Phillips Advisors sponsors the Investor Advantage Program (referred to as “Program”). The Program is a wrap-fee program. Only investment advisor representatives of Phillips may serve as portfolio managers in the Program. Therefore, participants in the Program must be advisory clients of Phillips Advisors. Phillips Advisors is an investment adviser registered with the United States Securities and Exchange Commission (“SEC”) and is a limited liability company (LLC) formed under the laws of the State of Delaware.
• Timothy C. Phillips is the Chief Executive Officer (CEO) of Phillips Advisors. Timothy C. Phillips majority owner of Phillips Advisors. None of the minority owners holds more than five percent.
• Phillips Advisors has been registered as an investment adviser since October 2011. Prior to that time, beginning in 2004, the personnel of Phillips Advisors conducted advisory business through Phillips & Company Securities, Inc. in its former capacity as a registered investment adviser. In October 2011, we formed Phillips Advisors and registered the new company as an investment advisor. Through the Program, we provide investment supervisory services defined as giving continuous investment advice to a client and making investments for the client based on the individual needs of the client. The investment advisory services of Phillips Advisors are provided to you through an appropriately licensed and qualified individual who is an investment adviser representative of Phillips Advisors (referred to as your investment adviser representative throughout this brochure). Your investment adviser representative is limited to providing the services and charging investment advisory fees in accordance with the descriptions detailed in this brochure. However, the exact services you receive and the fees you will be charged will be specified in your advisory services agreement. We provide Program services through a partnership with Lockwood Advisors, Inc. (referred to as “LA”). LA is an investment advisory firm registered with the SEC, but not affiliated with Phillips Advisors. As the sponsor, we provide an extensive range of investment advisory services through Program. These services may include:
• Assessment of the client’s investment needs and objectives;
• Development of an asset allocation strategy designed to meet the client’s objectives;
• Recommendations on suitable style allocations;
• Identification of appropriate investments and investment vehicles suitable given the client’s goals;
• Evaluation of investments meeting style and allocation criteria;
• Review of client accounts to ensure adherence to policy guidelines and asset allocation;
• Recommendations for account rebalancing, if necessary;
• Online and paper reporting of client account(s) performance and progress; and
• Fully integrated back office support systems to advisers, including custody, trade execution, and confirmation and statement generation, through Pershing. We provide some or all of the above referenced investment advisory services. Though all of the above referenced services may be offered, services offered are based on the type of account and your individual situation. Phillips and Company Advisors, LLC Page 4 Investor Advantage Program Brochure We will obtain from you information to determine your financial situation and investment objectives. Accounts are managed on the basis of your financial situation and investment objectives. At least quarterly, you will be instructed to notify us whether your financial situation or investment objectives have changed, or if you want to impose and/or modify any reasonable restrictions on the management of your accounts. At least annually, your investment adviser representative will contact you to determine whether your financial situation or investment objectives have changed, or if you want to impose and/or modify any reasonable restrictions on the management of your accounts. Your investment adviser representative is always reasonably available to consult with you relative to the status of your accounts. You have the ability to impose reasonable restrictions on the management of your accounts, including the ability to instruct us not to purchase certain securities. Your beneficial interest in a security does not represent an undivided interest in all the securities held by the custodian, but rather represents a direct and beneficial interest in the securities which comprise your accounts. A separate account is maintained for you with the custodian and you retain right of ownership of the account (e. g. right to withdraw securities or cash, exercise or delegate proxy voting, and receive transaction confirmations). Upon establishment of a Program account, your investment adviser representative will be granted trading authorization over your account. Accounts managed through the Program are typically done so on a discretionary basis. However, at your request, we will manage Program accounts on a non-discretionary basis. You must opt-in to provide us with the ability to manage accounts on a discretionary basis. The opt-in of such authority must be memorialized in the Investor Advantage Client Agreement. This authority allows us to determine the type of securities and the amount of securities that can be bought or sold for the