General information
Merit Financial Group, LLC (hereinafter “Merit,” “the Firm,” “we,” “our,” or “us”) was established as
an SEC registered investment advisory firm in 2007. Our mission is to provide coordinated, objective
advice to help you achieve your financial goals through professional wealth management. We provide
our clients with a wide array of advisory services, including asset management, financial planning,
retirement plan advice, participant and other consulting, employee wellness programs and
educational workshops.
Merit Holdings, LLC is the ultimate owner of Merit Financial Group, LLC. Merit Intermediate Holdings,
LLC, is principal owner of Merit Holdings, LLC. In addition, WPCG Management InvestCo 2.0, LLC
(“WPCG”), an affiliate of Wealth Partners Capital Group, LLC (“Wealth Partners”) and Catapult
Investments, LLC (“Catapult”), a subsidiary of HGGC, LLC (“HGGC”) (collectively, “Indirect Owners”),
through their ownership interest in Project Alpha Acquisition, LLC (“Alpha”) hold an indirect equity
interest in Merit Financial Group, LLC (“Merit”). The Indirect Owners’ interest in Merit is structured
so that Merit maintains operational autonomy in managing its business. The relationship between
the Indirect Owners, Alpha and Merit is defined by an operating agreement that provides that neither
the Indirect Owners nor Alpha have the authority or the ability to operate or manage Merit’s business
in the normal course. Accordingly, the Indirect Owners and Alpha are not “control persons” of Merit.
Wealth Partners also holds equity interests in certain other investment advisers (“WPCG Affiliates”)
and HGGC may, from time to time, hold equity interests in other investment advisers and/or financial
services industry members (“HGGC Affiliates”) (collectively, “Indirect Affiliates”). Each of the Indirect
Affiliates, including Merit, operates autonomously and independently of the Indirect Partners and
each other. Merit does not have any business dealings with these Indirect Affiliates and does not
conduct any joint operations with them. Merit carries out its asset management activity, including
the exercise of investment discretion and voting rights, independently of the Indirect Affiliates.
Except as described in this Form ADV, the Indirect Affiliates do not formulate advice for Merit’s
clients. In certain cases, managers and products selected by Merit may include those of Indirect
Affiliates. However, none of the Indirect Owners or Indirect Affiliates have any involvement or
influence in Merit’s selection of managers and/or products. As such, the Indirect Owners’ ownership
interest in Merit through Alpha does not, in Merit’s view, present any material conflict of interest for
Merit with respect to its clients. Consequently, information about individual Indirect Affiliates is not
listed in Section 7.A of Schedule D of Part 1A of Form ADV. A list of all Indirect Affiliates is available
to Merit clients upon request.
The firm also has a network of offices that provide advisory services under local doing business as
(“DBA”) names. We provide investment advisory services to clients through licensed individuals who
are Investment Adviser Representatives of our firm (referred to as your “investment adviser
representative” or “IAR” throughout this brochure). Your investment adviser representative could
be an independent contractor of our firm. Investment adviser representatives may have their own
legal business entities whose business names and/or trademarks may appear on marketing materials
as approved by us, or on client statements as accepted by your account’s custodian. Clients should
understand that these businesses are legal entities of the investment adviser representative and not
of our firm or the custodian. A complete list of our approved DBA names can be found by searching
for Merit Financial Group, LLC CRD# 142457 at www.adviserinfo.sec.gov.
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Merit is the sponsor of a wrap fee program (the “Wrap Program” or “Program”). The Wrap Program
is only available to clients who had an existing wrap account that was transferred to Merit at the time
of their advisor’s transition to Merit. Clients who participate in the Program pay a consolidated fee
(“wrap fee”) that includes both the investment advisory fee and transaction execution costs. The
wrap fee is based on a percentage of the value in the client’s account in the Program (“wrap fee
account”).
