Firm Description and Principal Owners
GEM Asset Management, LLC (“GEM Asset,” “us,” “our,” or “we”) is a Michigan
limited liability company, formed in 2001 by Steve Alexandrowski and has been registered with
the SEC since 2007. We are required to disclose the persons owning twenty-five percent (25%)
or more of our firm’s membership interests. Steve Alexandrowski, CFP® and S. Timothy Story
each own more than twenty-five percent (25%) of our firm’s membership interests.
Our Advisory Services
We provide our clients with continuous and regular investment management services and
financial planning, explained in more detail below. In providing these services, GEM Asset acts
in the capacity of a fiduciary and, as such, is obligated to place the interests of our clients first at
all times.
When we provide investment management or financial planning services to “related”
parties (i.e., husband and wife, parent, and child, etc.), our services will be based upon the joint
goals communicated to us, as agreed upon in the investment management agreement. We will be
permitted to rely upon instructions from either party with respect to the services requested,
unless and until such reliance is revoked in writing and provided to us. We will not be
responsible for any claims or damages resulting from such reliance or from any change in the
status of the relationship between the clients. We cannot and will not treat information provided
by either party as confidential from the other related party.
Investment Management Services
Prior to engaging us to provide our services you will be required to enter into an
investment management agreement with us setting forth the terms and conditions under which
we will provide our services. We provide investment management services for clients on a
discretionary basis. If you engage us, we will discuss and help to identify your individual
financial needs and objectives based upon the general background and financial information you
provide to us.
Any limitations or restrictions applicable to your investments or our services must be
provided in writing, so please inform us. We will rely on the information you provide to us and
will not independently verify the accuracy or completeness of this information when preparing
our recommendations. We will construct the initial investment portfolio and will periodically
rebalance the asset allocation in your portfolio subject to any limitations you have provided to us
in writing. As your financial situation, goals, objectives, or needs change, you must notify us
promptly in writing. As described in further detail below in the
“ITEM 16 – INVESTMENT
DISCRETION” section beginning on page
19, we manage your accounts on a discretionary basis,
which means that we determine the securities to buy and sell for your account without obtaining
your specific consent prior to each transaction.
Additional Services
If clients request, and we agree, we will provide discretionary investment advice for
certain outside accounts, for an additional fee (see ITEM 5: FEES AND COMPENSATION for
the specific fees for these services). These outside accounts are primarily plan participant
retirement accounts. We will regularly review the available investment options in these accounts,
monitor them, and rebalance in the same way we do other accounts, though using different tools,
as necessary. We use a third party platform to facilitate the management of these “held-away
accounts.”
Clients using this service are provided with their own log-in credentials by the platform
and will link their account to the platform. By linking the account on the platform, we are
allowed to view the account allocation, and when deemed necessary by us, rebalance the held-
away accounts. We do not have access to clients’ credentials and therefore, do not have custody
of the assets held in these accounts. We are not affiliated with the third-party platform in any
way, and do not receive any compensation for using the platform. If you would like us to provide
this additional service, you will sign an addendum to your current agreement or, for new clients,
Exhibit B Additional Services to Investment Management Agreement, which explains this
service.
Investment Management Services to Retirement Investors
We will act as an “investment advice fiduciary” under Employment Retirement Income
Security Act, as amended (“ERISA”) and the Internal Revenue Code of 1986, as amended (the
“Code”) when we provide fiduciary investment advice to retirement investors. Retirement
investors includes ERISA plans, participants, and IRA owners. When we provide a
recommendation to roll over or transfer a Retirement Investor’s retirement plan account or
individual retirement account including, Health Savings Accounts (“HSAs”), Medical Savings
Accounts (“MSAs”) and Coverdell Education Savings Accounts (“Educational IRAs”), we must
provide prudent investment advice designed to meet their investment goals. In addition, we must
among other requirements put the Retirement Investor’s financial interests ahead of ours when
making recommendations and avoid misleading statements about conflicts of interest, fees, and
investments.
