Description of Firm
Wealth Architects is a California limited liability company and independent registered
investment advisor, registered with the Securities and Exchange Commission. Our Firm
provides comprehensive wealth management, wealth planning and wealth consulting
services. Our broad range of wealth planning and consulting services can include non-
investment related matters.
Principal Owners
The firm was founded in 2005 by Mark T. Johnsen and Lois Cole. Lois retired in 2012. The
Firm is currently majority-owned by the Johnsen Family Living Trust. Wealth Architects is
proud to be employee owned, with several employees holding minority stakes in the Firm.
ADVISORY SERVICES
Wealth Management
The wealth management services we provide are tailored to each individual client’s
financial circumstances and investment objectives. It is the Firm’s policy, when engaged
by a new client, to gather sufficient information about the client to determine the
investment advice that the Firm should provide to that client. The Firm’s Chief Operating
Officer is responsible for ensuring that a client questionnaire is completed which provides
sufficient information obtained from and about the client to allow portfolio managers to
determine the investment strategy most suitable for the client. The Firm’s portfolio
managers consult with each client to design an individualized investment plan based on a
number of factors including the client’s financial condition, investment goals and
objectives, risk tolerances, asset class preferences, time horizons, liquidity needs, and
other factors as gathered through the completion of a Confidential Family and Background
Goals Form and Investment Policy Statement. Our portfolio managers help each of the
Firm’s clients identify a strategic asset allocation that is consistent with the client’s
investment objectives and other criteria. Clients can identify any investment restrictions to
be placed on their account.
Wealth management clients enter into a management relationship with the Firm by
executing a wealth management agreement and by establishing a custodial investment
account with a qualified custodian. A client can make additions to, and withdrawals from,
the client’s custodial account at any time. Clients can withdraw account assets with notice
to the Firm, subject to the usual and customary securities settlement procedures.
However, we design client portfolios as long-term investments and caution our clients that
unplanned asset withdrawals can impair the achievement of the client’s investment
objectives.
Form ADV Part 2A 5
Additions to an account can be in cash or securities however, on an infrequent basis, our
portfolio managers can or will decline to accept particular securities into a client’s account
or can recommend that the security be liquidated if it is inconsistent with the Firm’s
investment strategy or the client’s investment objectives. Clients are advised that when
transferred securities are liquidated, they can be subject to transaction fees, fees
assessed at the mutual fund level (i.e., contingent deferred sales charge) and/or tax
ramifications.
WEALTH PLANNING AND WEALTH CONSULTING SERVICES
Wealth Architects provides wealth planning services on either an hourly fee or fixed fee
basis. Wealth Architects’ wealth planning services can include a financial review and
analysis of some or all of the following areas:
• Determining Financial Goals and Objectives
• Asset Allocation Review
• Retirement Plan Analysis
• Employee Stock Option Analysis
• Current Portfolio Review
• Education Funding Analysis
• Cost Audit of Current Investments
• Cash Flow Management Review
• Review of Insurance Needs
• Mortgage and Refinance Evaluation
• Estate Plan Review or Development
• Charitable (or social capital) Planning
• Opinion on Current Investment Strategy/Advisors
• Other Financial or Investment Analysis
The Firm’s professionals also accept wealth consulting engagements that are more
limited in scope than our wealth planning services to conduct any of the listed reviews
or analyses on an hourly fee basis.
The Firm relies upon the Investment Policy Statement and Confidential Family and Goals
Form, as mentioned above, and financial planning software to analyze client financial
condition and retirement needs. In cases where a financial plan is requested by a client,
the financial planning software program produces a comprehensive financial plan tailored
to the client’s condition and projected retirement needs.
The Firm can recommend its own wealth management or wealth planning services or
those of other professionals to implement investment recommendations. Clients are
advised that a conflict of interest exists if the Firm recommends its own services. The
client is under no obligation to act upon any of the recommendations made by Wealth
Architects under a wealth planning / consulting engagement and/or to engage the services
of any recommended professional, including Wealth Architects itself.
Form ADV Part 2A 6
The client retains absolute discretion over all such planning implementation decisions and
is free to accept or reject any of the Firm’s recommendations.