This Wrap Fee Program Brochure describes the asset management services that we offer through
our Wrap Fee Program, which is administered through our custodians; LPL Financial and Charles
Schwab & Co., Inc. (“Schwab”) (collectively “Custodians). Information contained in this brochure
applies specifically to the Wrap Fee Program. You will find additional information about the Firm in
our Form ADV Part 2A, which is referenced variously herein, and provided in conjunction with this
document.
Wrap fee programs create conflicts of interest for advisers and risks to investors. Examples include
incentives for advisers trading less frequently than may be in the client’s best interest, engaging in
transactions that reduce costs to the adviser, or mis-billing by failing to incorporate certain covered
transactions costs into the wrap fee – to the extent that advisers or their supervised persons have
incentives to lower their internal costs. We mitigate this conflict of interest by conducting a risk-
based review of trading activity in wrap accounts on an annual basis. Clients may pay more or less
by participating in the Wrap Program than if they arranged to receive the same or similar services in
a non-wrap account. For example, accounts with low trading volumes, high cash balances, or
significant fixed income weightings may be able to receive similar services at a lower cost outside of
a wrap fee program. Clients should be aware that while the advisory fee in a wrap fee account is
typically higher than a non-wrap fee account, that is not always the case.
Clients should also be aware that a wrap fee account may cost you more or less than if the assets were
held in a traditional brokerage account. In a brokerage account, you are charged commissions for
each transaction, and the representative typically will not agree to monitor your account or provide
ongoing advice with respect to the account. So, if you plan to follow a buy and hold investment
strategy for the account or do not wish to receive ongoing investment advice or management
services, you should consider opening a brokerage account rather than a wrap fee account.
When deciding whether one of our advisory services is appropriate for your needs, you should bear
in mind that fee-based accounts often result in lower costs than commission-based accounts during
periods of heavier trading. However, during periods of lighter trading a fee-based account may result
in higher costs. Depending on various factors, the total cost for a fee-based account versus a
commission-based account can vary significantly. Factors which affect the total cost include account
size, amount of turnover, type and quantities of securities purchased or sold, commission rates, and
your tax situation. It should also be noted that lower fees for comparable service may be available
from other sources. You should discuss the advantages and disadvantages of fee-based and
commission-based accounts with your investment adviser representative.
Asset Management Services
We generally follow an established investment management process with a long-term orientation.
For most clients, we believe that a long-term diversified approach is the most suitable investment
strategy. As part of our asset management services, we may create a portfolio consisting of individual
stocks or bonds, exchange traded funds (“ETFs”), options, mutual funds, fee-based variable annuities
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and other public and private securities or investments. We also manage a group of standard model
asset allocation portfolios that are used in client accounts, when appropriate.
Each portfolio is designed to meet the client's particular investment goals, risk tolerance and financial
circumstances. The client’s individual investment strategy is tailored to their specific needs and may
include some or all of the previously mentioned strategies and securities. The investment adviser
representative recommends a strategy after obtaining a reasonable belief that it is in the client’s best
interest. Once a portfolio has been determined and agreed by the client, we review the portfolio
periodically or as often as necessary and will rebalance and/or recommend modifications to the
portfolio as needed.
Each investment adviser representative remains responsible for managing client portfolios directly
or using Merit Investment Management to assist with managing client portfolios. The experience of
our investment adviser representatives, who may also serve as portfolio managers, will vary from
one individual to another. Along those same lines, performance results will also vary from one
investment adviser representative to another.
We will manage the client’s investment portfolio on a discretionary or a non-discretionary basis. As
a discretionary investment adviser, we will have the authority to supervise and direct the portfolio
without prior consultation with the client. Under a non-discretionary arrangement, clients must be
contacted prior to the execution of any trade in the account(s) under management.
Clients may impose certain reasonable written restrictions in the management of their investment
portfolios, such as prohibiting the inclusion of certain types of investments in an investment portfolio
or prohibiting the sale of certain investments held in the account at the commencement of the
relationship.
We will not enter into an investment adviser relationship with a prospective client whose investment
objectives we consider to be incompatible with our investment philosophy or strategies or where the
prospective client seeks to impose unduly restrictive investment guidelines.
