This Brochure provides information about the business practices of NSLLC. NFS
Distributors, Inc. owns all of the outstanding ownership interests of NSLLC and is a wholly
owned subsidiary of Nationwide Financial Services, Inc. (“Nationwide Financial”).
Nationwide Financial is wholly owned by Nationwide Corporation, an intermediate holding
company for entities controlled by Nationwide Mutual Insurance Company, a mutual
insurance company owned by its policyholders. None of these Nationwide entities are
publicly held.
NSLLC is an investment adviser registered with the Securities and Exchange Commission
(“SEC”) under the Investment Advisers Act of 1940 (“Advisers Act”); a securities broker
registered with the SEC under the Securities Exchange Act of 1934 and a member of the
Financial Industry Regulatory Authority (“FINRA”); and a member of the Municipal
Securities Rulemaking Board (“MSRB”). All of the Firm’s securities sales representatives
are registered in connection with the Firm’s brokerage business (“Registered
Representatives”). Some Registered Representatives are also licensed or registered as
investment adviser representatives (“IARs”) in accordance with the requirements of the
state or other jurisdiction in which they operate. The IARs (who are subsequently referred
to herein as “advisory representatives”) provide the investment advisory services
described in this Brochure.
Overview of Advisory Services
The Firm provides investment advisory services to natural persons, based on each client’s
individual needs. The Firm offers two main types of investment advisory services: financial
planning and non-discretionary recommendations of asset allocation models in connection
with individual retirement account assets – My Investment Planner and ProAccount. Each
type is discussed below.
Financial Planning Services
The Firm provides financial planning services to participants of retirement plans serviced
by an affiliate. Generally, when the Firm acts as an investment adviser for financial planning
services, it goes through several steps that include information gathering, information
analysis, plan development, and plan delivery. Typically, before it takes these steps, the Firm
will enter into a written agreement with the client expressly acknowledging its investment
advisory relationship and describing the services it will provide to the client. For additional
information about the Firm’s financial planning services, see Item 5 (Fees and
Compensation) and Item 8 (Methods of Analysis, Investment Strategies and Risk of Loss).
The Firm’s financial planning service ends upon its delivery of the plan to the client, as will
the fiduciary relationship that arises from providing this service. Clients are not required to
establish accounts, purchase products that the Firm distributes, or otherwise transact
business with NSLLC in order to put into action any aspect of the financial plan. Clients have
the option to purchase investment products through other brokers or agents that are not
affiliated with NSLLC. In addition, NSLLC is available to assist clients in implementing the
investment strategy described in the plan. The capacity in which NSLLC acts when helping
clients implement an investment strategy will depend on, and vary by, the nature of the
service (i.e., brokerage or advisory) used for the implementation.
It is important to understand that NSLLC’s financial planning services are separate and
distinct from its brokerage services, and that each is governed by different laws and
separate contracts with the client. When acting as a broker, NSLLC typically receives
commissions, sales loads, concessions or other payments, including revenue from third
parties, in connection with the products it sells. When acting in its capacity as a broker,
NSLLC has an incentive to recommend investment products based on the compensation it
receives rather than on a client’s needs, which presents a conflict of interest.
My Investment Planner Investment Advisory Program
Under the My Investment Planner investment advisory program, clients open an individual
retirement account (“IRA”) with Nationwide Trust Company, FSB (“NTC”), an affiliate of the
Firm, to invest retirement assets using an investment advisory service called My
Investment Planner. The My Investment Planner service is offered by Nationwide
Investment Advisors, LLC (“NIA”), a registered investment adviser that is also an affiliate of
the Firm and made available to clients of the Firm through the Firm. The minimum amount
currently required by NTC to open a My Investment Planner IRA account is $5,000, but the
amount is subject to change, and the requirement for a minimum amount could be
eliminated entirely.
The My Investment Planner service provides the opportunity for clients to have their assets
invested in accordance with an asset allocation model that corresponds to the client’s
stated objective or goal (“Model”) developed for NIA by a third-party registered investment
adviser acting as an independent financial expert (“IFE”). Each Model’s underlying
portfolio allocation is generally comprised of non-proprietary mutual funds, but in some
instances can include one or more proprietary funds selected by the IFE from the
Nationwide family of funds, which are advised by a registered investment adviser affiliated
with the Firm and NIA.
Before opening an IRA and receiving the My Investment Planner service, a client must
complete a client profile form and application, as well as a risk tolerance questionnaire,
with the assistance of an advisory representative. The advisory representative will then
review the results of these documents with the client, and discuss the client’s current risk
tolerance, investment objectives, and financial goals for the assets held in the IRA. The
advisory representative will then make a non-discretionary recommendation of a Model
and assist the client in opening the client’s IRA. It is the sole responsibility of the client to
decide whether to follow any recommendation provided by the advisory representative.
The client will have the opportunity to impose reasonable restrictions on the management
of the account.
The services provided in connection with the My Investment Planner program are available
only on a “point in time” basis. As a result, after a client receives a recommendation of a
Model, the client will receive no further investment advisory services or recommendations
from the
Firm or its advisory representatives with respect to the IRA assets invested under
the My Investment Planner program and will not be contacted by the Firm or an advisory
representative to review the Model selected for the IRA assets. In order to receive any
further investment advice or recommendation or a review of the Model selected for the IRA
assets by the Firm, the client must first re-engage the Firm and enter into a new investment
advisory agreement for the My Investment Planner program.
