A. About Fifth Third Securities
Fifth Third Securities, Inc. (“FTS” or “we”) is a registered broker-dealer member of Financial Industry
Regulatory Authority (“FINRA”) and
SIPC (www.SIPC.org), and a registered investment adviser with the U.S.
Securities and Exchange Commission (registration does not imply a certain level of skill or training). FTS is
a direct wholly-owned subsidiary of Fifth Third Bank, National Association (“FTB”). FTB is a full-service
bank (see
Item 9.B. Other Financial Industry Activities and Affiliations for more information). Brokerage
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and investment advisory services and fees differ, and it is important for clients to understand the
differences between these two types of services.
IMPORTANT – Read before you open a Passageway Account – The FTS’ Customer Relationship Summary
(Form CRS) provides important information about both of brokerage and investment advisory services, and
clients should review Form CRS prior to making any decision to engage FTS for either brokerage or
investment advisory services. The current version of FTS’ Form CRS can be requested from your
Investment Advisor Representative (“IAR”) or found by going to the websit
e 53.com/ftsdisclosure.
B. Passageway Investment Management Programs
FTS is the sponsor of the Passageway Managed Account Program (“Passageway”), a program that provides
various investment management services to clients. Passageway is accessed through the Fidelity Managed
Account Xchange (“FMAX”) platform, of which Fidelity Institutional Wealth Adviser LLC (“FIWA”) is the
platform sponsor.
Additional services included in Passageway: brokerage and custodial services for Passageway accounts,
performance reporting, and assistance with investment style selection and asset allocation strategies.
Passageway is not intended for investors who want to frequently switch investments from one style or
strategy to another in reaction to short-term trends.
FTS makes various portfolio managers available in Passageway (each a “Portfolio Manager” and
collectively, “Portfolio Managers”). An IAR of FTS will meet with a prospective client to interview and
complete an investor profile. During this interview the IAR gathers information regarding the client’s risk
tolerance, investment objectives, and other financial information. With this data, the IAR assists the client
in determining whether Passageway is appropriate for them and recommends one or more Passageway
programs to the client. A client choosing to open a Passageway account will sign an Investment
Management Agreement and a Statement of Investment Selection (Passageway accounts opened prior to
February 2007 would have signed an Investment Policy Statement in lieu of the Statement of Investment
Selection) with FTS, as well as an agreement to open an account with National Financial Services LLC
(“NFS”). An advisory relationship exists between the client and FTS once the Investment Management
Agreement and Statement of Investment Selection have been reviewed and accepted by FTS’ Principal
Review Desk.
NFS is FTS’ clearing brokerage and custodial services provider, to custody client assets invested by the
client in Passageway. NFS is a registered broker/dealer and is not an affiliated entity of FTS. Most or all
security transactions for Passageway accounts are executed through NFS as the clearing broker/dealer.
However, Portfolio Managers sometimes trade with other broker/dealers to achieve best execution,
obtain a wider variety of securities, or take advantage of favorable mark-ups or mark-downs available
elsewhere. FTS can at any time change the clearing broker and custodian for the client’s account. The
discretion delegated to Portfolio Managers includes the discretion to select broker-dealers for the
execution of transactions to achieve best execution. FTS and Portfolio Managers have no authority or duty
to manage any of the client’s assets that are not within Passageway. Participating in any of the
Passageway programs entails risk. For more information about some of these risks please see
Item 6.C. 2)
Methods of Analysis, Investment Strategies and Risk of Loss and the Portfolio Managers’ Form ADV Part 2A,
if applicable.
For Passageway Programs investing in stocks or ETFs, Passageway clients will be unable to automatically
reinvest dividends into the stock or ETF originating the divided.
Fiduciary Duties. Under federal law, a registered investment adviser, such as FTS, is a fiduciary to its
investment advisory clients (a/k/a Passageway clients). FTS’ fiduciary duty includes, but is not limited to, a
duty of care and a duty of loyalty. The duty of loyalty requires FTS, and our IARs, not to place our own
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interest ahead of our Passageway clients’ interests. FTS is to make appropriate disclosures to our
Passageway clients, which is done through a number of documents, such as this Brochure. These
disclosures help provide material information relating to the advisory relationship and FTS. The duty of
care requires, among other things, the duty for FTS to provide advice that is in the best interest of our
Passageway clients, a duty to monitor the client’s managed investments in Passageway accounts, and the
ongoing suitability of those investments, over the course of the advisory relationship. As part of FTS’ duty
of care, it our responsibility to understand the client’s objectives for the investments which we manage
under Passageway, the client’s risk tolerance (e.g., how much risk and losses you are willing to take for the
potential of gains in their Passageway account), and other financial profile information (e.g., annual
income, estimated net worth, liquid assets, federal tax bracket, etc.). This information is needed in order
to have a reasonable belief that the advice we provide is in the best interest of the Passageway client.
Additionally, when FTS provides investment advice to clients of Passageway regarding their retirement
plan account or individual retirement account, FTS is 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. The way FTS makes money creates conflicts with your interests, so FTS
operates under a rule that requires us to act in the client’s best interest and not put our interest ahead of
our clients.
Reasonable Restrictions. Clients have the opportunity to place reasonable restrictions on the types of
investments that will be managed on the client's behalf within Passageway accounts. The client must
provide these restriction requests to FTS in writing. If FTS, Fidelity Institutional Wealth Adviser, LLC
(“FIWA”), or a Portfolio Manager deem the restriction request unreasonable, FTS will notify the client of
the rejection of the restriction request in writing. Clients can request two types of restrictions on their
Passageway account: 1) individual security restrictions, and 2) industry restrictions.
Individual security restrictions will only apply to that specific security that is identified by a symbol or
CUSIP, and the restriction will not apply to other securities that hold that individual security, such as
mutual funds and exchange traded funds. For example, if a client has an accepted restriction request for
Microsoft stock (symbol ‘MSFT’), the client’s Passageway account will not purchase Microsoft stock.
However, a mutual fund held in the client’s Passageway account can be invested in Microsoft, and
therefore, the client has an indirect investment still in Microsoft.
Industry restrictions apply to general sectors of industry. Some examples of industry restrictions include,
but are not limited to, Resorts & Casinos, Tobacco, Wineries & Distilleries, and Auto Manufacturers.
Clients do not have the ability to determine what securities are included or excluded within an industry
restriction nor can clients determine the criteria that is used to include or exclude a security within an
industry restriction. If a client requests an industry restriction in a Passageway account, the client is
accepting the FTS, FIWA, or the Portfolio Manager’s determination of what securities are included and
excluded from the industry restriction.
Limitation of Products and Types of Products - FTS offers a wide range of investment products, advisory
services, and other services to help meet your financial needs. However, we do not offer the same
investment products, Portfolio Managers, or product types that are available through other broker-dealers
or registered investment advisors. This limitation is due to various reasons that include, but are not limited
Critically Important Client Responsibility: You need to promptly notify the FTS’ IAR that you
work with of changes to your risk tolerance, investment objectives, or financial circumstances
that differ from the financial profile information that you previously provided to FTS, so that your
Passageway account can be reevaluated for potential changes.
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to, the product company or Portfolio Manager has not passed our due diligence process, we do not have a
contract with the product company or Portfolio Manager, the Portfolio Manager is not available through
FIWA, or the product, product type, or Portfolio Manager, or the product company is outside of our
current business model or the amount of risk associated with the company or product is too great.
Dollar Cost Averaging - FTS’ IARs can use dollar-cost averaging when making purchases of securities in
Passageway accounts with the exception of accounts in the Advisor Directed Program. Dollar-cost
averaging is the investment strategy of regularly or periodically making purchases of a security or
securities over a time period instead of making the purchases at a single point in time. Dollar-cost
averaging attempts to help address the volatility risk that sometimes occurs in the markets or with a single
security. An example of dollar-cost averaging is when investing $15,000 into one security and instead of
purchasing it all at once, the IAR or Portfolio Manager makes a purchase of $5,000 of the same security
once a month for three months.
FTS limits the timeframe in which dollar-cost averaging can be used to a maximum of approximately 90
calendar days. Actual calendar days may exceed 90 calendar days if the 90th day falls on a weekend or a
day which the securities markets are closed. Dollar-cost averaging does not prevent losses, and the use
of dollar-cost averaging can result in paying more for a security or securities than if the security or
securities were purchased all at one time.
