Annual
Program Fee
Program Fee
Portion Payable
to CSI
First $250,000 *0.76% 0.70%
Next $250,000 *0.66% 0.60%
Next $500,000 *0.56% 0.50%
Next $1,000,000 *0.46% 0.40%
Next $3,000,000 *0.41% 0.35%
$5,000,000 and
over
*0.41% 0.35%
* Represents minimum annual program fee. Additional manager fees may apply
**100% Treasuries program fee begins at 0.41%. Additional manager fees may apply
Citizens Advisory Connect Fee Schedule
Account Balance Annual
Program Fee
Program Fee
Portion Payable
to CSI
First $250,000 1.35% 1.27%
Next $250,000 1.25% 1.17%
Next $500,000 1.13% 1.05%
Next $1,000,000 1.08% 1.00%
Next $3,000,000 1.03% 0.95%
$5,000,000 and
over
0.98% 0.90%
Managed Account Program Fees Are Negotiable Under Some Circumstances
We are willing to negotiate the rate of the applicable fees and any account minimums for
Managed Account Program accounts under some circumstances, such as the type and size
of the client account, the range of services provided to the client, and our total relationship
with Platform Manager in terms of assets under supervision. Our employees and employees
of our affiliates, in certain circumstances, are entitled to fee discounts and/or cash credits by
virtue of their employment.
Managed Account Fee Billing
The Program Fee typically is paid quarterly in advance by applying the applicable fee rate (as
specified in the fee schedule for the applicable Managed Account Program account type or
otherwise applicable to the client’s account balances) to the fair market value of the assets in the
account (including interest paid or accrued) as of the last business day of the preceding calendar
quarter. The fair market value of the assets in the account will be as determined by the Platform
Manager. The following procedures will apply:
• The initial Program Fee will be calculated and debited on the 10th day of the month
following the initial investment. The initial Program Fee for any partial calendar quarter
will be pro-rated based on the number of calendar days in the partial quarter.
• After the initial payment period, the Program Fee will be calculated at the beginning of
each calendar quarter based on the value of Program Assets on the last business day of
the prior calendar quarter.
• If an account is terminated and all assets of the account are withdrawn prior to the end of
a quarter, a pro rata portion of the Program Fee will be reimbursed to the client.
• The Platform Manager will calculate the applicable Program Fee and provide the amount
due to the Managed Account Program account custodian, National Financial Services
(“NFS”). NFS will automatically deduct the amount due from your Managed Account
Program account.
The Connect Fee is applied to the “Account Value”, which means the sum of the market value of
all eligible security positions, including accrued income, cash, and any cash alternatives (if
applicable) held in your Account. The Connect Program Fee is payable monthly in arrears and
will be calculated by Platform Manager and deducted from your Account by the Custodian. If a
Connect account has been managed for less than one month, the monthly fee will be prorated for
the number of days the account was managed. This would typically be applicable during the fee
calculations for the account opening month and/or the final month (termination).
Costs Not Covered by the Program Fee
In addition to the Program Fee, you will incur certain transaction costs, fees, commissions, and
other charges and expenses (described below). In some cases, we and our employees and
affiliated companies will also receive fees and compensation in addition to the fees paid directly
by you, including from mutual funds or similar funds, third-party providers, and affiliates.
Securities Transaction Charges
The Program Fee does not cover certain charges associated with securities transactions in clients’
accounts, including the following:
• Dealer markups, markdowns, or spreads charged on transactions in over-the-counter
securities;
• Costs relating to trading in certain foreign securities;
• The internal charges and fees imposed by collective investment vehicles, such as mutual
funds and closed-end funds, unit investment trusts, ETFs, or real estate investment trusts,
including fund operating expenses, management fees, redemption fees, 12b-1 fees, and
other fees and expenses;
• Brokerage commissions or other charges imposed by broker/dealers or entities other than
the custodian if and when trades are executed through another broker/dealer;
• Regulatory fees; and
• The charge to carry tax lot information on transferred mutual funds or other investment
vehicles, postage and handling charges, returned check charges, transfer taxes; stock
exchange fees, or other fees mandated by law.
In-Kind Transfers
If you transfer assets into a Program account “in-kind,” the Platform Manager will have the
discretion to liquidate some or all of those assets either immediately or at a future point in time.
In that event, you will incur a brokerage commission or other charge, including a Contingent
Deferred Sales Charge. The in-kind transfer or liquidation of assets also may have tax
consequences for you. Accordingly, you should consult with your tax consultant before
transferring assets in-kind into a Platform Manager account.