The Firm will not have the authority to change or modify the Models, the asset allocation
percentages of the mutual funds comprising the Models or the selection of the mutual
funds underlying each Model.
Upon the client’s instruction, IRA assets will be invested in the mutual funds comprising the
Models and the client will own shares of such funds. The IFE may periodically adjust the
target allocations of the mutual funds comprising a Model or may add or subtract mutual
funds to or from a Model. In connection with these periodic updates, NIA will provide
corresponding reallocation and/or fund recommendations to the Firm. However, even
though the Firm will periodically receive updated Models, the Firm will not monitor any
client’s account or contact any client to recommend that the client accept an updated Model
or determine whether there have been any changes in the client’s financial circumstances,
risk tolerance or investment objectives. It is the client’s sole obligation and responsibility
to re-engage the Firm for the purpose of determining whether (i) the Model the client has
selected has been updated by the IFE and, if so, whether the client would like to receive an
additional recommendation from the Firm with respect to the updated Model or any other
Model, and (ii) the Model the client has selected continues to be appropriate for the client.
If the client does not re-engage the Firm to discuss whether to accept an updated Model,
the client’s IRA assets will remain invested in accordance with the Model’s target allocation
that was in effect prior to the IFE updating the Model.
NIA has hired Wilshire Associates Incorporated (“Wilshire”) to act as the IFE for the My
Investment Planner program. The IFE provides its services directly to NIA and has no
contractual relationship with clients of NSLLC or NIA. All fees and expenses charged by the
IFE for its services will be paid by NIA. In certain circumstances, NIA may terminate
Wilshire and engage the services of a suitable replacement without prior notice to NSLLC
or its clients.
ProAccount Investment Advisory Program
Under the ProAccount investment advisory program (“ProAccount”), a client opens an IRA
with NTC to receive ongoing investment management services with respect to assets held
in the IRA. Under ProAccount, an IFE develops and maintains a number of asset allocation
portfolios (“Portfolios”) in accordance with which the client’s IRA assets may be invested.
Each Portfolio’s underlying portfolio allocation is generally comprised of non-proprietary
mutual funds, but in some instances can include one or more proprietary funds selected by
the IFE from the Nationwide family of funds, which are advised by a registered investment
adviser affiliated with the Firm and NIA. The minimum amount currently required by NTC
to open a ProAccount IRA is $5,000, but the amount is subject to change, and the
requirement for a minimum amount could be eliminated entirely.
The IFE has sole control and discretion over the development and ongoing maintenance of
the Portfolios, including periodic rebalancing and changes to asset allocation and mutual
fund selection. Among other things, the IFE takes into account varying tolerances for risk.
The IFE assesses the Portfolios at least quarterly to determine if reallocation or rebalancing
is needed. More frequent reallocation or rebalancing may occur as determined by the IFE.
While enrolled in ProAccount, NIA manages client IRA assets in accordance with the IFE’s
portfolio allocation instructions on a discretionary basis (i.e., NIA has authority to allocate
and reallocate client assets in accordance with the Portfolios managed by, and the
investment advice provided by, the IFE), and clients are not able to make investment
allocation changes to their IRA assets, including fund-to-fund transfers, changes to fund
allocations, or rebalancing adjustments. The investment advice provided under ProAccount
is limited and is based on the model Portfolios developed and maintained by the IFE, which
NIA cannot modify. NIA also maintains responsibility for the periodic monitoring of the
IFE’s services, and, if necessary, selecting a new IFE in the event that its relationship with
the current IFE is terminated.
As part of enrolling in ProAccount, clients complete a client profile form and application, as
well as a risk tolerance questionnaire, and, if desired by the client, an extended
questionnaire, with the assistance of an advisory representative. These documents are
tools developed by the IFE to help identify clients’ investment risk tolerance, time-horizon,
and retirement objectives, and to indicate any reasonable restrictions clients wish to place
on the management of their account. Information provided through any interactive online
planning tool provided by an affiliate of NIA or the Firm may be used by NIA and the IFE to
further refine the client’s investor profile. The Firm, through its advisory representative,
provides clients with a non-discretionary recommendation regarding the Portfolio that is
appropriate for the client and his/her IRA assets given the client’s responses to the
documents and any extended questionnaire. Moreover, NIA, at least annually, contacts the
client to determine whether there have been any changes to the client’s personal or
financial situation or the client’s requested restrictions that may affect the client’s
investment profile, and provide any additional non-discretionary recommendations as
necessary based on any such changes.
NIA has hired Wilshire to act as the IFE for ProAccount. The IFE provides its services
directly to NIA and has no contractual relationship with clients of NSLLC or NIA. All fees
and expenses charged by the IFE for its services will be paid by NIA. In certain
circumstances, NIA may terminate Wilshire and engage the services of a suitable
replacement without prior notice to NSLLC or its clients.
Management of Client Assets
The Firm does not have discretion of or manage client assets.