Terminating Passageway Services. Either FTS or the client can terminate participation in Passageway at
any time by providing thirty (30) days written notice to the other party. The client will be charged a pro-
rated investment advisory fee for the portion of any billing period during which the account is open (see
Investment Management Agreement within (5) business days from the client signing the Investment
Management Agreement. If a client terminates the Investment Management Agreement within five (5)
business days from the client signing the Investment Management Agreement, then the client is not
charged an investment advisory fee. FTS reserves the right to distribute the assets of a client’s account
in-
kind (a delivery or transfer of securities held in the Passageway account instead of in cash) upon
termination of the account by either party. FTS will generally evaluate a Passageway account for
termination if there has been no IAR initiated transactional activity (e.g., buys or reallocations) for a period
greater than 18 months (withdrawals from the Passageway account are excluded). If after the completion
of the review FTS determines that it is appropriate to terminate the Passageway account, FTS will
terminate the Investment Management Agreement by providing thirty (30) days prior written notice to the
client. Upon notification that an account owner has died, the Investment Management Agreement is
immediately terminated and is no longer a Passageway account. Any subsequent trades placed based
upon instructions from the executor, heirs, or beneficiaries are subject to standard fees and commissions
of a brokerage account. See the Standard Commission and Fee Schedule at
53.com/ftsdisclosure for more
information.
Fidelity Institutional Wealth Adviser, LLC (“FIWA”). FIWA oversees the technology platform on which
Passageway functions for Passageway Accounts. Beginning November 17, 2023, FTS will access tools and
related services as well as research and additional information about investment products offered through
the FMAX platform, which assists FTS’ IARs in building personalized solutions for FTS’ clients. For more
information about the FMAX platform and the research and risk ratings of investment products on FMAX,
as well as other investment tools and related services, please see the current FIWA brochure describing
FMAX. Additionally, FIWA provides due diligence for the majority of Portfolio Managers in the SMA
Program, and the majority of the mutual funds and exchange traded funds/notes available through the
Advisor Directed Program and the mutual funds and exchange traded funds/notes managed by FTS’ IARs in
the Passageway One Program. See the “Passageway FTS Only Due Diligence List”
at 53.com/ftsdisclosure
for more information on which SMA Managers, mutual funds, and exchange traded funds/notes that FIWA
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does not provide due diligence services.
Passageway Programs. Passageway consists of the below referenced separate programs. Clients can, in
consultation with an IAR and signing the corresponding Investment Management Agreement, elect to
participate in one or more of the following programs.
1) Passageway One Program
The Passageway One Program provides the opportunity for clients to have multiple Portfolio Managers
and different types of Portfolio Managers that can manage assets under a single account. FTS requires
that at least one Portfolio Manager who is not an IAR of FTS be selected in a Passageway One Program
account. In the Passageway One Program, client appoints FTS as the Portfolio Manager, and as the
Portfolio Manager FTS has the discretionary authority to:
a) Design, implement, and change the asset allocation used in conjunction with the
Passageway One Program Account including making all investment decisions with respect to
the client’s account(s) when FTS deems appropriate and without prior consultation with the
client, to invest, reinvest, buy, sell, exchange, convert and otherwise trade in any security or
investment.
b) Add and/or remove any Portfolio Manager(s) that are available under any of the
Passageway Programs (with the exclusion of the Passageway Focus Program) to manage the
assets or portion of the assets in the Passageway One Account.
c) FTS’ IARs can act as the Portfolio Manager and provide investment management services on
the assets or a portion of the assets in the Passageway One Account utilizing mutual funds,
exchange traded funds, and/or exchange traded notes.
d) Increase, decrease, or otherwise change the dollar amount or the assets managed by a
Portfolio Manager in the Account, including when an IAR(s) is serving as a Portfolio
Manager.
The above discussed discretionary authority allows FTS, FTS’ IARs acting as the Portfolio Manager, and any
other Portfolio Manager selected by FTS to take any and all of the above actions without prior consultation
with the client. In addition, this discretionary authority allows FTS to invest a client’s accounts/assets in a
lower risk tolerance up to two levels than the client has selected. Please see below for a list of risk
tolerances in the Passageway One Program, which are listed in order of the riskiest to the least risky. For
example, if a client has selected the risk tolerance as Aggressive Growth, then when FTS deems it
appropriate, FTS could move the client’s account/assets to reflect a Moderate Growth risk tolerance.
However, in this example FTS would not be able to move the client’s account/assets to reflect a Moderate
or lower risk tolerance since any risk tolerance of Moderate or lower is more than two levels below the
client’s stated risk tolerance. Furthermore, this discretionary authority does not allow FTS to invest in a
higher risk tolerance than the client has selected.
Risk Tolerances
Aggressive Growth Conservative Growth
Growth Conservative
Moderate Growth Capital Preservation
Moderate
The Passageway One Program can provide investment management services for various investment styles
and objectives. Initial and ongoing due diligence on the assets within the Passageway One Program is
conducted by the Portfolio Manager, FIWA, or FTS. Due diligence performed by Portfolio Managers, FIWA,
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and FTS differ from each other.
The minimum account size for establishing an account in the Passageway One Program is $100,000;
however, Portfolio Managers impose their own minimum amount to manage a client’s assets. Therefore,
the minimum accounts size to use some Portfolio Managers in a Passageway One Account will be greater
than $100,000. Clients can ask the FTS IAR for the minimum amount a specific Portfolio Manager requires
to manage assets. FTS, at its discretion, can choose to terminate a client’s participation in a Passageway
One Program account if the account falls below $100,000.
The FTS IAR will provide the Portfolio Manager’s Form ADV Part 2A for each Portfolio Manager that the FTS
IAR selects. Clients should refer to the applicable Portfolio Manager’s Form ADV Part 2A for additional
information and details about the Portfolio Manager. Additionally, the Passageway One operates under
FIWA’s “Unified Managed Account Program” also known as the “UMA Program,” and the FTS IAR will
provide FIWA’s ADV Part 2A that includes information about FIWA and the UMA Program.
Tax Overlay Service: In conjunction with the Passageway One Program, clients can elect to utilize the Tax
Overlay Service for non-qualified accounts (e.g., non-retirement accounts). The Tax Overlay service seeks
to enhance the client’s after-tax returns by analyzing holdings and trading activities in an account. Tax
Overlay Service is completely optional to the client, and a client does not have to opt into receiving the Tax
Overlay Service in order to have a Passageway One Program account. Clients should seek the advice of
their tax professional prior to electing to utilize the Tax Overlay Services for their Passageway One
Program account. Clients should refer to FIWA’s ADV Part 2A and their State of Investment Selection for
additional information regarding the Tax Overlay Service. FTS and FTS’ IARs receive a portion of the Tax
Overlay Service fee, and as a result, FTS and FTS’ IARs have a conflict of interest when recommending the
Tax Overlay Service to a client.
2) Advisor Directed Program
In the Advisor Directed Program, FTS’ IARs provide investment management services to clients utilizing
mutual funds and/or exchange traded funds. Investment management services provided under the
Advisor Directed Program are limited to open-end mutual funds and exchange traded funds. The Advisor
Directed Program can provide investment management services for various investment styles and
objectives. Initial and ongoing due diligence for the mutual funds and exchange traded funds available
within the Advisor Directed Program is conducted by FIWA or FTS. Due diligence performed by FIWA and
FTS differ from each other. Clients grant FTS limited discretionary authority to manage Advisor Directed
Program account assets. Such limited discretionary authority allows FTS to make all investment decisions
with respect to the client’s account(s) when FTS deems appropriate and without prior consultation with
the client, to buy, sell, exchange, convert and otherwise trade in any mutual fund or exchange traded fund
approved by FTS or FIWA. In addition, this limited discretionary authority allows FTS to invest a client’s
accounts/assets in a lower risk tolerance up to two levels than the client has selected. Please see below
for a list of risk tolerances in the Advisor Directed Program, which are listed in order of the riskiest to the
least risky. For example, if a client has selected the risk tolerance as Aggressive Growth, then when FTS
deems it appropriate, FTS could move the client’s account/assets to reflect a Moderate Growth risk
tolerance. However, in this example FTS would not be able to move the client’s account/assets to reflect a
Moderate or lower risk tolerance since any risk tolerance of Moderate or lower is more than two levels
below the client’s stated risk tolerance. Furthermore, this limited discretionary authority does not allow
FTS to invest in a higher risk tolerance than the client has selected.
Risk Tolerances
Aggressive Growth Conservative Growth
Growth Conservative
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Moderate Growth Capital Preservation
Moderate
The minimum account size for establishing an account in the Advisor Directed Program is $50,000. FTS, at
its discretion, can choose to terminate a client’s participation in an Advisor Directed Program account if
the account falls below $50,000.