client portfolio without obtaining the client’s consent for each transaction. Administrative Services Provided by Lockwood Advisors We have contracted with LA to utilize LA technology platforms to support performance reporting, fee calculation, investment research and billing. Pershing, LA’s parent company will be responsible for delivering account statements and confirmations. Lockwood provides access to account management systems which allow us to view and administer all Program accounts. Lockwood may be given authorization to accept and process trade instructions from our firm. Suitability and Investment Strategy Your investment advisor representative will work with you to determining your objective(s), investment strategy, and investment suitability, prior and subsequent to opening a Program account. You must contact your investment adviser representative to advise us of any changes to your investment objective(s) and/or financial situation. Client portfolios developed through the Program may be constructed by your investment advisor representative or may be developed by the Phillips Investment Committee. We will agree, in writing, to a particular investment portfolio. Numerous model portfolios are developed by the Phillips Investment Committee at any one time, but generally speaking, portfolios will be designed based on the following objectives: Current Income, Growth & Income, Conservative Growth, Moderate Growth, and Growth. Depending on your individual needs, investment recommendations will be made in, but not necessarily limited to, no-load mutual funds, funds at NAV, equity positions, fixed income positions, municipal securities and U.S. government securities. Phillips Advisors’ advisory services are always provided based on your individual needs. This means, for example, that when we provide asset management services, you are given the ability to impose restrictions on the accounts we manage for you, including specific investment selections and sectors. We work with you on a one-on-one basis through interviews and questionnaires to determine your investment objectives and suitability information. Phillips and Company Advisors, LLC Page 5 Investor Advantage Program Brochure We will not enter into an investment adviser relationship with a prospective client whose investment objectives may be considered incompatible with our investment philosophy or strategies or where the prospective client seeks to impose unduly restrictive investment guidelines. Brokerage, Clearing and Custody Pershing Advisor Solutions, LLC For Advisory Accounts established on or after October 1, 2013 , Phillips Advisors had added an additional option in which accounts can be held directly at Pershing LLC through the Pershing Advisor Solutions platform. This is an investment advisor platform and therefore our affiliated company, Phillips & Company Securities, Inc. does not serve as an introducing broker/dealer or have any other involvement in the servicing of managed accounts. Pershing Advisor Solutions, LLC (PAS) can best be described as an institutional RIA platform. An institutional RIA platform allows a client to grant Phillips Advisors limited power of attorney to have trading authority over the client’s account held by the broker/dealer, in this case Pershing, LLC. Phillips Advisors is independently owned and operated and not affiliated with Pershing, LLC or PAS. Phillips Advisors’ decision to use PAS is based on numerous factors. Institutional trading and custody services are typically not available to the same providers’ retail investors. Institutional services generally are available to Investment Advisers on an unsolicited basis at no charge to them. Institutional services include brokerage, custody, research and access to mutual funds and other investments that are otherwise generally available only to institutional investors or would require a significantly higher minimum initial investment. For client accounts maintained at PAS, PAS does not charge separately for custody but is compensated by account holders through commissions or other transaction-related fees for securities trades that are executed through or that settle into platform accounts. When evaluating institutional RIA platforms, Phillips Advisors considers other products and services that assist Phillips Advisors in managing and administering clients' accounts. While these products and services benefit Phillips Advisors and its Advisor Representatives, they may not necessarily benefit every Phillips Advisors client. Services and products that Phillips Advisors actively considers and evaluates include software and other technology that provide access to client account data (such as trade confirmation and account statements); facilitate trade execution (and allocation of aggregated trade orders for multiple client accounts); provide research, pricing information and other market data; facilitate payment of Phillips Advisors' fees from its clients' accounts; and assist with back-office functions; recordkeeping and client reporting. Many of these services generally may be used to service all or a substantial number of Phillips Advisors accounts, including accounts not maintained on the institutional RIA platform that provides the services. Phillips Advisors will also evaluate