Custodian Fees and Charges
The customary, ongoing custody fee charged by the Managed Account Program custodian will be
paid out of the Program Fee. However, the Program Fee will not cover certain fees and charges or
any other Managed Account Program custodian. Among other items, clients are charged for
specific account services, including the following:
• Automated Customer Account Transfers;
• Electronic fund and wire transfer charges;
• Other optional services which you elect to request;
• Transaction-based ticket charges assessed by the custodian for the purchase of certain
mutual funds; and
• Non-brokerage-related fees such as individual retirement account (“IRA”) trustee or
custodian fees and tax-qualified retirement plan account fees and annual and termination
fees for retirement accounts (such as IRAs).
Mutual Fund and Similar Commissions and Expenses
Your Managed Account Program account will not incur front-end or deferred sales charges in
connection with the purchase of collective investment vehicles, such as mutual funds and ETFs.
However, all collective investment vehicles (including money market mutual funds used for
investment of cash balances) have ongoing expenses that will impact the return received by your
account. These ongoing expenses include, but are not limited to, management fees, distribution
expenses, 12b-1, shareholder servicing, administrative service, and similar fees. Collective
investment vehicle charges and expenses are subject to change. A detailed explanation of mutual
fund fees and expenses is contained in each mutual fund’s prospectus. You should carefully read
each fund’s prospectus. In some cases, the investment of assets in collective investment vehicles
will result in the receipt of additional compensation by us or our affiliates or our affiliate’s
employees (see “Participation or Interest in Client Transactions” below).
Mutual Fund and Other Investment Vehicle Redemption Fees
Some mutual funds, ETFs, and other collective investment vehicles assess redemption fees to
investors upon the short-term sale of shares or other participation interests. Your account will
incur redemption fees if you (assuming you participate in the Citizens Integrated Portfolios
program, which allows you to direct investment of your account), the Platform Manager, or a
Sub-Manager sells some or all of your account’s holdings in a collective investment vehicle
before the end of the collective investment vehicle’s stated minimum holding period. The
Platform Manager or a Sub-Manager may decide to delay a decision to liquidate a position in a
collective investment vehicle until the end of the applicable minimum holding period if it
believes that it is appropriate to do so under the circumstances, but the Platform Manager and
Sub-Managers are not obligated to do so. Depending on the particular collective investment
vehicle, redemption fees will also be incurred in connection with routine, periodic rebalancing of
your account.
Please see the prospectus or other disclosure document for the specific collective investment
vehicle for detailed information regarding applicable redemption fees.
Additional Compensation
We and our affiliates will receive fees and other compensation in addition to the fees we charge to
your account for investment management services. The compensation we receive in connection
with a client’s participation in the Managed Account Program will vary based on a number of
factors, including, among other things, the size of the account, the type of Managed Account
Program account(s) the client maintains with us (i.e., based on whether the client maintains a
Separate Account, a Citizens Integrated Portfolios account, or a Model Portfolio account), changes in
value over time, our and the Platform Manager’s ability to negotiate fees or commissions, and the
number of transactions. These factors create conflicts of interest because there is a financial
incentive for us to recommend certain Managed Account Program portfolios that result in higher
levels of compensation to us. Although we have attempted to manage these conflicts of interest in
the case of the Model Providers by ensuring that we and our representatives receive the same
amount of compensation regardless of the Model Provider or program type selected, we will receive
additional compensation if a client selects the Citizens Private Wealth Target Portfolios (one of the
wrap strategist or “model portfolio” options available within Citizens Integrated Portfolios) because
Citizens Bank will receive additional compensation for managing the model portfolios.
Accordingly, although the compensation our FAs receive does not vary, clients should understand
that we have a financial incentive to recommend the Citizens Private Wealth Target Portfolios over
other model portfolios available through the Managed Account Program.
In addition, the compensation payable to an FA in connection with a client’s participation in the
Managed Account Program may be more than what the FA would receive if the client
participated in another one of our advisory and/or brokerage programs, or if the client paid
separately for investment advice, brokerage, and other services. Therefore, our FA has an
incentive to recommend the Managed Account Program over other programs or services
available from us.