3) Separately Managed Account Program (“SMA Program”)
In the SMA Program, the client grants FTS and FIWA discretionary authority to manage the assets in
client’s SMA Program account(s) and to delegate such authority to selected Portfolio Manager(s). Such
discretionary authority allows FTS’ delegate, the Portfolio Manager(s), to make investment decisions with
respect to the account(s) when the Portfolio Manager(s) deems appropriate and without prior consultation
with client to invest, reinvest, sell, exchange, and otherwise trade in any stocks, bonds, and other
securities, subject to any reasonable investment restrictions made by the client. Client can select one
Portfolio Manager or multiple Portfolio Managers, provided the client has sufficient assets for multiple
Portfolio Managers. FTS’ IARs will assist clients in selecting Portfolio Managers on an account-by-account
basis. Portfolio Managers that are available within the SMA Program can provide investment management
services for various investment styles and objectives. For a complete list of Portfolio Managers available
within the SMA Program please contact an IAR of FTS. In the SMA Program, the client chooses the Portfolio
Manager(s). FTS will not fire a Portfolio Manager on behalf of a client without the client’s approval with
the exception when a Portfolio Manager has been removed from the SMA Program. FTS and FIWA retain
the right to terminate a Portfolio Manager's participation in Passageway. When a Portfolio Manager is
removed from the SMA Program, clients utilizing this Portfolio Manager are notified by their IAR of this
event. The IAR will work with clients to identify another Portfolio Manager or Passageway program that
corresponds with their investment objectives and risk tolerance.
The FTS IAR will distribute the Portfolio Manager’s Form ADV Part 2A for each Portfolio Manager that the
FTS IAR recommends. Clients should refer to the applicable Portfolio Manager’s Form ADV Part 2A for
additional information and details about the Portfolio Manager.
The minimum account size per Portfolio Manager account in the SMA Program is $100,000 or more, based
on the specific Portfolio Manager chosen by the client. FTS, at its discretion, can choose to terminate a
client’s participation in an SMA Program account if the account falls below the account opening minimum.
4) Investment Management Group Portfolios Program (“IMG Program”)
In the IMG Program, (formerly known as the
Nationally Recognized Mutual Fund Portfolio Program and the
Managed Mutual Fund Program), the client grants FTB authority to manage the IMG Program account(s)
assets (see
Item 9.B. Other Financial Industry Activities and Affiliations for more information about this
conflict of interest). Such discretionary authority allows FTB to make investment decisions with respect to
the account(s) when FTB deems appropriate and without prior consultation with client, to buy, sell,
exchange, convert and otherwise trade in open-end mutual funds and exchange-traded funds (“ETFs”),
subject to any reasonable investment restrictions made by the client. FTB recommends an asset allocation
model for IMG Program accounts based upon the risk tolerance, investment objectives, and financial
information provided by the client. FTB has the following seven different asset allocation models:
MODEL DESCRIPTION
Aggressive Growth
The Aggressive Growth model seeks long-term capital
appreciation. The model has a diversification strategy that
has a very heavy emphasis on stocks and a small allocation
to fixed income.
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Growth
The Growth model seeks long-term capital appreciation. The
model has a diversification strategy that has a heavy
emphasis on stocks and a small allocation to fixed income.
Moderate Growth
The Moderate Growth model seeks long term capital
appreciation and growth of income. The model will have a
diversification strategy that has an emphasis on stocks.
Moderate
The Moderate model seeks high total return consistent with
the preservation of capital. The model has a diversification
strategy that normally emphasizes stocks slightly more than
bonds.
Conservative Growth
The Conservative Growth model seeks income and capital
appreciation. The model has a diversification strategy that
has an emphasis on bonds, which have historically had less
volatility than stocks.
Conservative
The Conservative model seeks income and capital
appreciation. The model has a diversification strategy that
has a heavy emphasis on bonds, which have historically had
less volatility than stocks.
Capital Preservation
The Capital Preservation model seeks income and capital
appreciation. The model has a diversification strategy that
has a very heavy emphasis on bonds, which have historically
had less volatility than stocks.
The IMG Program asset allocation models, except for the Aggressive model, have the availability to have a
tax-efficient focus (FTS does not provide tax or legal advice).
The IMG Program can provide investment management services for various investment styles and
objectives. For a complete list of mutual funds and ETFs available within the IMG Program please contact
an IAR of FTS. Additionally, the IMG Program falls under FIWA’s “Fund Strategist Portfolio Program” also
referred to as the “FSP Program”, and clients can find additional information about FIWA’s FSP Program in
FIWA’s ADV Part 2A.
The minimum account size for participation in the IMG Program is $50,000. FTS or FTB, at its discretion,
can choose to terminate a client’s participation in an IMG Program account if the IMG Program account
falls below $50,000.
Important Conflicts of Interest regarding IMG Program – FTS has several conflicts of interest when
recommending the IMG Program to clients, including financial conflicts of interest. Refer to Item 4.C.1)
NFS, and Portfolio Manager Fees and Item 9.B.2)a. -
Additional Conflicts of Interest-Fifth Third Bank,
National Association (FTB) in this Brochure for more information about these conflicts of interest. Clients
should not open an IMG Program account until they have reviewed these conflicts of interest disclosures
and posed any questions to FTS or their FTS’ IAR.
5) Symmetry Managed Mutual Fund Portfolio Program (“Symmetry Program”)
In the Symmetry Program, the client grants Symmetry Partners, LLC (“Symmetry”) the discretionary
authority to manage the assets in client’s Symmetry Program account. Such discretionary authority allows
Symmetry to make investment decisions with respect to the account(s) when Symmetry deems
appropriate and without prior consultation with client, to invest, reinvest, sell, exchange, and otherwise
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trade in any mutual fund or exchange-traded fund subject to any reasonable investment restrictions made
by the client. The Symmetry Program can provide investment management services for various
investment styles and objectives. Clients should refer to the applicable Symmetry’s Form ADV Part 2A for
additional information and details about Symmetry.
In some Symmetry models, investment management services provided by Symmetry within the Symmetry
Program primarily utilize mutual funds created and managed by Dimensional Fund Advisors (“DFA”). As a
result, Symmetry’s investment management services will be generally limited to DFA mutual funds, which
can adversely affect the performance of the Passageway account. Additionally, the Symmetry Program
falls under FIWA’s “Fund Strategist Portfolio Program” also referred to as the “FSP Program”, and clients
can find additional information about FIWA’s FSP Program in FIWA’s ADV Part 2A. The minimum account
size for establishing an account in the Symmetry Program is $50,000. FTS or Symmetry, at its discretion,
can choose to terminate a client’s participation in a Symmetry Program account if the account falls below
$50,000.
6) Goldman Sachs Multi-Manager Mutual Fund Portfolio Program (“Goldman Sachs
Mutual Fund Program”) – formerly known as the Standard and Poor’s Managed Mutual
Fund Portfolio Program
In the Goldman Sachs Mutual Fund Program, the client grants FIWA the discretionary authority to manage
assets. Such discretionary authority allows FIWA to make investment decisions with respect to the
account(s) when FIWA deems appropriate and without prior consultation with client, to invest, reinvest,
sell, exchange, convert and otherwise trade in any mutual fund subject to any reasonable investment
restrictions made by the client. FIWA has retained Goldman Sachs Asset Management, L.P. (“Goldman
Sachs”) to assist with the recommendation of models made up of mutual funds and the asset allocation of
those mutual funds. The Goldman Sachs Mutual Funds Program can provide investment management
services for various investment styles and objectives. Clients should refer to Goldman Sachs’ Form ADV
Part 2A, and FIWA’s ADV Part 2A for additional information and details about FIWA and Goldman Sachs.
Additionally, the Goldman Sachs Mutual Fund Program falls under FIWA’s “Fund Strategist Portfolio
Program” also referred to as the “FSP Program”, and clients can find additional information about FIWA’s
FSP Program in FIWA’s ADV Part 2A.
The minimum account size for establishing an account in the Goldman Sachs Mutual Fund Program is
$50,000. FTS or FIWA, at its discretion, can choose to terminate a client’s participation in a Goldman Sachs
Mutual Fund account if the account falls below $50,000.
Clients should note that Goldman Sachs is also an asset manager available under the Passageway SMA
Program and provides recommendations to FIWA in the Goldman Sachs ETF Program (listed below).
Clients can determine if they are in the SMA Program, the Goldman Sachs ETF Program, or the Goldman
Sachs Mutual Fund by speaking with their IAR or by reviewing the
Statement of Investment Selection that
was signed at the opening of the Passageway account. For the Goldman Sachs Mutual Fund Program, the
Statement of Investment Selection will have a reference to “Mutual Fund” under the
Investment Type field
(e.g., Goldman Sachs Multi-Manager 50/50 Mutual Fund Model Portfolio Fund Strategist Portfolio). The
Goldman Sachs ETF Program, the Statement of Investment Selection will have a reference to “ETF” under
the Investment Type field (e.g., Goldman Sachs Multi-Manager 50/50 ETF Model Portfolio Fund Strategist
Portfolio). Whereas, the Passageway SMA Program will generally have the reference of “Separate
Account” in the name of the
Investment Type (e.g., Goldman Sachs S&P 4 Managed Account Separate
Account).
