Allstate Financial Advisors, LLC, (“AFA” or “the Firm”) offers investment advisory services
to individuals, trusts, estates, charitable organizations, corporations, and other business
entities. The Firm is a limited liability company formed under the laws of the State of
Delaware and was founded in 1999. This brochure provides customers with information
regarding the Firm and the qualifications, business practices, and nature of advisory
services that should be considered before becoming an advisory customer of the Firm.
AFA is a wholly-owned subsidiary of Allstate Insurance Company, which is a wholly-
owned subsidiary of Allstate Insurance Holdings, LLC, which is a wholly-owned subsidiary
of The Allstate Corporation, a publicly held company.
As of December 31, 2023, AFA managed approximately $48,096,832 on a non-
discretionary basis and as of the date of this brochure does not manage any assets on a
discretionary basis.
AFA offers advisory management services to our customers by selecting, recommending,
and monitoring an unaffiliated third-party investment manager who offers a wrap fee
platform. Those services are provided by Fidelity Institutional Wealth Adviser, LLC
(“FIWA”), a Registered Investment Advisor. FIWA has developed and sponsors the
Fidelity Managed Account Xchange℠ managed account program (“FMAX”) whereby
certain investment advisers, broker-dealers, banks, family offices or other financial
institutions use the FMAX Platform to provide investment advisory and administrative
services to their customers or perspective customers. Please refer to the separate FIWA
Form ADV Part 2A Brochure for more details.
Through FMAX, customers participate in a “wrap fee” program FMAX sponsors. A wrap
fee program provides an all-inclusive fee covering investment advice and trading costs.
The fee for service is based on a percentage of the assets under management and is no
more than 1.5%. In addition, AFA participates in the wrap fee and receives part of the
fee. As such, there is a conflict of interest which incentivizes AFA and its Investment
Advisory Representatives (“IAR”) to recommend the FMAX wrap fee program. FMAX,
while charging a higher fee, also provides certain services which may not be available to
customers investing in other non-wrap fee programs whether through AFA or another
advisor. Such services include, but are not limited to assessment of customer’s needs,
investment policy statements, portfolio modeling, monitoring, administrative services,
money manager evaluation, customer periodic account statements and reporting
regarding investment strategies. Participation in FMAX’s program enables AFA to
leverage FMAX’s established relationship with various third-party managers that provide
asset allocation for portfolios. Customers who participate in the program enter into an
agreement entitled “Statement of Investment Selection.” The parties to this agreement
are FMAX, AFA, and the customer. This agreement establishes an understanding among
the parties as to the customer’s investment goals and objectives among other subjects.
AFA will be appointed Advisor on the account. In consultation with your IAR, the customer
will select an investment portfolio containing various investments, usually mutual funds
and or exchange traded funds (“ETF”). IARs will review the performance of the assets in
the portfolio quarterly and meet with the customer annually to discuss changes in
investment objectives and risk tolerance, as well as asset allocation changes.
AFA offers investment advisory programs to retail investors through its IARs. After
ascertaining the customer’s financial position, investment needs and objectives,
investment limitations, and risk tolerance; IARs tailor the advisory services offered based
upon individual customer needs. Customers may impose restrictions on individual
securities, or the types of securities utilized
by the IAR. It is important that customers
inform their IAR of any changes in their financial condition, investment objectives,
personal circumstances, and any reasonable investment restrictions they may
wish to impose on the Account, if any, that may affect the Customer’s overall
investment goals and strategies.
Platforms available:
(1) Fund Strategist Portfolio (“FSP”), which provides access to a menu of professionally
managed asset-allocated models of mutual funds and exchange traded funds. Each
Model is assigned a risk rating by the FMAX Platform, which allows the Firm to view all
available risk-appropriate models based on the information the IAR has input for their
customer. FSPs actively manage the customer’s portfolio on a fully discretionary basis,
including exercising trading authority over funds allocated to those accounts. AFA does
not provide day-to-day management of customer assets allocated to FSPs.
(2) Unified Managed Account Program (“UMA”), which provides access to personalized
customer portfolios housed in a single brokerage account. UMAs offer the ability to
incorporate multiple Funds and Strategies into one account by accounting for each unique
investment strategy as a unique investment “sleeve” within a single account (e.g., Fund
sleeves and Fund Strategist sleeves). The IAR can develop a UMA portfolio for an
Investor by starting with an FMAX prepared asset allocation or create its own asset
allocation. The Intermediary then determines the investment solution(s) to utilize within
the UMA from the options available on the Platform, including ETFs, mutual funds and
FSP models. The IAR is solely responsible for determining the Investor’s asset allocation
and underlying investment solutions it elects to recommend to the Investor.
Before choosing the FMAX wrap fee program, customers should compare the overall fee
of any program in which they participate with non-wrap fee comparable programs. This
comparison should review not only fees and costs but also level of service. In particular,
the customer should examine cost and service in light of the investment objectives of the
account, the level of trading anticipated, as well as alternatives including brokerage
accounts which do not charge any fee (instead charging transaction-based
compensation), and/or other advisor programs, either offered by AFA or not, which
charge lower fees than FMAX or other wrap fee programs. At all times, customers are
under no obligation to choose any particular program offered by AFA. AFA recommends
only those advisors who agree to share part of the fee paid by the customer to the advisor.
This is true when AFA recommends FMAX wrap fee programs to customers as well. This
split is paid to AFA, based on a percentage of the advisor fee calculated against the
assets under management the customer deposits with FMAX. The amount of
compensation AFA receives is agreed to by a contract between AFA and FMAX.
Although AFA endeavors at all times to put the interests of customers ahead of it and its
IAR’s interests, relationships like the one it has with FMAX described in this section
constitutes a conflict of interest for AFA and its IARs since the incentive and/or actual
receipt of compensation because of revenue sharing arrangements based on a referral
to FMAX could and in some instances does affect the judgement of AFA and its IARs
when recommending participation in FMAX’s wrap fee program. There are likely other
third-party investment advisor programs suitable for customers who might otherwise
invest in a wrap fee program like FMAX that are less costly to the customer. Before
accepting any recommendation from AFA regarding a wrap fee program, the customer
should weigh the cost of the program, the frequency of trading, the availability of other
advisors, and the impact of receipt of part of the fee by AFA before acting on the
recommendation.