Our investment advisory services fees are not reduced by the amount of the additional fees and
other compensation received by us, our representatives, or our affiliates. This presents a conflict
of interest and gives us or our representatives an incentive to recommend investment products
based on the compensation received, rather than on a client’s needs. The types of additional
compensation we expect to receive are described below:
• We receive 12b-1 distribution fees, shareholder servicing fees, administrative service fees
and similar fees, and revenue-sharing payments, from certain affiliates of the collective
investment vehicles or in connection with the investment of client funds into the
collective investment vehicle (“Fund-Related Compensation”). The availability to us of
Fund-Related Compensation gives rise to conflicts of interest since some collective
investment vehicles pay Fund-Related Compensation, while others do not, and from the
fact that the level of Fund-Related Compensation varies based on the collective
investment vehicle and the corresponding share class that is chosen. Mutual fund
companies offer a variety of different share classes with different expense levels, and
each share class pays different levels of Fund-Related Compensation. We do not make all
share classes available to you through the Managed Account Program, and although we
undertake reasonable efforts to obtain the lowest cost share class available for your
investment, you should not assume that you are invested in the lowest available share
class. The mutual fund share class we recommend or select can have higher expenses
(including because of the Fund-Related Compensation we receive), and therefore lower
returns, than other share classes for which you are eligible to invest or that might
otherwise be available to you if you invested in the mutual fund through a third party or
through the mutual fund directly. As a result, we have a financial incentive to select
collective investment vehicles and mutual fund share classes that provide us with more
Fund-Related Compensation. Share class selection for advisory accounts will be based on
a variety of factors, though we strive to place clients in the lowest net expense share class
offered by the applicable funds. Any 12b-1 compensation received by CSI in the
Managed Account Program is credited back to the client’s account. While CSI generally
seeks to select a single share class of a mutual fund for purchase, share classes will likely
vary among custodial platforms and more than one share class can be purchased and held
in advisory accounts. Factors we consider in share class selection include, but are not
limited to, the net expense ratio of the share classes, whether a portfolio is a discretionary
managed portfolio or a non-discretionary managed portfolio, the availability of share
classes on various custodial platforms, whether particular share classes are subject to
transaction fees (“TF”) or do not have transaction fees (“NTF”) on the custodial platform
used, operational considerations such as share class consistency within a fund family on a
particular custodial platform, the availability of account minimum waivers, tax and other
circumstances that are unique to particular clients.
• You should not assume that you are or will be invested in the lowest expense share class,
and the share class of a mutual fund offered by CSI can have higher expense ratios, and
therefore lower returns, which can reduce performance over time, than other share classes
of that mutual fund for which you are eligible or that may otherwise be available to you if
you invested in the mutual fund through a third party or through the mutual fund directly.
• We address these conflicts by disclosing them to you and by adopting policies and
procedures and related controls around share class selection. We may also take steps to
mitigate these conflicts. In the case of Managed Account Program accounts, we credit
12b-1 distribution fees received by us to the client account. This applies to taxable clients,
as well as to clients that are IRAs and employee benefit plans subject to the Employee
Retirement Security Act of 1974 (“ERISA”). Model Providers and Sub- Managers are
responsible for making the determination of which share class of a mutual fund to invest
in and will follow their own share class selection practices.
• CSI also conducts periodic reviews of a mutual fund’s available share classes to
determine if a different share class would be more appropriate. CSI may, at its discretion,
determine to convert your mutual fund positions held in one share class to a different
share class. Such share class conversions will occur as deemed appropriate by CSI and
will be reflected on your account statement. CSI will consider various factors when
considering share class conversion in your advisory accounts, including but not limited
to, the net expense ratios of the share classes, whether your account is subject to taxation,
the difference in the expense ratios between share classes, the share class designated by
CSI for initial purchases, your investment preferences and amount of taxable gains or
losses to which you could be subject. The ability and length of time to affect a share class
conversion will vary by custodial platform and is subject to prospectus requirements and
custodial platform approval. Thus, if CSI determines to convert your mutual fund position
to a lower-cost share class, you may remain in the higher-cost class for some period of
time.
• Our affiliates receive additional compensation from advisory accounts that are invested in
accordance with the Citizens Private Wealth Portfolios because Citizens Bank receives
compensation for managing the model portfolios. Although our FAs will not receive
additional compensation as a result of the recommendation or selection of the Citizens
Private Wealth Portfolios, the fact that Citizens Bank receives additional compensation
creates a financial incentive for us to promote the services provided by our affiliated
Model Provider.
• We act as a broker/dealer in addition to acting as an investment adviser. If you open your
Managed Account Program account with securities previously purchased through us or
one or our representatives, you will already have paid a commission on the purchase to us
or our representative, or both. Similarly, if you open your account with cash proceeds
from the sale of securities through us or our representative, we, or our representative, or
both, may have already received commissions of the sale. Clients have the option of
obtaining certain of the investment products we recommend for our investment advisory
accounts through brokers or other agents that are not affiliated with us.
Changes in Our Fee Schedule
We and the Platform Manager may revise the Program Fees on an annual basis by giving you at
least 30 days prior notice. You will be deemed to have approved a fee change unless you object
to the fee change by sending written notice to us within 30 days from the date of the fee change
notification.
Account Termination
Your Managed Account Program Investment Management Agreement (IMA) is not effective
until it is accepted by us and the Platform Manager. In addition, you, we, and the Platform
Manager each have the option to terminate your Managed Account Program IMA by providing
at least 30 days prior written notice to the other parties. In the event of termination, you will be
refunded any Managed Account Program Fees that have been prepaid but have not yet been
earned.