7) Goldman Sachs Multi-Manager Exchange Trade Funds Portfolio Program (“Goldman
Sachs ETF Program”) – formerly known as the Standard and Poor’s Exchange Trade
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Funds Portfolio Program
In the Goldman Sachs ETF Program, the client grants FIWA the discretionary authority to manage assets.
Such discretionary authority allows FIWA to make investment decisions with respect to the account(s)
when FIWA deems appropriate and without prior consultation with client, to invest, reinvest, sell,
exchange, and otherwise trade in any exchange-traded fund subject to any reasonable investment
restrictions made by the client. FIWA has retained Goldman Sachs Asset Management, L.P. to assist with
the recommendation of models consisting of exchange-traded funds and the asset allocation of those
exchange-traded funds. The Goldman Sachs ETF Program can provide investment management services
for various investment styles and objectives. Clients should refer to Goldman Sachs’ Form ADV Part 2A,
and FIWA’s ADV Part 2A for additional information and details about FIWA and Goldman Sachs.
Additionally, the Goldman Sachs ETF Program falls under FIWA’s “Fund Strategist Portfolio Program” also
referred to as the “FSP Program”, and clients can find additional information about FIWA’s FSP Program in
FIWA’s ADV Part 2A.
The minimum account size for establishing an account in the Goldman Sachs ETF Program is $50,000. FTS
or FIWA, at their discretion, can choose to terminate a client’s participation in a Goldman Sachs ETF
account if the account falls below $50,000.
Clients should note that Goldman Sachs is also an asset manager available under the Passageway SMA
Program and provides recommendations to FIWA in the Goldman Sachs Mutual Fund Program (listed
above). Clients can determine if they are in the SMA Program, the Goldman Sachs ETF Program, or the
Goldman Sachs Mutual Fund by speaking with their IAR or by reviewing the
Statement of Investment
Selection that was signed at the opening of the Passageway account. For the Goldman Sachs Mutual Fund
Program, the Statement of Investment Selection will have a reference to “Mutual Fund” under the
Investment Type field (e.g., Goldman Sachs Multi-Manager 50/50 Mutual Fund Model Portfolio Fund
Strategist Portfolio). The Goldman Sachs ETF Program, the Statement of Investment Selection will have a
reference to “ETF” under the Investment Type field (e.g., Goldman Sachs Multi-Manager 50/50 ETF Model
Portfolio Fund Strategist Portfolio). Whereas, the Passageway SMA Program will generally have the
reference of “Separate Account” in the name of the
Investment Type (e.g., Goldman Sachs S&P 4 Managed
Account Separate Account).
8) Fund Evaluation Group Managed Program (“FEG Program”)
In the FEG Program, the client grants FIWA the discretionary authority to manage assets. FIWA has
retained Fund Evaluation Group, LLC (“FEG”) to assist with the recommendation of models made up of
mutual funds and/or exchange-traded funds and the asset allocation of those assets. This discretionary
authority allows FIWA to invest, reinvest, sell, exchange, and otherwise manage the client’s assets in the
Passageway account at FIWA’s discretion, including but not limited to, when FIWA deems appropriate and
without prior consultation with client, to select, allocate, reallocate, and sell the assets in the client’s
account to different mutual funds and/or exchange-traded funds. The FEG Program can provide
investment management services for various investment styles and objectives. Clients should refer to
FEG’s Form ADV Part 2A, and FIWA’s Form ADV Part 2A for additional information and details about FIWA
and FEG. Additionally, the FEG Program falls under FIWA’s “Fund Strategist Portfolio Program” also
referred to as the “FSP Program”, and clients can find additional information about FIWA’s FSP Program in
FIWA’s ADV Part 2A.
The minimum account size for establishing an account in the FEG Program is $50,000. FTS or FIWA, at its
discretion, can choose to terminate a client’s participation in an FEG account if the account falls below
$50,000.
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9) Wilshire Program
In the Wilshire Program, the client grants FIWA the discretionary authority to manage assets. FIWA has
retained Wilshire Associates, Inc. (“Wilshire”) to assist with the recommendation of models made up of
mutual funds and the asset allocation of those assets. This discretionary authority allows FIWA to invest,
reinvest, sell, exchange, and otherwise manage the client’s assets in the Passageway account at FILA’s
discretion (FIWA, including but not limited to, when FIWA deems appropriate and without prior
consultation with client, to select, allocate, reallocate, and sell the assets in the client’s account to
different mutual funds. The Wilshire Program can provide investment management services for various
investment styles and objectives. Clients investing in the Wilshire Diversified Alternatives Portfolio should
be aware that Wilshire uses mutual funds that use investment strategies that differ from the buy-and-hold
strategy typical in the mutual fund industry, and these mutual funds typically hold more non-traditional
investments and employ more complex trading strategies. Please refer to Item 6.C.2)
Methods of Analysis,
Investment Strategies and Risk of Loss for more information regarding the potential risks of portfolios
using alternative mutual funds. Clients investing in the Wilshire Diversified Alternatives Portfolio should
also review the prospectuses of the mutual funds making up this portfolio strategy. Clients should refer to
Wilshire’s Form ADV Part 2A, and FIWA’s ADV Part 2A for additional information and details about FIWA
and Wilshire. Additionally, the Wilshire Program falls under FIWA’s “Fund Strategist Portfolio Program”
also referred to as the “FSP Program”, and clients can find additional information about FIWA’s FSP
Program in FIWA’s ADV Part 2A.
The minimum account size for establishing an account in the Wilshire Program is $50,000. FTS or FIWA, at
its discretion, can choose to terminate a client’s participation in a Wilshire account if the account falls
below $50,000.
10) Russell Investment Management Program (“Russell Program”)
In the Russell Program, the client grants FIWA the discretionary authority to manage assets. FIWA has
retained Russell Investment Management, LLC (“Russell”) to assist with the recommendation of
investments and models. It is expected that the investment recommendations will solely be made up of
funds available by Russell’s affiliated entity Russell Investment Company in which Russell serves as the
investment adviser and the funds are affiliated products of Russell. See Item 9.C. –
Additional Conflicts of
Interest in this Brochure for additional information regarding this conflict of interest. This discretionary
authority allows FIWA to invest, reinvest, sell, exchange, and otherwise manage the client’s assets in the
Passageway account at FIWA’s discretion, including but not limited to, when FIWA deems appropriate and
without prior consultation with client, to select, allocate, reallocate, and sell the assets in the client’s
account to different mutual funds and/or mutual funds. The Russell Program can provide investment
management services for various investment styles and objectives. Clients should refer to Russell’s Form
ADV Part 2A, FIWA’s Form ADV Part 2A for additional information and details about FIWA, and Russell.
Additionally, the Russell Program falls under FIWA’s “Fund Strategist Portfolio Program” also referred to as
the “FSP Program”, and clients can find additional information about FIWA’s FSP Program in FIWA’s ADV
Part 2A.
The minimum account size for establishing an account in the Russell Program is $50,000. FTS or FIWA, at
its discretion, can choose to terminate a client’s participation in a Russell account if the account falls below
$50,000.
11) Vanguard Investment Management Program (“Vanguard Program”)
In the Vanguard Program, the client grants FIWA the discretionary authority to manage assets. FIWA has
retained The Vanguard Group Inc. (“Vanguard”) to assist with the recommendation of investments and
models. It is expected that the investment recommendations will solely or primarily be made up of mutual
funds and exchange traded funds made available by Vanguard or affiliated entity(ies) of Vanguard in which
05/20/2024 Passageway Managed Account Wrap Fee Program Brochure Page 14 of 46
Vanguard serves as the investment adviser and the mutual funds and exchange traded funds are affiliated
products of Vanguard. See
Item 9.C. –
Additional Conflicts of Interest of this Brochure for additional
information regarding this conflict of interest. This discretionary authority allows FIWA to invest, reinvest,
sell, exchange, and otherwise manage the client’s assets in the Passageway account at FIWA’s discretion,
including but not limited to, when FIWA deems appropriate and without prior consultation with client, to
select, allocate, reallocate, and sell the assets in the client’s account to different mutual funds and/or
mutual funds. The Vanguard Program can provide investment management services for various
investment styles and objectives. Clients should refer to Vanguard’s Form ADV Part 2A, FIWA’s Form ADV
Part 2A for additional information and details about FIWA and Vanguard. Additionally, the Vanguard
Program falls under FIWA’s “Fund Strategist Portfolio Program” also referred to as the “FSP Program”, and
clients can find additional information about FIWA’s FSP Program in FIWA’s ADV Part 2A.