services available that are intended to help Phillips Advisors and its Advisor Representatives manage and further develop its business enterprise. These services may include consulting, publications and conferences on practice management, information technology, business succession, regulatory compliance and marketing. In addition, institutional RIA platforms may make available, arrange and/or pay for these types of services rendered to Phillips Advisors and its Advisor Representatives by an independent third party providing these services to Phillips Advisors. While as a fiduciary, Phillips Advisors endeavors to act in its clients' best interests, Phillips Advisors recommendations or requirements that clients maintain their assets in accounts at a particular institutional RIA platform like PAS may be based in part on the benefit to Phillips Advisors of the availability of some of the foregoing products and services and not solely on the nature, cost or quality of custody and Phillips and Company Advisors, LLC Page 6 Investor Advantage Program Brochure brokerage services provided by the institutional RIA platform, which may create a potential conflict of interest. Phillips & Company, Securities, Inc. For accounts established prior to October 1, 2013, our affiliated broker/dealer, Phillips & Company Securities, Inc. (“Phillips & Company”), is used as the broker/dealer for all Program accounts. Our advisor representatives are also registered securities representatives of Phillips & Company and are required to use the services of Phillips & Company and Phillips & Company’s approved clearing broker- dealer when acting in their capacity as registered representatives. Phillips & Company serves as the introducing broker-dealer. All accounts established through Phillips & Company will be cleared and held at Pershing, LLC which acts as the qualified custodian. It should be noted that Pershing and Lockwood are related companies. For Advisory accounts established on or after October 1, 2013, Phillips Advisors has added an additional option in which accounts can be held directly at Pershing LLCthrough the Pershing Advisor Solutions platform. This is an investment advisor platform and therefore our affiliated company, Phillips & Company Securities, Inc. does not serve as an introducing broker/dealer or have any other involvement in the servicing of managed accounts. Phillips & Company has a wide range of approved securities products for which Phillips & Company performs due diligence prior to selection. Phillips & Company’s registered representatives are required to adhere to these products when implementing

securities transactions through Phillips & Company. The requirement to use Phillips & Company is based on our decision that we can provide efficient and cost-effective services through our affiliated broker/dealer. However, the use of an affiliated broker/dealer is an inherent conflict of interest between Phillips Advisors and its clients because requiring our clients to use Phillips & Company as the broker/dealer allows Phillips & Company to retain brokerage revenue that would otherwise be retained by an unaffiliated broker/dealer. Clients should understand that not all investment advisors require the use of a particular broker/dealer or require the use of a broker/dealer that is affiliated with the investment advisor. The requirement to use Pershing, LLC (“Pershing”) (which is not affiliated with Phillips & Company/Phillips Advisors) is based on the fact that Phillips & Company has established a clearing agreement with Pershing as its preferred clearing broker/dealer and qualified custodian. Because Phillips Advisors and Phillips & Company are under common ownership and have mutual executive officers and control persons, the decision to use Pershing was mutually determined by both Phillips & Company and Phillips Advisors. The decision to use Pershing is based on past experiences, minimizing brokerage expenses and other costs as well as offerings or services Pershing provides that Phillips & Company, Phillips Advisors or clients may require or find valuable. There are some investment advisors that permit the use of multiple broker/dealers and permit clients to select the broker/dealer. We have considered the positive factors to this approach which include the ability to better negotiate brokerage costs such as transaction fees, the ability to better analyze speed of execution, and the ability to compare and negotiate services. However, we have determined that the use of one brokerage platform (Phillips & Company/Pershing) allows us to provide more streamlined operational and trading services. We consider the fact that allowing multiple brokerage arrangements would increase the need for additional internal staff and technology which may increase the overall fees charged to Phillips Advisors clients. By selecting one brokerage platform, Phillips Advisors is able to avoid additional compliance, recordkeeping, staffing, and technological costs that may be associated with implementing procedures designed to work with multiple brokerage platforms. Considering all factors in relation to our structure and capacities, we have Phillips and Company Advisors, LLC Page 7 Investor Advantage Program Brochure concluded that requiring one brokerage