We may recommend or offer to our clients the services of other wrap program sponsors. Those
services are described in our ADV Part 2A, Item 4 - Advisory Business. This Wrap Fee Program
Brochure only addresses the Program which Merit sponsors.
The annual investment advisory fee charged ranges up to a maximum of 2.50% of the assets held in
the account. Asset Management Fees are negotiable depending on the Investment Adviser
Representative (IAR) providing the management services, the market value of the account, asset
types, complexity of the client’s portfolio, the client’s financial situation, level of portfolio trading
activity, anticipated future assets, the relationship of the client to the IAR and additional services
requested or performed. Fee waivers or discounts can be offered to Owners, Directors, Officers and
associated persons of Merit and our related companies in addition to family members and friends of
associated persons of Merit which are not available to clients.
It is important to note that it is possible that different investment adviser representatives may charge
different fees for providing the same types and level of service to clients. The specific level of services
you will receive and the fees you will be charged will be specified in your asset management
agreement. The annual fee for asset management services is divided and paid quarterly through a
direct debit to your account. The annual fee is billed either quarterly in advance based on the market
value of the assets under management on the last day of the preceding quarter or quarterly in arrears
based on the market value of the assets under management on the last day of the calendar quarter.
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If management begins after the start of the quarter, fees will be prorated accordingly. Our fees may
be negotiable, and in certain circumstances, clients could be provided a tiered fee schedule, or a flat
fee could be charged for asset management services.
Under a tiered fee schedule the assets can be billed at more than one fee rate.
Example: An account is billed under the following tiered fee schedule and the account has a
billable market value of $500,000
o $0 - $100,000 @ 1.50%
o $100,000 - $250,000 @ 1.25%
o Above $250,000 @ 1.00%
This account would have the first $100,000 in Assets Under Management billed at 1.50%;
The next $150,000 would bill at $1.25%; and
The Remaining $250,000 would be billed at $1.00%.
Merit may “household”, for fee billing purposes, multiple Client Accounts together within the Asset
Management Agreement at the Client’s request. Fidelity, Schwab
and Pontera accounts can be
under the same billing household. LPL accounts can only be under the same billing household as
other LPL accounts and cannot be under the same billing household with Fidelity, Schwab and
Pontera accounts. Accounts to be combined under the same billing household will be indicated as
such on the Asset Management Agreement. This practice is designed to allow you the benefit of an
increased asset total, which could potentially cause your account(s) to be assessed a reduced
advisory fee based on the tiered fee schedule. Accounts opened at a later date may be added to the
same billing household. Client understands that they are responsible for notifying the IAR and Merit
of which Account(s) Client would like to household under the Asset Management Agreement for fee
billing purposes.
Clients of independent contractor IARs of Merit will pay a platform fee in addition to the Asset
Management Fee charged by the IAR. The platform fee is 0.25% of AUM for accounts managed by
Merit’s corporate investment team and 0.35% of AUM for accounts managed by the IAR. The
platform fee will be fully disclosed to the client via the Asset Management Agreement and will be
charged on the same frequency as the Asset Management Fee.
For accounts maintained at LPL Financial, fees billed quarterly in advance are adjusted pro-rata for
contributions and withdrawals to the account. For accounts maintained at Fidelity Institutional,
Charles Schwab (or their affiliates) or Pontera that are billed in advance, fees will only be prorated
for intra-quarter deposits or withdrawals of $100,000 or greater for accounts that were active the
full quarter. For accounts maintained at Fidelity, Charles Schwab, or via Pontera where we apply our
fees in arrears, we make adjustments for all intra-quarter deposits or withdrawals. For all accounts
at all custodians, we begin calculating fees at the later of (1) the date the Asset Management
Agreement is signed, or (2) the date the account is funded.
Fees are generally automatically deducted from the client's managed account in accordance with the
authority granted by the client pursuant to the executed Asset Management Agreement. Clients
should receive account statements from the custodian at least quarterly, reflecting the value of their
account holdings and all deposits and disbursements from their account(s), including the amount of
the advisory fees paid to us.