The minimum account size for establishing an account in the Vanguard Program is $50,000. FTS or FIWA,
at its discretion, can choose to terminate a client’s participation in a Vanguard account if the account falls
below $50,000.
12) Brinker
Capital Management Program (“Brinker Capital Program”)
In the Brinker Capital Program, the client grants FIWA the discretionary authority to manage assets. FIWA
has retained Orion Portfolio Solutions, LLC dba Brinker Capital Investments (“Brinker Capital”) to assist
with the recommendation of investments and models. This discretionary authority allows FIWA to invest,
reinvest, sell, exchange, and otherwise manage the client’s assets in the Passageway account at FIWA’s
discretion, including but not limited to, when FIWA deems appropriate and without prior consultation with
client, to select, allocate, reallocate, and sell the assets in the client’s account to different mutual funds
and/or exchange-traded funds. The Brinker Program can provide investment management services for
various investment styles and objectives. Clients should refer to Brinker Capital’s Form ADV Part 2A, and
FIWA Form ADV Part 2A for additional information and details about Brinker Capital, and FIWA.
Additionally, the Brinker Program falls under FIWA’s “Fund Strategist Portfolio Program” also referred to as
the “FSP Program”, and clients can find additional information about FIWA’s FSP Program in FIWA’s ADV
Part 2A.
The minimum account size for establishing an account in the Brinker Capital Program is $50,000. FTS or
FIWA at its discretion, can choose to terminate a client’s participation in a Brinker Capital account if the
account falls below $50,000.
13) AllianceBernstein Dynamic Multi-Asset Program (“AllianceBernstein Program”)
In the AllianceBernstein Program, the client grants FIWA the discretionary authority to manage assets.
FIWA has retained AllianceBernstein, L.P. (“AllianceBernstein”) to assist with the recommendation of
investments and models. This discretionary authority allows FIWA to invest, reinvest, sell, exchange, and
otherwise manage the client’s assets in the Passageway account at FIWA’s discretion, including but not
limited to, when FIWA deems appropriate and without prior consultation with client, to select, allocate,
reallocate, and sell the assets in the client’s account to different mutual funds and/or exchange-traded
funds. The AllianceBernstein Program can provide investment management services for various
investment styles and objectives. Clients should refer to AllianceBernstein’s Form ADV Part 2A and FIWA’s
Form ADV Part 2A for additional information and details about AllianceBernstein, and FIWA. Additionally,
the AllianceBernstein Program falls under FIWA’s “Fund Strategist Portfolio Program” also referred to as
the “FSP Program”, and clients can find additional information about FIWA’s FSP Program in FIWA’s ADV
Part 2A.
The minimum account size for establishing an account in the AllianceBernstein Program is $50,000. FTS or
FIWA, at its discretion, can choose to terminate a client’s participation in an AllianceBernstein account if
the account falls below $50,000.
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Clients should note that AllianceBernstein is also an asset manager available under the Passageway SMA
Program. Clients can determine if they are in the SMA Program or the AllianceBernstein Program by
speaking with their IAR or by reviewing the
Statement of Investment Selection that was signed at the
opening of the Passageway account. For the AllianceBernstein Program, the Statement of Investment
Selection will have a reference to “Multi-Asset” under the
Investment Type field (e.g., AB Dynamic Multi-
Asset Income 40/60 Strategy). Whereas, the Passageway SMA Program will generally have the reference
of “Separate Account” in the name of the
Investment Type (e.g., AB US Large Cap Growth Managed
Account Separate Account).
14) BlackRock Global Allocation Selects Program (“BlackRock Program”)
In the BlackRock Program, the client grants FIWA the discretionary authority to manage assets. FIWA has
retained BlackRock Advisors, LLC. (“BlackRock”) to assist with the recommendation of investments and
models. This discretionary authority allows FIWA to invest, reinvest, sell, exchange, and otherwise manage
the client’s assets in the Passageway account at FIWA’s discretion, including but not limited to, when FIWA
deems appropriate and without prior consultation with client, to select, allocate, reallocate, and sell the
assets in the client’s account to different mutual funds and/or exchange-traded funds. The BlackRock
Program can provide investment management services for various investment styles and objectives.
Clients should refer to BlackRock’s Form ADV Part 2A and FIWA’s Form ADV Part 2A for additional
information and details about BlackRock, and FIWA. Additionally, the BlackRock Program falls under
FIWA’s “Fund Strategist Portfolio Program” also referred to as the “FSP Program”, and clients can find
additional information about FIWA’s FSP Program in FIWA’s ADV Part 2A.
The minimum account size for establishing an account in the BlackRock Program is $50,000. FTS or FIWA,
at its discretion, can choose to terminate a client’s participation in a BlackRock account if the account falls
below $50,000.
15) Passageway Focus Program
In the Passageway Focus Program, client grants FIWA the discretionary authority to manage assets. This
discretionary authority allows FIWA to invest, reinvest, sell, exchange, and otherwise manage the client’s
assets in the Passageway account at FIWA’s discretion, including but not limited to, when FIWA deems
appropriate and without prior consultation with client, to select, allocate, reallocate, and sell the assets in
the client’s account to different mutual funds and/or exchange-traded funds. The Passageway Focus
Program can provide investment management services for various investment styles and objectives.
Clients should refer to FIWA’s Form ADV Part 2A for additional information and details about FIWA.
The minimum account size for establishing an account in the Passageway Focus Program is $10,000. FTS or
FIWA, at its discretion, can choose to terminate a client’s participation in a Passageway Focus Program
account if the account falls below $10,000.
C. Investment Advisory Fee Information
Investment advisory fees (referred to as the “Program Fee” in the Investment Management Agreement)
are calculated at the beginning of each calendar quarter based upon the daily weighted average market
value of the assets under management for the previous quarter. Investment advisory fees are
automatically deducted from the client’s Passageway account, and are charged quarterly in arrears,
generally based on the
Passageway Program Standard Fee Schedule (see further below). Investment
advisory fees are negotiable between FTS and the Passageway client. Clients should refer to their
Investment Policy Statement or their Statement of Investment Selection to see the negotiated advisory fee
schedule for their specific Passageway account(s). FTS includes cash and cash equivalents positions in the
daily weighted average market value of the assets under management when FTS assesses investment
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Critically Important Conflict of Interest: The management fees paid by FTS to the Portfolio
Manager, and fees paid to FIWA directly reduces the amount an IAR will receive in
compensation. As a result, IARs have a financial incentive to recommend to a client a
Passageway Program that has lower fees as it will result in greater compensation to the IAR.
advisory fees. As a result, clients should limit the amount of cash or cash equivalents held in their
Passageway account.
For the initial calendar quarter in which a Passageway account is opened, the initial advisory fee will be
based upon the number of days the account is open and the daily weighted average market value of the
assets under management. Likewise, upon the termination of a Passageway account, an advisory fee will
be based upon the beginning date of the calendar quarter through the date of termination of the
Passageway account and the daily weighted average market value of the assets under management.
Clients should be aware that the investment management services provided under Passageway can be
more or less expensive than if the services were purchased separately or purchased at another financial
firm. A client could purchase services similar to those offered in Passageway from other financial services
providers. When determining the cost of purchasing services separately, clients should evaluate the costs
of brokerage commissions charged, the volume of trading activity in the account, transaction fees, wire
fees, trade-away fees, foreign security transfer fees, retirement account termination fees, custody charges,
fees charged for investment management services, fees for performance reporting, and the internal costs
of the assets purchased (e.g., mutual fund and ETF internal expenses).
The maximum investment advisory fee for all Passageway Programs is 1.50%.
1) FIWA, NFS, and Portfolio Manager Fees
FTS pays fees to FIWA for the platform and services FIWA renders under Passageway. FIWA fees are
assessed at the account level but are not directly paid by clients.
FTS pays NFS clearance and execution fees for trades placed in Passageway accounts. These clearance and
execution fees are generally based upon the type of security involved in the transaction (e.g., listed equity,
over-the-counter equities, municipal bonds, mutual fund, etc.). In addition, NFS makes transactions in
certain mutual funds and exchange traded funds/notes available to FTS at no cost if the mutual fund or
exchanged trade fund/note is part of NFS’ NTF Mutual Funds Program, NTF Managed Account Program,
and iNTF Managed Account Program. See “Conflicts Related to Clearing Firm (NFS)” under Item
9C. –
Additional Conflicts of Interest of this Brochure for important information regarding the conflicts of
interest related to these NFS fees and NFS’ NTF Mutual Funds Program, NTF Managed Account Program,
and iNTF Managed Account Program.
FTS pays management fees to the Portfolio Managers, excluding IARs, for the advisory services they render
under Passageway. These Portfolio Managers’ management fees vary and are based upon the market
value of the assets of a client’s Passageway account.
