Generation Capital Management, LLC (“GCM”) is a Rochester, NY-based independent, fee-based, SEC
registered investment advisor firm. GCM was founded in 2003 by Scott Nasca. Mr. Nasca is the firm’s
President, Chief Investment Officer and sole owner.
As of December 31, 2023, GCM manages client assets of $ 916,589,883 including $128,616,969 on a
discretionary basis and $ 787,972,914 on a non-discretionary basis.
Business Focus
GCM provides individualized portfolio and investment management and consulting services for
individuals, high net worth individuals, charities, trusts and estates, corporations, retirement plans,
municipal government entities and foundations.
Initial Consultation
Before we begin managing client portfolios, we engage a new or potential client in a pre-advisory
consultation to gain better insight into the clients’ financial situation and expectations. During this
consultation, we:
• Review the individual’s (or organization’s) goals, tax situation, financial needs, and
limitations
• Gauge the individual’s (or organization’s) risk tolerance
• Conduct an analysis of current investment strategies and asset allocation
By understanding each of these financial characteristics and communicating our investment
philosophy, we can proceed with developing an investment strategy for the client and setting the
expectations for our client-advisor relationship.
Based on this conversation, the client typically selects a targeted allocation (fixed income,
conservative balanced, balanced (fifty/fifty), growth balanced and equity). A large majority of our
clients fit into one of these categories. However, we also take into consideration special situations
such as restrictions on certain securities or asset classes, liquidity needs and tax situations when
managing portfolios. We continuously manage the investments in the portfolios and the guidelines
for each account are reviewed as needed with clients for any changes in the basic assumptions.
Investment Advisory Services
GCM provides discretionary portfolio management and retirement plan consulting services.
GCM’s portfolio management services will involve us providing you with continuous and ongoing
supervision over your specified accounts.
You must appoint our firm as your investment adviser of record on specified accounts (collectively,
the “Account”) held at qualified custodian. The Account consists only of separate account(s) held at
the qualified custodian, under your name. The qualified custodian maintains physical custody of all
funds and securities of the Account, and you retain all rights of ownership (e.g., right to withdraw
securities or cash, exercise or delegate proxy voting and receive transaction confirmations) of the
Account. See Item 12 and Item 15 for more information.
The Account is managed by us based on your financial situation, investment objectives and risk
tolerance. We actively monitor the Account and provide advice regarding buying, selling, reinvesting,
or holding securities, cash or other investments of the Account.
We will need to obtain certain information from you to determine your financial situation and
investment objectives. You will be responsible for notifying us of any updates regarding your
financial situation, risk tolerance or investment objective and whether you wish to impose or modify
existing investment restrictions; however, we will contact you at least annually to discuss any
changes or updates regarding your financial situation, risk tolerance or investment objectives. We
are always reasonably available to consult with you relative to the status of your Account. You can
impose reasonable restrictions on the management of your accounts, including the ability to instruct
us not to purchase certain securities.
It is important that you understand that we manage investments for other clients and may give them
advice or take actions for them or for our personal accounts that is different from the advice we
provide to you, or actions taken for you. We are not obligated to buy, sell, or recommend to you any
security or other investment that we may buy, sell, or recommend for any other clients or for our own
accounts.
Conflicts may arise in the allocation of investment opportunities among accounts that we manage.
We strive to allocate investment opportunities believed to be appropriate for your account(s) and
other accounts advised by our firm among such accounts equitably and consistent with the best
interests of all accounts involved. However, there can be no assurance that a particular investment
opportunity that comes to our attention will be allocated in any particular manner. If we obtain
material, non-public information about a security or its issuer that we may not lawfully use or
disclose, we have absolutely no obligation to disclose the information to any client or use it for any
client’s benefit.
1) Portfolio Management. GCM offers active money management services for individuals, high net
worth individuals, retirement plans, corporations, charities, institutions, trusts and estates,
municipal government entities and foundations.
a) Investment Philosophy. We believe the optimal strategy for long-term success requires
extensive diversification across asset classes, sectors and styles. Our commitment to
broad market representation by its very nature curtails risk and creates well-diversified
portfolios. Because no single investment strategy can outperform over an extended
period of time, we provide our clients with the diversification necessary to eliminate the
risk associated with single-strategy or single-sector investing.
b) Investment Strategy. In order to reduce risk for our clients, GCM is attracted to the
broad diversification and variety of styles of management as well as the opportunity to
allocate assets to the domestic and global markets. We combine an active investment
approach with a disciplined investment strategy. We generally prefer a macroeconomic
approach (top-down) to investing as precursor to individual security selection (bottom-
up). Historically, certain sectors tend to do better than others during specific segments
of the economic cycle. We combine the reliability of historical trends while factoring in
current market conditions to set our targeted asset allocation. Our bottom-up analysis
employs multiple analytic techniques including fundamental and technical analysis.
c) Securities Used. Generally, client portfolios will be comprised of equity and fixed income
securities, exchange traded funds (ETFs), and closed-end funds (CEFs), depending on the
client’s strategy. For its Plan Sponsor clients, GCM may also use open-end mutual funds.