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Merit believes that its annual fee is reasonable in relation to the services provided and fees charged
by other investment advisers offering similar services/programs. However, our fees may be higher
or lower than fees charged by other financial professionals offering similar services.
Clients who participate in the Wrap Program pay a wrap fee that includes both the investment
advisory fee and transaction execution costs. Although clients do not pay a transaction charge for
transactions in a Wrap account, clients should be aware that Merit and/or your investment adviser
representative pays the custodian of your account transaction charges for those transactions. The
transaction charges paid by us vary based on the type of transaction (e.g., mutual fund, equity or ETF)
and the security selected. Transaction charges paid by Merit/IAR for equities and ETFs are $0 to $7
depending on the custodian of your account. For mutual funds, the transaction charges range from
$0 to $45, depending on the custodian of your account. Because Merit and/or your investment
adviser representative pays the transaction charges in Wrap accounts, there is a conflict of interest.
Clients should understand that the cost to the firm of transaction charges may be a factor that the
investment adviser representative considers when deciding which securities to select and how
frequently to place transactions in a Wrap account.
In the event that you wish to terminate our services, we will refund the unearned portion of our
advisory fee to you. Upon notification of termination or within a reasonable time after learning of
your termination of our services, we will seek to return pro-rata, a refund of unearned advisory fees.
General Information Concerning Fees and Other Client Charges
1. Custodian Charges: Our Fee does not include miscellaneous and ancillary fees and charges
assessed by the custodian. Such charges may include, but are not limited to, wiring fees, broker
dealer mark-ups/mark-downs or broker dealer spreads, electronic fund and wire transfers, SEC
fees, trade-away fees, alternative investment custody fees, debit balance or related margin
interest, foreign exchange fees, odd-lot differentials, IRA fees, transfer taxes, exchange fees, non-
sufficient funds fees, transfer fees, or other fees or taxes as required by law.
2. ETFs: Our Fee does not include the expenses of the individual ETFs. Each of the ETFs bears its
own operating expenses, including compensation to the fund or sub-account advisor. By
investing in ETFs, you indirectly bear the operating expenses of the ETFs because these expenses
will affect the share price of an ETF. Fund expenses vary from fund to fund according to the actual
amounts of expenses incurred and fluctuations in the fund’s daily net assets. Further information
regarding charges and fees assessed by an ETF are available in the prospectus and statement of
additional information, which you should read carefully.
To the extent that cash used for investment comes from redemptions of a client’s mutual fund or
other investments outside of the Program, there may be tax consequences or additional cost from
sales charges previously paid and redemption fees incurred. Such redemption fees would be in
addition to the Fee on those assets.
3. Mutual Funds: Your mutual fund investments may be subject to early redemption fees, 12b-1
fees and mutual fund management fees as well as other mutual fund expenses. These fees are in
addition to the fees and expenses referenced above. Please review the mutual fund prospectus
for full details. Neither Merit nor the IAR retain 12b-1 fees paid by mutual funds for advisory
accounts; these fees are retained by the custodian of your account.
Mutual funds generally offer multiple share classes available for investment based upon certain
eligibility and/or purchase requirements. For instance, in addition to the more commonly offered
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retail share classes (typically, Class A, B and C shares), mutual funds may also offer institutional
shares classes and other share classes that are specifically designed for purchase in an account
enrolled in fee-based investment advisory programs. Institutional share classes or classes of
shares designed for purchase in an investment advisory program usually have no 12 b-1 fees and
have lower internal expenses than other share classes.
Retail share classes are available for no-transaction fee (“NTF”) and are either no-load or load-
waived; meaning, there are no up-front charges to purchase these share classes. Institutional
share classes typically bear an up-front charge to purchase. Merit’s internal policy regarding
Mutual Fund shares class selection is that Merit Investment Management will make the
appropriate shares class selection based on account type and account size. Account balances
below a specified threshold in standard model portfolios (as discussed below in Item 8) will
invest in NTF mutual funds. This policy is reviewed on a quarterly basis. All model portfolios
managed by individual IARs, and not part of the standard Merit model portfolios must be invested
in Institutional shares or best available share class based on the net expense ratio.