To aid in providing clients transparency regarding an IAR’s financial incentive to recommend one
Passageway Program over another, below is the schedule of fees FTS is charged for each Passageway
program:
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Advisor
Directed
Program
BlackRock
Program1
IMG
Program2
Passageway
Focus2
Passageway One
Program2
Goldman Sachs
ETF Program2
Goldman Sachs
Mutual Fund
Program2
SMA
Program
Wilshire
Program2
0.00% 0.02%
0.02%+ 0.10%++ Up to 0.50% (Fee
will vary by the
Portfolio
Manager(s)
selected)
0.17% 0.17% Up to
0.50%
0.22%
+ FTB acts as the Portfolio Manager for the IMG Program and is an affiliated entity of FTS. As a result, FTB
does not charge or directly receive a Portfolio Manager fee for its asset management services and the fee
is retained by FTS.
The lack of a management fee by FTB creates a conflict of interest for FTS and FTS’ IARs when the IMG
Program is recommended to a client, as FTS receives more in compensation in the IMG Program than in
other Passageway Programs. To help address this conflict of interest by having a separate group of
securities registered principals that review the solicited Passageway account recommendations by IARs,
and these registered principals do not directly receive compensation from the recommendations made by
IARs.
++ FTS is assessed a minimum fee of $10 per Passageway Focus account per year.
1 FTS does not pay a management fee to BlackRock. The BlackRock Program utilizes mutual funds and/or
exchange traded funds where BlackRock and/or an affiliated entity or entities of BlackRock receive
compensation through the management of those funds. Please refer to the corresponding prospectuses of
the BlackRock funds and
Item 9C. – Additional Conflicts of Interest in this Brochure for additional detail.
However, FIWA charges FTS 0.02% of the for BlackRock Program
2 0.02% of the listed fee reflects the amount FIWA charges FTS. This FIWA fee is included in the
investment advisory fee paid by the client, as reflected on the Statement of Investment Selection, and
does not reflect an additional charge to the client.
3
FTS does not pay a management fee to Symmetry Partners, LLC for the Panoramic Portfolios. The
Panoramic Portfolios within the Symmetry Program utilizes Symmetry Panoramic funds where Symmetry
receives compensation through the management of those funds. Please refer to the corresponding
prospectuses of the Symmetry Panoramic funds, Symmetry Partners, LLC’s ADV Part 2A, and
Item 9C. –
Additional Conflicts of Interest in this Brochure for additional detail. However, FIWA charges FTS 0.02% for
Symmetry Program accounts that use the Panoramic Portfolios.
4 FTS does not pay a management fee to AllianceBernstein. The AllianceBernstein Program utilizes
Symmetry Program2
PrecisionCore ETF Portfolios Panoramic
Portfolios
Structured Portfolios
(
closed to new accounts)
0.27% 0.02%3 0.27%
AllianceBernstein Program4 Brinker Capital Program5 FEG Program2 Russell Program6 Vanguard Program7
0.02% 0.02% 0.32% 0.00-0.02% 0.00-0.02%
05/20/2024 Passageway Managed Account Wrap Fee Program Brochure Page 18 of 46
AllianceBernstein mutual funds where AllianceBernstein and/or an affiliated entity or entities of
AllianceBernstein receive compensation through the management of those funds. Please refer to the
corresponding prospectuses of the AllianceBernstein funds and
Item 9C. – Additional Conflicts of Interest in
this Brochure for additional detail. However, FIWA charges FTS 0.02% of the for AllianceBernstein Program
accounts.
FTS does not pay a management fee to Brinker Capital. The Brinker Capital Program utilizes Brinker
Destination funds where Brinker Capital and/or an affiliated entity or entities of Brinker Capital receive
compensation through the management of those funds. Please refer to the corresponding prospectuses
for the Destination funds and
Item 9C. –
Additional Conflicts of Interest in this Brochure for additional
detail. However, FIWA charges FTS 0.02% for Brinker Capital Program accounts.
6 FTS does not pay a management fee to Russell. The Russell Program utilizes Russell Investment Company
funds where Russell and/or an affiliated entity or entities of Russell receive compensation through the
management of those funds. Please refer to the corresponding prospectuses of the Russell funds and
Item
9C. – Additional Conflicts of Interest in this Brochure for additional detail. However, FIWA charges FTS
0.02% for Russell Program accounts. This FIWA fee is included in the investment advisory fee paid by the
client, as reflected on the Statement of Investment Selection, and does not reflect an additional charge to
the client.
7 FTS does not pay a management fee to The Vanguard Group, Inc. The Vanguard Program utilizes
Vanguard mutual funds and exchange traded funds that receive compensation through the management
of those funds. Please refer to the corresponding prospectuses of the Vanguard mutual funds and
exchange traded funds and
Item 9C. – Additional Conflicts of Interest in this Brochure for additional detail.
However, FIWA charges FTS 0.02% for Vanguard Program accounts opened beginning June 1, 2017. This
FIWA fee is included in the investment advisory fee paid by the client, as reflected on the Statement of
Investment Selection, and does not reflect an additional charge to the client.
2) Passageway Program Standard Fee Schedule:
Investment advisory fees (referred to as the “Program Fee” in the Investment Management Agreement)
for the Passageway Program generally follow the below fee schedule*, but investment advisory fees can
be lower. Clients should refer to their Investment Policy Statement or their Statement of Investment
Selection to see the negotiated advisory fee schedule for their specific Passageway account(s).
Value of Account Advisory Fee
First $250,000 1.50%
Next $250,000 1.35%
Next $250,000 1.25%
Next $250,000 1.10%
Next $1,000,000 1.00%
Balance Above $2,000,000 0.80%
*In the Passageway One Program, if the client selects to receive the Tax Overlay service, the optional
service will have an additional fee on top of the Passageway Program Standard Fee Schedule, which means
that the total fees can be in excess of the total Passageway Program Standard Fee Schedule.
D. Client Householding Investment Advisory Fees
Clients can reduce their investment advisory fees when Passageway accounts are linked together to
aggregate total assets under management (hereafter referred to as “Householding”). By Householding
Passageway accounts, the client can potentially reach another tier on the investment advisory fee
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schedule that has a lower interest rate over that dollar amount.
For example, if a client has two Passageway accounts in the Advisor Directed Program using the standard
fee schedule (see above) and each of these accounts have a balance of $150,000, the combined assets of
the two Passageway accounts would be $300,000. Instead of each account receiving an investment
advisory fee charge of 1.5%, the Householding feature will result in the first $250,000 receiving a 1.5%
charge and the next $50, 000 will receive an investment advisory fee charge of 1.35%.
If the client has a flat percentage investment advisory fee (e.g., 1.40%) rather than an investment advisory
fee schedule, the client will not receive any reduction of investment advisory fees when Passageway
accounts are Householded. Householding Passageway accounts will not always result in a lower
investment advisory fee if the aggregated assets of the Householded accounts do not add up to enough to
reach the next tier of the client’s investment advisory fee schedule(s). For example, if the client had two
Passageway accounts Householded each holding $100,000 and the first tier of the investment advisory fee
schedule goes from $0 - $250,000, then the client would not receive a reduction in investment advisory
fees because the Householded aggregate asset amount is only $200,000, which is below the minimum
amount for the next tier ($250,001).
In order for the Passageway accounts to qualify for Householding, the Passageway accounts must meet
certain conditions. The current conditions for Householding are:
• Each of the Householded Passageway accounts being linked together must have the same IAR or IARs
associated. For example, if a client with a Passageway account that has an IAR (John Doe) and their
spouse has a different IAR (Jane Smith) who handles their Passageway account, the Passageway
accounts will not be Householded because the clients have different IARs.
• Each Householded Passageway account must be open (i.e., the investment advisory relationship has
not been terminated) at the end of the calendar quarter. For example, if a client has two Passageway
accounts that meet the all the conditions to receive Householding but terminates one of the
Passageway accounts during the calendar quarter including up to the last day of the calendar quarter,
then the Passageway accounts would not be Householded.
• Each Householded Passageway account must have the same mailing address listed with FTS. If a client
or clients that have two or more separate mailing addresses, even if the client or clients are related or
part of the same family (e.g., spouse, children, trust, etc.), the Passageway accounts are not eligible for
Householding. A client should never provide FTS with a mailing address that is not their own address.
If a client would provide FTS with another individual’s address, that individual at the other address
would receive the client’s statements and other communications from FTS and NFS rather than the
client; and
• If the client has additional non-Passageway accounts (e.g., brokerage accounts, annuities, 529 Plans,
etc.) these accounts and assets are not eligible for Householding.