platform (Phillips & Company/Pershing) is a better policy than permitting multiple brokerage arrangements including client directed brokerage arrangements. However, the current policy may change in the future and if we decide to permit other brokerage arrangements all clients will be made aware of the change in policy. Phillips Advisors may not necessarily obtain the lowest possible commission and brokerage rates for client account transactions. Therefore, the overall services provided by both Phillips & Company and Pershing are evaluated to determine the level of best execution provided to clients. However, considering Phillips Advisors requires its clients to use the brokerage services of Phillips & Company and Pershing, Phillips Advisors may not be able to achieve the most favorable execution of client transactions and therefore our practice of requiring the use of Phillips & Company and Pershing may cost clients more money compared to advisory programs offered by other investment advisors. While clients may be able to attain brokerage services with lower costs and expenses, clients should be aware of some of the qualitative factors Phillips Advisors considers for selecting Phillips & Company and Pershing as its required Program brokerage platform. These factors include, but are not necessarily limited to, being able to rely on the internal staff of Phillips & Company to provide operations, trading, and other services. Pershing is able to provide numerous specialized service groups and a Client Service Manager who is dedicated to servicing our accounts. Their back-office system generates exception reports designed to monitor all aspects of brokerage accounts, including trading, money movement, transfers, and client account data. Client paperwork is processed through a secure electronic workflow and storage system. Pershing’s electronic trading platform provides a real-time order matching system, ability to “block” client trades, investment research tools, automated rebalancing, account balance and position information, and access to mutual fund families, many of which have no transaction fees. Clients may access their account information over the internet, including balances, transactions, positions, statements, confirmations, and tax documents. Advisory fees can be calculated on aggregated account balances and are debited directly from client accounts Aggregation of Client Orders Transactions implemented for Program accounts are generally effected on an aggregated basis. This means we purchase or sell the same securities for several clients at approximately the same time. This process is also referred to as batch trading or block trading. When Phillips Advisors aggregates client orders, the allocation of securities among client accounts will be done on a fair and equitable basis. Typically, the process of aggregating client orders is done in order to achieve better execution, to negotiate more favorable commission rates or to allocate orders among clients on a more equitable basis in order to avoid differences in prices and transaction fees or other transaction costs that might be obtained when orders are placed independently. Under this procedure, transactions will be averaged as to price and will be allocated among Phillips Advisors clients in proportion to the purchase and sale orders placed by Phillips Advisors for each client account on any given day. When Phillips Advisors determines to aggregate client orders for the purchase or sale of securities, including securities in which an associated person of Phillips Advisors may invest, Phillips Advisors will do so in accordance with the parameters set forth in the SEC No-Action Letter, SMC Capital, Inc. It should be noted, Phillips Advisors does not receive any additional compensation or remuneration as a result of aggregation. Phillips and Company Advisors, LLC Page 8 Investor Advantage Program Brochure Trade Error Policy Phillips has implemented procedures designed to prevent trade errors; however, trade errors in client accounts cannot always be avoided. It is the policy of Phillips to correct trade errors in a manner that is in the best interest of the client. In cases where the client causes the trade error, the client will be responsible for any loss resulting from the correction but will not receive any gains generated as a result of the error correction. In all situations where the client does not cause the trade error, the client will be made whole and any loss resulting from the trade error will be absorbed by Phillips.However, Phillips will maintain gains that may result from correcting a trade error and in some instances may use such gains to offset overall losses Phillips incurs from trading errors. Custody Custody, as it applies to investment advisors, has been defined by regulators as having access or control over client funds and/or securities. In other words, custody is not limited to physically holding client funds and securities. If an investment adviser has the ability to access or control client funds or securities, the investment adviser is deemed to have custody and must ensure proper procedures are implemented. According to this definition, Phillips Advisors does not have custody of client funds or securities. Program Fees As a participant in the