There is no guarantee that, in hindsight, we will always have selected the most cost-effective
share class. This may be due to multiple factors, including, but not limited to the following:
Fewer trades than reasonably expected at the time of purchase;
More trades than reasonable expected at the time of purchase;
Changes in cost to purchase the Institutional share class; and
Changes in the internal expenses of available share classes.
4. Variable annuity companies generally impose internal fees and expenses on your variable
annuity investment, including contingent deferred sales charges and early redemption fees. In
addition, variable annuity companies generally impose mortality charges annually. These fees
are in addition to the fees and expenses referenced above. Complete details of such internal
expenses are specified and disclosed in each variable annuity company’s prospectus. Please
review the Variable Annuity prospectus for full details.
5. Other Compensation: Many of our investment adviser representatives are licensed insurance
agents and are also associated with LPL Financial as broker-dealer registered representatives
(“Dually Registered Persons”). As such, they are entitled to receive commissions or other
remuneration on the sale of securities and insurance products, including distribution or service
(“trail”) fees from the sale of mutual funds in non-advisory accounts. The recommendation that
a client purchase a commission product from our Dually Registered Persons presents a conflict
of interest as the receipt of commissions provides an incentive to recommend investment
products based on the commission to be received, rather than on a particular client’s need. No
client is under any obligation to purchase any commission product from our Dually Registered
Persons. To mitigate this conflict of interest, our Dually Registered Persons, are supervised by
both LPL Financial and our firm’s compliance programs. The firm’s Chief Compliance Officer
remains available to address any questions that a client or prospective client may have regarding
the above conflict of interest.
6. As a result of this relationship, LPL Financial may have access to certain confidential information
(e.g., financial information, investment objectives, transactions, and holdings) about our clients,
even if the client does not establish any account through LPL Financial. If you would like a copy
of LPL Financial’s privacy notice, please contact us.
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7. Expense Reimbursements: We will from time to time receive expense reimbursement for travel
and/or marketing expenses from distributors of investment and/or insurance products. Travel
expense reimbursements are typically a result of attendance at due diligence and/or investment
training events hosted by product sponsors. Marketing expense reimbursements are typically the
result of informal expense sharing arrangements in which product sponsors underwrite the costs
incurred for marketing such as client appreciation events, advertising, publishing, and seminar
expenses. Although receipt of these travel and marketing expense reimbursements are not
predicated upon specific sales quotas, the product sponsor reimbursements are typically made
by those sponsors for which sales have been made or for which it is anticipated sales will be
made. This creates a conflict of interest in that there is an incentive to recommend certain
products and investments based on the receipt of this compensation instead of what is in the best
interest of our clients. The amount of these expense reimbursements is not considered to be
material; further, we attempt to control this conflict by basing investment decisions on the
individual needs of our clients.
8. Step-Out Trades: In certain circumstances, Merit may choose to execute trades for client
accounts with a broker-dealer other than the custodian where the client maintains their account
if we reasonably believe that another broker-dealer can obtain a more favorable execution under
the circumstances. Occasionally, the firm will use a broker-dealer other than the custodian where
the client maintains their account to execute large transactions if we determine that it is in our
clients' best interest and that other broker-dealer has the capability to handle such large
transactions and to reduce or eliminate any potential negative price fluctuation. This generally
will occur when the size of the transaction in any one security is so large that it could cause the
price of the security to fluctuate, up or down, resulting in an unfavorable execution price for our
clients. Where the firm trades through a broker-dealer other than the custodian where the client
maintains their account, the wrap fee does not include the compensation that is paid to that
broker-dealer. This compensation is embedded into the price of the security which is paid by the
client. These additional costs are in addition to the wrap fee paid by the client.