Provided the above listed criteria are met and continue to be met, Householding will be applied to the
applicable Passageway accounts. Passageway accounts that are linked for Householding are not required
to be opened the same day to be eligible for Householding. Clients are not required to take any steps to
apply for Householding.
Important Consideration for Householding – When Passageway accounts are Householded together,
clients will receive only one Quarterly Performance Report that reflects all of the Householded Passageway
accounts. Clients desiring to receive separate Quarterly Performance Reports for Passageway accounts will
need to opt-out of Householding, which can result in paying more in investment advisory fees. Clients can
opt-out of Householding by providing a written request to:
05/20/2024 Passageway Managed Account Wrap Fee Program Brochure Page 20 of 46
Fifth Third Securities, Inc.
Attn: FTS Compliance Department
38 Fountain Square Plaza
MD: 1090AM
Cincinnati, OH 45263
However, if a client chooses to opt-out of Householding the client or clients will not receive the potential
benefit of lower investment advisory fees.
FTS can at any time choose to cease offering Householding or change the conditions of when or how
Passageway accounts are Householded. If FTS ceases to offer Householding or changes the conditions for
Householding, FTS will mail to clients a written notification approximately 30 calendar days in advance of
the change(s) taking effect.
E. IAR Compensation
A client’s IAR is generally paid a portion of the investment advisory fees (generally a percentage) charged
for a Passageway account. The specific amount the IAR will receive will depend on several factors,
including but not limited to, the role the IAR has with FTS (e.g., Investment Executive), how long the IAR
has been associated with FTS, and the total amount of revenue attributable to the IAR in a calendar year.
Specifically, IARs who meet certain revenue thresholds or tiers (e.g., dollar amounts such as $300,000) are
eligible for a higher payout percentage of the investment advisory fees, commissions, sales loads, trail
commissions, and/or fees from the sales and services associated with the IAR. For example, an IAR whose
revenue totaled $200,000 earns less as a percentage than an IAR whose revenue that has totaled
$400,000. These tiers create a conflict of interest as it provides a financial incentive for the IAR to increase
the revenue associated with them. To help address this conflict of interest, FTS has created an IAR
compensation schedule with multiple tiers in which an IAR can earn a higher payout. By creating multiple
tiers with smaller percentage increases, this decreases the financial incentive for an FTS IAR to act
inappropriately in order to obtain a higher payout percentage.
IARs in an “Investment Executive” role for five or more years or in a partnership with another Investment
Executive who has been in the role for five or more years, FTS pays a portion of the investment advisory
fees from Passageway accounts to the Investment Executive as the investment advisory fees are earned.
For all other IARs who can offer Passageway services, FTS will advance the first year’s estimated
investment advisory fees of a new Passageway account to an IAR based upon the market value of the
assets in the first month the assets are invested within the Passageway account. Then in the approximate
thirteenth month since the opening of the Passageway account, FTS will pay the IAR in advance that
month’s anticipated investment advisory fees based upon the market value of the Passageway account.
Compensation Conflicts of Interest - As a result of the receipt of compensation, when an IAR makes a
recommendation to a client and that client opens a Passageway account, the IAR has a conflict of interest
because it is anticipated that the IAR will receive a portion of the investment advisory fees associated with
that Passageway account.
The investment advisory fees that an IAR at FTS can be greater than what the IAR would receive at another
registered investment advisor firm. The Passageway investment advisory fees can be more or less than an
IAR would receive if a client conducted their transactions in a brokerage account, rather than a
Passageway account, and paid separately for the investment advice. As a result, your IAR has a financial
incentive to offer a Passageway account over a brokerage account.
1) Recruitment Compensation
FTS provides recruitment compensation to IARs who join FTS. There are generally three types of
05/20/2024 Passageway Managed Account Wrap Fee Program Brochure Page 21 of 46
recruitment compensation methods that FTS can use when an IAR joins our firm.
a) Forgivable Draw Compensation
The forgivable draw recruitment compensation will generally be broken into two segments. In the first
segment, the IAR will generally receive a bi-weekly forgivable draw for the first 6 calendar months and a
higher payout percentage for the first 6 calendar months. In the second segment, the IAR will generally
receive either a forgivable or non-forgivable draw and a higher payout percentage for the subsequent 12
calendar months. The determining factor if the draw is forgivable or non-forgivable in the second segment
is dependent upon either the amount of revenue associated with the IAR for that time period or the
amount of the total market value of the assets brought to FTS during that time period. Generally,
recruitment compensation is limited for a time period of no greater than 24 calendar months to allow the
IAR to transition to FTS. However, depending on the individual circumstances of the IAR, FTS could deviate
from these stated timeframes by going longer or shorter for either segment, or having an overall longer or
shorter time period for the recruitment compensation.
FTS has established written policies and procedures, controls, and processes that are reasonably designed
to provide a supervisory structure that oversees the Passageway Program and FTS’ IARs.
b) Upfront Forgivable Loan
An upfront forgivable loan (or note) is an upfront payment paid by FTS to the IAR when the IAR joins our
firm. In the scenario of an upfront forgivable loan, the IAR doesn’t have to repay the loaned amount if the
IAR stays with FTS for the duration of the loan and the IAR meets certain monthly revenue thresholds.
The specific length of time period of the upfront forgivable loan will vary from IAR to IAR. However,
generally speaking, a larger upfront forgivable loan will result in a longer time period the upfront
forgivable loan will last.
An example of how the upfront forgivable loan generally works, if an IAR received a three-year upfront
forgivable loan and the IAR meets the revenue threshold in March, then 1/36 or approximately 2.78% of
the upfront forgivable loan has been forgiven by FTS and the IAR no longer needs to pay back this amount.
An upfront forgivable loan creates a conflict of interest for the IAR because the IAR has a financial
incentive to meet monthly revenue thresholds. However, under the Passageway Program these IARs have
a fiduciary duty to Passageway clients for their Passageway accounts whenever making a
recommendation. FTS helps address this conflict by having a separate group of securities registered
principals that review the recommendations of Passageway by IARs, and these registered principals do not
directly receive compensation from the recommendations made by IARs.
c) Minimum Guaranteed Payout Percentage
FTS generally pays our IARs a percentage of the commissions, sales loads, trail commissions, and/or fees
received from the sales and services associated with the IAR (otherwise known as the “payout
percentage”).
An IAR that is in the role of an Investment Executive or a Private Bank Investment Executive, when that IAR
is initially registered with FTS, we provide the Investment Executive with a minimum guaranteed payout
percentage. This guarantees that the Investment Executive or Private Bank Investment Executive’s payout
percentage will be at a certain percentage for a specified time period. The minimum guaranteed payout
percentage is used even if the actual compensation associated with the Investment Executive or Private
Bank Investment Executive’s activities is lower than normally required.
It is anticipated that the minimum guaranteed payout percentage will be higher than the standard payout
percentage when an Investment Executive or Private Bank Investment Executive initially starts with FTS.
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When we provide an Investment Executive or Private Bank Investment Executive a minimum guaranteed
payout percentage, we do so to help reduce the conflict of interest that can occur when an Investment
Executive or Private Bank Investment Executive initially starts with FTS and is making recommendations to
clients.
The length of time that the minimum guaranteed payout percentage is in place can vary from IAR to IAR,
but when we offer the minimum guaranteed payout percentage, it will generally last 24 months from the
date the IAR starts with FTS or enters a new role with FTS. However, depending on the individual
circumstances of the IAR, we could deviate from these stated timeframes by going longer or shorter for
either segment, or having an overall longer or shorter time period for the recruitment compensation.
2) IAR Forfeiture of Compensation
Certain activities or failure to perform certain activities will or can result in the forfeiture of an IAR’s
receipt of their portion of the investment advisory fee. This includes the following:
• FTS requires its IARs to conduct an annual review meeting with Passageway clients. If an annual
review is not conducted in a calendar year starting the year after the Passageway account is
opened, the IAR will have their portion of investment advisory fees for that Passageway account
forfeited until a review has been conducted with the applicable Passageway client. Once the
annual review has been conducted, the IAR will begin to receive the portion of the investment
advisory fees for that Passageway account again.
• As part of the due diligence of the securities made available in the Advisor Directed and the
Passageway One Programs for IARs to manage, securities will be removed from the available list
when the security does not meet certain criteria. Once a security is removed from the available
list, the IAR will have until the end of the calendar quarter to have the security or securities
removed from the Advisor Directed or Passageway One Programs Account. If an IAR does not
sell, exchange, or work with the client to transfer the removed security or securities from an
Advisor Directed or Passageway One Programs account within the prescribed time period, then
the IAR’s portion of the investment advisory fees will be forfeited until such time the security is
no longer held in the Advisor Directed or Passageway One Programs account. Once the removed
security is no longer in the Advisor Directed Passageway One Programs account, the IAR will
begin to receive the portion of the investment advisory fees for that Passageway account again.