Program, you will pay an annualized asset-based fee (“Program Fee”) which includes all fees and charges for the advisory services, selected Managers, Lockwood and all applicable brokerage charges. Therefore, you are not charged transaction fees separately from the Program Fee. Specifically, the Program Fee will cover all commissions, prime broker fees, and any other transaction fees relating to the execution of securities transactions within client accounts. The Program Fee will be payable quarterly in advance. The first payment is due upon the later of opening an account or executing a client agreement and will be assessed on a pro rata basis in the event an agreement is executed at any time other than the first day of the billing cycle. All subsequent payments will be assessed accordingly. Fees are negotiable and will depend on factors such as, but not limited to, the amount of assets under management, the number of accounts established, the complexity of the client’s financial situation, and the investment advisor representative. The following is a sample fee schedule provided for illustrative purposes. The exact fee charged to a client will be detailed in the Investor Advantage Client Agreement Exhibit “A”. Household Fees First $ 500,000 2.20% Next $ 250,000 1.95% Next $ 250,000 1.75% Over $ 1,000,000 1.60% The maximum fee charged for the Program shall not exceed 2.20%. A portion of the fee shall be retained by LA. LA shall retain a maximum of twenty-two (22) basis points (0.22%) of the fee. This fee includes custodial and trade execution services paid to Pershing. In addition, clients electing to subscribe to the Performance Link option will be charged up to an additional three (3) basis points (0.03%). Phillips and Company Advisors, LLC Page 9 Investor Advantage Program Brochure Fees are generally deducted directly from your Phillips & Company/Pershing brokerage account. Clients must provide written authorization to have fees deducted from the account. At our discretion, you may pay fees directly via invoice. For clients that pay directly, payment is due upon receipt of the billing invoice. Pershing will send client brokerage account statements, at least quarterly, showing all disbursements for the account including the amount of the advisory fee, when deducted directly from the account. The Program may cost more or less than purchasing such advisory and execution services separately. As disclosed in this section, we receive compensation as a result of a client’s participation in Program. Therefore we have a financial incentive to recommend the Program over other programs or services. The amount of our compensation may be more than what you would receive if you participated in programs sponsored by other financial firms or paid separately for investment advice, brokerage, and other services. In the event you have purchased commissionable products through your investment advisor representative in the investment advisor representative’s capacity as a securities agent, we will offset or waive the management fee charged through Program. Any reduction will not exceed 100% of the commission received and will be disclosed prior to beginning services or at the time the deduction is made. Other Fees You may incur certain charges imposed by third parties other than Phillips Advisors and Phillips & Company in connection with investments made through the account, including but not limited to, mutual fund sales loads, surrender charges, and IRA and qualified retirement plan fees charged by Pershing, a product sponsor or other third party. Our Program fees are separate and distinct from the fees and expenses charged by investment company securities that may be recommended to clients. A description of these fees and expenses are available in each investment company security’s prospectus. Additional Compensation, Economic and Non-Economic Benefits Through the relationship with Pershing and LA, we receive economic and non-economic benefits. These benefits include, but are not necessarily limited to: receipt of duplicate client confirmations and bundled duplicate statements; access to a trading desk; access to block trading which provides the ability to aggregate securities transactions and allocate the appropriate the shares to client accounts; the ability to have investment advisory fees deducted directly from client accounts; access to an electronic communications network for client order entry and account information. Termination of Services You or Phillips Advisors may terminate Program services at any time, for any reason upon receipt of written notice to the other party. Services will be terminated without penalty and you will receive a pro- rated refund based on the amount of time remaining in the period. We will cooperate fully in any requests to deliver funds and securities held in the Account to another custodian. Pershing may charge an Account Transfer fee, which is detailed in the Phillips & Company Fee Schedule. Transactions in a closed account are subject to normal brokerage rates applied by Phillips & Company. Termination of services will not affect the liabilities or obligations of the parties arising out of transactions initiated prior to termination. Phillips and Company Advisors, LLC Page 10 Investor Advantage Program Brochure