When our investment adviser representative recommends a rollover or transfer of your
retirement assets, the recommendation involves a conflict of interest if you accept the
recommendation. GEM Asset and our representative earn a fee on the market value of the
rollover or transferred IRA which would not be earned if the money were not placed under our
management. GEM Asset mitigates this conflict by creating a compensation structure that does
not encourage GEM Asset or our representatives from placing our interests ahead of your
interest. For information regarding additional compensation paid to our representatives see
“ITEM 14 – CLIENT REFERRALS AND OTHER COMPENSATION” beginning on page
18.
A retirement investor leaving an employer has four options regarding an existing
retirement plan (and under certain circumstances may engage in a combination of the following
options). We will provide general education, for discussion purposes, regarding the “pros and
cons” to each of these choices: (i) leave the money in the former employer’s plan, if permitted,
(ii) roll over the assets to the new employer’s plan, if one is available and rollovers are permitted,
(iii) roll over to an IRA, or (iv) cash out the account value (which could, depending upon the
client’s age, result in adverse tax consequences). If we recommend a roll over from a retirement
plan account or a transfer of an IRA account into an account to be managed by us, such a
recommendation creates a conflict of interest if the retirement investor accepts the
recommendation as we earn a fee on the market value of the rollover or transferred IRA which
would not be earned if the money was not placed under our management.
Financial Planning Services
We offer investment management as our primary service, but the firm also provides
financial planning as a stand-alone service. If you engage us to provide personal financial
planning advice, we will enter into a financial planning agreement with you. We will outline the
terms and conditions of our engagement and describe our fee and scope of our services.
Generally, clients will select from our menus of services including income planning, education
funding, investment advisory services for “assets held away,” insurance planning, retirement
planning, tax planning, estate management and wealth transfer, philanthropy, and budgeting and
cash flow planning. Under this arrangement, we will not provide investment advice, whether in
a discretionary or non-discretionary capacity. Any such services will be set forth in a separate
investment management agreement with us. Our financial planning agreement will conclude at
the presentation of a written financial plan to you and full payment by you to us for our fees.
Initially, we consult with you to gather information about your current financial situation,
income and expenses, taxes, estate plan, objectives, needs and goals, and any special or
particular circumstance unique to you. After analyzing your individual circumstances and
objectives, we present our recommendations to you in writing. When we provide financial
planning services, we will rely on the information you provide to us. We will not independently
verify this information when preparing our recommendations.
As part of your financial plan, we may recommend other services we offer or the services
of other professionals to implement our recommendations. While recommending our own
services presents a conflict of interest, you are under no obligation to act upon any of our
recommendations and you are not required to engage the services of any recommended
professional, including us as an investment manager. You retain absolute discretion over all
financial planning implementation decisions and may accept or reject any of our
recommendations.
Investment Advisory Services to Qualified Plans
At our discretion, we provide advisory services to qualified retirement plans which are
subject to the ERISA. As part of our services to qualified plans, we will act as a fiduciary of the
plan under Section 3(21)(A)(ii) and Department of Labor Regulation Section 2510.3-
21(c)(1)(ii)(B), and Department of Labor Regulation (“DOL”) Section 2510.3-21(a). As a 3(21)
investment advisor, we will not have discretion to invest and reinvest the plan assets without the
plan fiduciary’s prior consent. Thus, as a 3(21) advisor, we will share responsibility for the
selection of investments.
For qualified plan clients, we will use the plan’s investment policy statement, or other
written investment objectives, to counsel the plan fiduciary on recommended investments and
the reasons for any proposed investment changes. We will continually monitor the performance
of the plan’s investments and prepare periodic investment reports that document the investment
performance.
In addition to the investment advisory services, we provide to plan fiduciaries, the plan
fiduciary may engage us to provide one-on-one non-discretionary investment advice as a
fiduciary as defined in ERISA Section 3(21)(A)(ii) to the participants of the plan (“Advice
Services”). Advice Services are provided only to those participants who elect to meet with our
representatives and accept our services. We provide these services to plan participants in two
ways: (i) by telephone service and (ii) in person. We will ask the participant to provide
information about their investment goals, risk tolerance, time horizon to retirement.
Assets Under Management
As of December 31, 2023, we managed $460,972,231 on a discretionary basis.