• When a Passageway Account’s value is below $25,000, the IAR does not receive any
compensation associated with your Passageway Account. Additionally, when a Passageway
Account’s value is between $25,000 and $49,999.99, your IAR does not receive any
compensation from the Passageway Account unless the client has total household assets of
$50,000 or more with FTS.
In addition to the aforementioned reasons, FTS may, as a part of disciplinary action, cause the forfeiture or
withholding of an IAR’s portion of investment advisory fees associated with a specific Passageway account
or accounts when an IAR acts materially different from FTS’ expectations or policies and procedures.
F. Mutual Fund and ETF Fees
FTS does not charge a sales commission or load for investments in mutual funds or ETFs. However, a client
may already own certain securities that have contingent deferred sales charge (e.g., class B and C share
mutual funds). Liquidation of these investments reduces the value the client will have to invest in
Passageway. Clients should carefully review the securities they will utilize to fund a Passageway account
prior to choosing to establish a Passageway account.
In addition, each mutual fund and ETF has their own expenses, which are described in each mutual fund
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and ETF’s prospectus. These fees and expenses generally include a management fee, trading costs
associated with the underlying securities of the fun, and other expenses, which can also include Rule 12b-1
fees or similar fees for mutual funds. The fees and expenses of a mutual fund and ETF reduce the
performance of the account and are imbedded in the net return of the mutual fund or ETF. Therefore, the
client should review both the total direct and indirect fees and expenses of mutual funds and ETFs. Some
mutual funds have different share classes available, and these share classes will have different expenses,
including the internal expenses. FTS and Portfolio Managers will utilize the cheapest share class of mutual
fund that is available to FTS or the Portfolio Manager at the time of the purchase. However, some mutual
funds have different share classes that are not available to FTS or the Portfolio Manager, and these share
classes of mutual funds can be cheaper than those purchased in the client’s Passageway account.
Mutual funds that pay Rule 12b-1 fees to FTS and that are held in a Passageway account have the 12b-1
fees reimbursed directly to the client’s Passageway account the following month the 12b-1 is credited to
FTS. For clarity, if part or all of 12b-1 fee is retained by NFS, the mutual fund company, or any other party
other than FTS, these 12b-1 fees are not credited back to client’s Passageway account since FTS did not
receive these fees.
Passageway accounts can be invested in alternative mutual funds which can have higher operating
expensive relative to traditional mutual fund, and some alternative mutual funds are considerably more
expensive.
G. Additional Costs Charged by Custodian
The custodian for Passageway accounts, NFS, assesses additional costs and fees. These costs are not
included in the investment advisory fees described above. These costs include but are not limited to the
following: wire fees, overnight mailing fee, foreign security movement fee, and retirement account close-
out fee. Refer to the
Standard Commission and Fee Schedule at the end of this Brochure or visit
53.com/ftsdisclosure.
H. Miscellaneous Fees
Although commissions and transaction fees are not charged to the client’s account for securities
transactions by FTS, there can be securities transactions affected through or with another broker-dealer
other than NFS. These securities transactions can include commissions, mark-ups, mark-downs, or dealer
spreads paid to market makers or other principals from whom securities were obtained. This type of trade
is often referred to as “step out trades” or “trading away”. The effects of these trades are indirectly borne
by the client and are not covered by the investment advisory fees discussed above.
The Portfolio Manager for your Passageway account (which may include FIWA) can determine that placing
your trades with NFS is in your best interest. However, the Portfolio Manager has the ability to place a
client’s trades with a broker-dealer other than NFS if the Portfolio Manager believes that doing so is
consistent with its obligation to obtain best execution. FTS does not decide when securities transactions
are placed with NFS or away from NFS. In addition, FTS does not impose a restriction on a Portfolio
Manager’s ability to trade away, as the Portfolio Manager has a fiduciary duty to the clients.
In some instances, step out trades are executed without any additional commission, mark-up, or mark-
down, but in many instances, the broker-dealer executing the step out trade will sometimes impose a
commission or a mark-up or mark-down on the securities transaction. Additionally, some Portfolio
Managers executing trades in US Treasuries will incur a system cost from the portal through which the
trades are processed. These additional costs are often not reflected on trade confirmations Passageway
clients receive or on their account statements. Often, the executing broker will embed the costs into the
price of the trade execution, making it difficult for you to determine the exact added cost for the securities
transaction executed away from NFS.
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Clients should review the Form ADV Part 2A Brochure of the Portfolio Manager of the Passageway
program selected for more information. Clients can request the Program Manager’s brochure from your
IAR. Please refer to Exhibit A at the end of this Brochure for more information regarding Portfolio
Managers that have engaged in step out trades, which can have resulted in additional costs. Only those
Portfolio Managers or Programs that had step out trades in 2023 are listed on Exhibit A. Note that
information provided in Exhibit A has been provided by the corresponding Portfolio Managers, and FTS
does cannot attest to the accuracy of this information as the step out trading can include trading activity
that has occurred at other financial firms as well as FTS.
I. Trade Errors
If FTS, FIWA, or a Portfolio Manager makes an error when submitting a trade order on a client’s behalf, it is
the policy of FTS that the trade error be corrected as soon as possible and in such a manner the client is
not disadvantaged and bears no loss. Upon the identification of a trade error, FTS will work with NFS
and/or FIWA to take the appropriate steps necessary to rectify the error. If correcting a trade error results
in a loss or a gain within the client’s account, FTS, FIWA, and/or the Portfolio Manager will retain any gain
or absorb any loss.
J. Best Execution
As a registered investment advisor, FTS and the Portfolio Managers used in Passageway have a fiduciary
duty to seek to obtain the best trade execution in Passageway accounts. Best execution does not mean
the best price will be obtained. A number of factors are utilized in analyzing overall best trade execution
quality, including but not limited to, execution capability, timeliness of effecting trades, ability to execute
orders of significant size, service, costs, system capabilities, system security, financial stability of firm
executing the trade, and other relevant considerations. These factors combined are collectively referred
to as “best execution”.
To aid in our best execution obligations, FTS periodically and systematically conducts a sample review of
equity securities transactions executed through NFS to help ensure FTS continues to meet its best
execution obligations to our clients. Portfolio Managers that direct transactions for Passageway Accounts
are responsible for satisfying best execution obligations, and the Portfolio Manager can choose to place a
trade at a firm other than NFS if that Portfolio Manager believes they need to so in order to meet their
best execution obligation (often referred to as “trading away”). See Exhibit A for details on Portfolio
Managers that have traded away in 2022.
K. Trade Allocations and Block Trading
FIWA and Portfolio Managers often pool securities trades for the same security for multiple client accounts
to create large blocks trades. This is done to help achieve best price execution for the total pool of
accounts and to help avoid conflicts of interest of favoring one client over another. Once the trades have
been executed the securities or proceeds are allocated back to the pool of client accounts. Portfolio
Managers have their own allocation policies and will direct how trade executions are allocated. FTS and
FIWA have no control over a Portfolio Manager’s allocation policies. For more information on block trading
please see the FIWA’s ADV Part 2A Brochure. A current copy can be requested from your IAR or can be
obtained directly from the SEC’s website (https://adviserinfo.sec.gov/firm/brochure/301896) and selecting
“Fidelity Managed Account Xchange” under Brochure Name.
L. Non-Managed Assets and Worthless Securities
FTS does not permit securities to be held in a Passageway account that are not part of the asset
management of the Passageway account. For example, a client wants to hold several hundred shares of
the company he/she works at. FTS will not allow those shares to be held in a Passageway account since
the shares are not part of the asset management services.
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However, if a security is deemed to be worthless (has no market value), then that security can be placed in
the Passageway account with the client’s understanding that the worthless security or securities are not
being managed by FTS, FIWA, or a Portfolio Manager.
M. Holding a Client’s Order or Instruction
FTS, at its own discretion and without consultation with the Passageway client, may not immediately act
upon a Passageway client’s order to place a transaction (buy, sell or exchange) or act upon a client’s
instruction if FTS believes that the client is the subject of financial abuse or is engaged in a criminal activity
(directly or indirectly). Client instructions that FTS or FTS’ IARs may not act upon immediately include, but
are not limited to, money movement instructions including wire and check movements, termination of
advisory services, change in beneficiary or beneficiaries, and trading authorization of third-party.
In the instances where FTS does not immediately act upon a Passageway client’s order to place a
transaction or act upon a client’s instruction, FTS will attempt to promptly conduct a review in order to
determine the appropriate course of action, which can include, but not limited to, contacting the client,
contacting State and/or federal authorities, or contacting the Passageway client’s Trusted Contact.