For the portion of the clients' portfolio invested in open-end mutual funds and closed-
end funds, the client generally pays two advisory fees. First, the client pays a standard
quarterly fee on the market value of total assets managed by GCM which can include
assets in closed-end and open-end funds. Second, there is a management fee paid at the
fund level which is deducted from the fund’s net asset value. Likewise, other operating
expenses are automatically deducted at the fund level. GCM has an active policy of
monitoring the expense ratios of the registered investment companies to determine their
size and appropriateness.
i) About Equity Securities: Equity securities are an instrument that signifies a position in
a corporation and represents a claim on its proportional share in the corporation’s assets
and profits. Types of equity securities include, for example, common stocks, preferred
stocks, and real estate investment trusts (REITs).
ii) About Fixed Income Securities: Fixed-income securities pay interest, dividends, or
distributions at a specified rate. The rate may be a fixed percentage of the principal or
may be adjusted periodically. In addition, the issuer of a fixed-income security must repay
the principal amount of the security, normally within a specified time. Types of fixed
income securities include, for example, treasury securities, government securities, and
corporate debt securities.
iii) About Exchange Traded Funds (ETFs): An ETF is a fund that tracks an index, sector, or
other asset, but which can be purchased or sold on a stock exchange the same way a
regular stock can.
iv) About Closed-End Funds (CEFs): Closed-end investment companies are publicly traded
on the New York and American Stock Exchanges. Frequently, the selling price on the
exchange or market value price is below the fund's net asset value and therefore,
represents an undervalued or inefficiently priced security. The discount to net asset value
is one of the most important criteria for selecting closed-end funds. The effect of the
discount often negates the additional expense paid at the fund level and provides the
opportunity for higher returns over time than constructing a portfolio of individually
purchased investments.
d) Portfolio Targets. The table on the next page shows the various portfolio allocations
chosen by the majority of GCM clients. Each allocation seeks to maintain a percentage of
equity and/or fixed income instruments in the portfolio. These targets can vary by ±15%
based on market conditions. GCM increases exposure to equity markets and/or fixed
income markets when macroeconomic research suggests it is prudent to do so. In volatile
markets, and while assets are being redeployed, GCM may have higher allocations to cash
and/or short-term Treasuries while waiting for targeted prices to be hit.
Allocation
Targeted Percentage of
Portfolio (Equity)
Targeted Percentage of
Portfolio (Fixed Income)
Equity 100% 0%
Growth Balanced 70% 30%
Balanced 50% 50%
Conservative Balanced 30% 70%
Fixed Income 0% 100%
GCM provides an investment advisory service known as "Cash Investment Management Service"
as well.
GCM also provides an additional service for accounts that may be held at a custodian that is not
directly accessible by GCM (“Held Away Accounts”), but where we do have discretion. This service
is for clients that have accounts they would like us to manage, but for some reason or another, the
account can’t be moved. These are typically, but not limited to, 401(k) and similar retirement-
plan participant accounts. Through an arrangement with Pontera Solutions, Inc. we are able to
gain access and facilitate management of these held away accounts using the Pontera Order
Management System. We are not affiliated with the platform in any way and receive no
compensation from them for using their platform. A link is provided to the Client allowing them
to connect an account(s) to the platform. Once Client account(s) is/are connected to the platform,
GCM will review the current account allocations. When deemed necessary, we will rebalance the
account considering client investment goals and risk tolerance, and any change in allocations will
consider current economic and market trends. GCM will periodically review the available
investment options in these accounts, monitor them, and rebalance and implement our strategies
in the same way we do other accounts, using different tools as necessary.
While Pontera Solutions Inc. asserts that it has implemented cybersecurity measures to protect
your information, it is important to recognize the inherent risks of sharing your account
credentials. It is crucial to acknowledge that no cybersecurity system is impervious to risk. In the
event of a cybersecurity breach involving Pontera Solutions Inc., there is a possibility that your
retirement plan participant account credentials could be exposed.
Moreover, the sharing of login details with a third party, such as Pontera Solutions Inc., may
contravene the terms-of-use of the online platform associated with your retirement plan
participant account(s), potentially leading to service providers associated with those accounts
disclaiming liability to you for any unauthorized transactions. This is a critical consideration as it
might limit your recourse in the event of unauthorized access to your account. We recommend
that you check the terms-of-use of the specific online platform(s) associated with your retirement
plan participant account(s) with respect to this issue.
In light of these considerations, Pontera Solutions Inc. posted a "Client Cyber Protection Pledge,"
which is available for review at
https://pontera.com/client-protection-pledge. We strongly
advise you to review this pledge along with the Subscription Agreement, Terms & Conditions, and
Privacy Policy of Pontera Advisors Solutions, Inc. to understand the scope of their actual
contractual obligations. Furthermore, it is essential to consult with your legal counsel to assess
the risks associated with this arrangement and the enforceability of Pontera's pledge in
protecting your interests. You are under no obligation to retain us to manage your retirement
plan participant account(s).