NON-ADVISORY SERVICES
“Your Board of Advisors”—Wealth Architects collaborates with third-party services
providers to create solutions suited to a client’s needs. If Wealth Architects
recommends the service provider(s), and the client engages the provider(s), then
the client will pay the provider(s) directly for the provider(s)’ services. This is in
addition to any fees the client pays to Wealth Architects. While Wealth Architects
may have pre-existing business relationship with the selected
provider(s), Wealth
Architects does not receive any referral fees, percentages of payments by clients to
the service provider(s), or any other form of compensation associated with selection
of a particular service provider. This service is available to be included as part of
Wealth Architects’ Advisory Services, Wealth Planning, and Wealth Consulting
services (discussed above) and typically includes Estate Attorneys, Banks/Lenders,
Tax Advisors, Insurance Specialists, and Real Estate Professionals. A client of
Wealth Architects’ Advisory Services, Wealth Planning, and Wealth Consulting
services programs will not pay additional fees to Wealth Architects for using the
Board of Advisors. Note, however, that you will pay separate fees to these service
providers should you choose to engage with them.
FIDUCIARY STATUS UNDER ERISA
To the extent any client is a retirement or other employee benefit plan subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
depending upon the investment management services provided by Wealth Architects, the
Firm can be considered a “fiduciary” under ERISA. As an ERISA fiduciary, the Firm is
obligated to provide investment advice that is in each client’s best interests.
Compliance with Prohibited Transaction Exemption PTE 2020-02
On occasion, Wealth Architects will make a recommendation to a client with regards to
assets held in retirement accounts. Recommendations include, but are not limited to,
rolling assets out of an employer sponsored plan (e.g., 401k), or to rollover an individual
retirement account (“IRA”) for the Firm to manage for a fee. This is deemed a conflict of
interest.
In December 2020, the DOL adopted an exemption under ERISA (“PTE 2020-02”),
which specifically covers three activities prohibited under Section 406(a). These
activities are self-dealing, receiving compensation from third parties in connection with
any transactions involving an ERISA plan, and principal transaction activity.
PTE 2020-02 can be relied upon by, among others, SEC registered investment advisers
and their investment professionals that are deemed investment advice fiduciaries, so
long as all the exemption’s requirements are met, as applicable. There are five main
Form ADV Part 2A 7
components to PTE 2020-02, which are designed to safeguard against conflicts of
interest that apply to the prohibited activities covered by the exemption. These include:
• Adhering to specific Impartial Conduct Standards
• Providing specific disclosure to each ERISA Plan client
•
Maintaining applicable written policies and procedures
• Performing and documenting a retrospective review
• Having a senior officer make certain written certifications.
Wealth Architects is deemed to be an investment advice fiduciary. At all times, the Firm
will act in the client’s best interest in making any recommendations related to assets
covered by ERISA. Wealth Architects will comply with all applicable rules in order to
maintain this exemption.
GENERAL NOTICE
In performing its services, Wealth Architects relies upon the information received from its
client or from their other professional legal, accounting and insurance advisors, and is not
required to independently verify such information. Clients must promptly notify us of any
change in their financial situation or investment objectives that would necessitate a
review or revision by our advisors of the client’s portfolio and/or wealth plan.
Advisory Agreements
Unless provided in connection with the wealth management services described above,
clients engaging Wealth Architects to provide wealth planning or consulting services will
generally be required to enter into a separate written agreement with Wealth Architects
setting forth the terms and conditions of the engagement and describing the scope of the
services to be provided. Wealth planning and consultation clients are not required to be
wealth management clients of the Firm.
Clients can terminate their relationship with the Firm by written notice to the Firm. The
Firm does not assess any fees related to termination but will be entitled to all management
fees earned up to the date of termination. Any prepaid fees owed to the client will be
refunded on a pro rata basis determined on the amount of time expired in the calendar
quarter. In the event the client terminates the Firm’s wealth planning and/or consulting
services, the balance of the Firm’s unearned fees (if any) shall be refunded to the client. If
termination occurs within five business days of entering into an agreement for such
services, the client shall be entitled to a full refund.
If a copy of this Form ADV Part 2A disclosure statement was not delivered to the client
prior to or simultaneous with a client entering into a written advisory contract with Advisor,
then the client has the right to terminate the contract without penalty within five (5)
business days after entering into the contract. For purposes of this provision, a contract is
considered entered into when all parties to the contract have signed the contract. If the
client terminates the contract on this basis, all fees paid by the client will be refunded. Any
transaction costs imposed by the executing broker or custodian for establishing the
custodial account or for trades occurring during those five days are non-refundable.
Form ADV Part 2A 8
Amount of Client Assets Managed
As of December 31, 2023, the following represents the amount of client assets under
management by Wealth Architects on a discretionary and non-discretionary basis:
Type of Account Assets Under Management ("AUM")
Discretionary $1,647,094,813
Non-Discretionary $131,197,899
Total: $1,778,292,712