Important Disclosure for Retirement Plan Account & Individual Retirement Account
Clients:
When we provide investment advice to you regarding your retirement plan account or individual
retirement account, we are fiduciaries within the meaning of Title I of the Employee Retirement
Income Security Act and/or the Internal Revenue Code, as applicable, which are laws governing
retirement accounts. The way we make money creates some conflicts with your interests, so we
operate under a special rule that requires us to act in your best interest and not put our interest
ahead of yours. Under this special rule’s provisions, we must:
• Meet a professional standard of care when making investment recommendations (give
prudent advice);
• Never put our financial interests ahead of yours when making recommendations (give
loyal advice);
• Avoid misleading statements about conflicts of interest, fees, and investments;
• Follow policies and procedures designed to ensure that we give advice that is in your
best interest;
• Charge no more than is reasonable for our services; and
• Give you basic information about conflicts of interest.
Investors considering rolling over assets from a qualified employer-sponsored retirement plan
(“Employer Plan”) to an Individual Retirement Account (“IRA”) should review and consider the
advantages and disadvantages of an IRA rollover from their Employer Plan. A plan participant
leaving an employer typically has four options (and may engage in a combination of these
options):
(1) Leave the money in the former employer’s plan, if permitted;
(2) Rollover the assets to a new employer’s plan (if available and rollovers are permitted);
(3) Rollover Employer Plan assets to an IRA; or,
(4) Cash out the Employer Plan assets and pay the required taxes on the distribution.
At a minimum, Investors should consider fees and expenses, investment options, services,
penalty-free withdrawals, protection from creditors and legal judgments, required minimum
distributions, and employer stock. We encourage you to discuss your options and review the
above-listed considerations with an accountant, third-party administrator, investment advisor to
your Employer Plan (if available), or legal counsel, to the extent you consider necessary.
We have an economic incentive to encourage investors to rollover Employer Plan assets into an
IRA managed by us, as we will earn fees as a result.
2) Retirement Plan Consulting. GCM also provides consulting services to retirement plan sponsors
who utilize mutual funds as investment choices for plan participants. GCM provides this service
to both non-ERISA and ERISA Plans. GCM does not act as, or assume the duties of, a trustee or the
Plan Administrator. For the large majority of retirement plan clients, GCM has no discretion over
the investment of Plan assets or the management, administration or any other aspect of the Plan.
GCM offers the following Retirement Plan Consulting Services:
a) Provide non-discretionary investment advice to the Client about asset classes and
investment alternatives available for the Plan in accordance with the Plan’s investment
policies and objectives. Client shall have the final decision-making authority regarding
the initial selection, retention, removal, and addition of investment options.
b) Assist the Client with the selection of a broad range of investment options.
c) Assist the Client in the development of an investment policy statement (IPS). The
IPS establishes the investment policies and objectives for the Plan. Client shall have the
ultimate responsibility and authority to establish such policies and objectives and to
adopt and amend the investment policy statement.
d) Assist in monitoring investment options by preparing periodic investment reports
that document investment performance, consistency of fund management and
conformance to the guidelines set forth in the IPS and make recommendations to
maintain or remove and replace investment options.
e) Meet with Client on a periodic basis to discuss the reports and the investment
recommendations.
GCM may also provide discretionary investment advice to these Plan Sponsor clients. This
includes (1) developing an investment policy statement (IPS) for the Client, (2) selecting a broad
range of investment options consistent with ERISA Section 403(c) and the regulations
thereunder, and (3) providing ongoing and continuous discretionary investment management
with respect to the asset classes and investment alternatives under the Plan in accordance with
the IPS. Under this authority, GCM may remove and replace the investment alternatives available
under the Plan in its discretion.
As part of our contractual relationship with our Plan Sponsor clients, GCM may in some instances
provide services to the employees of employer-sponsored retirement plan clients that generally
consist of educational meetings on saving and investing for retirement, and the investment
alternatives available under the Plan.
GCM does not handle plan administration, recordkeeping, and other actuarial/legal matters.
However, we may provide a review of the service providers for each of these areas and/or provide
referrals.
3) Financial Planning Services. Additionally, GCM offers standalone financial planning services to
its clients under the working name “genPOWERMENT” pursuant to a written agreement. These
services are provided at varying levels depending on the nature and complexity of the client’s
situation. The planning or consulting may encompass one or more areas of need, including, but
not limited to financial goal setting, debt management, estate planning, cash flow and budgeting,
education funding and retirement planning.
All financial planning recommendations are based on information gathered through any of the
following: client questionnaires, emails and telephone discussions, and the scope of the
relationship can only be as in depth as the information that they provide to GCM.