overall financial situation. Financial planning can be described
as helpi
ng individuals determine and set their
long-term financial goals, thro
ugh investments, tax
planning, asset allocation, risk management, retirement planning, and other areas. T
he role of a financial
planner is to find ways to help the client understand his/her
overall financial situation and help t
he client
set financial
objectives.
Investment Management Services – Seneca Financial Advisors provides advisory services in the form
of Investment Management Services. Investment Management Services involve providing clients with
continuous and on-going supervision over client accounts. This means we will continuously monitor a
client’s account and make trades in client accounts when necessary.
Investment Consulting Services – We also provide investment consulting services in the form of oral
advice and written recommendations. These services are somewhat similar to Investment Management
Services, except for the fact that we do not implement any recommendations. Clients signing up for this
service must understand that the Firm does not provide on-going reviews of accounts through this service
and information about such accounts is limited to information provided exclusively by the client. The
Client always has the sole discretion to accept or reject the Firm’s advice. The client must implement all
trades in such accounts because the Firm will have no access to the account.
Limits Advice to Certain Types of Investments
Investment advice typically involves both generic and specific asset allocation recommendations.
Investment advice may be offered on any investments held by a client at the start of the advisory
relationship. Specifically, the Firm provides investment advice on the following types of investments.
• Exchange-listed securities (i.e., stocks)
• Securities traded over-the-counter (i.e., stocks)
• Foreign Issues
• Warrants
• Corporate debt securities (other than commercial paper)
• Commercial paper
• Certificates of deposit
• Municipal securities
• Variable life insurance
• Variable annuities
• Mutual fund shares
• United States government securities
• Options contracts on securities and commodities
• Futures contracts on tangibles and intangibles
• Interests in partnerships investing in real estate, oil and gas interests
Seneca Financial Advisors performs background research and may occasionally recommend or provide
advice on private real estate investments, tax credit partnerships (including low income housing and/or oil
and gas), conservation tax credits, REITs (real estate investment trusts), hedge funds, and 529 college
savings plans. In addition, Seneca Financial Advisors researches and makes occasional
recommendations for investments in private equity, venture capital, timber and hedge funds, real estate
partnerships and other private placement investments.
Private offering (i.e., unregistered) investments are often illiquid, which means that the investments can
be difficult to trade and consequently limits a client’s ability to dispose of such investments in a timely
manner and at an advantageous price. Additionally, such investments may not have been registered
pursuant to the Securities Act of 1933, and therefore the client will need to complete a subscription
agreement showing the client is an “accredited” investor (as defined by applicable law and rules and
regulations) and acknowledge that he or she has read and understands the private placement
memorandum and is aware of the various risk factors associated with such an investment.
When providing Investment Management Services, the Firm will typically construct each client’s portfolio
using mutual funds, Exchange-Traded Funds and separate account managers to build a diversified
portfolio. It is not Seneca Financial Advisors’ typical investment strategy to attempt to time the market,
however, we do use a tactical asset allocation strategy whereby we will overweight or underweight certain
asset classes based on our expectations of market behavior, extreme undervaluation (or overvaluation),
and stages of the risk cycle. Further, we may modify our investment strategy to accommodate special
situations such as low basis stock, stock options, legacy holdings, inheritances, closely held businesses,
collectibles, or special tax situations.
(Please refer to Item 8 – Methods of Analysis, Investment
Strategies and Risk of Loss for more information.)
Tailor Advisory Services to Individual Needs of Clients
Seneca Financial Advisors’ services are always provided based on the individual needs of each client.
This means, for example, that you are given the ability to impose restrictions on the accounts we manage
for you, including specific investment selections and sectors. We work with each client on a one-on-one
basis through interviews and educational materials to determine the client’s investment objectives and
suitability information.
When managing client accounts through the Firm’s Investment Management Services program, we may
manage accounts in accordance with one or more investment models that are developed and monitored
by our investment team. When client accounts are managed using models, investment selections are
based on the underlying model. However, the determination to use a particular model or models is
always based on each client’s individual investment goals, objectives and mandates.
Retirement Plan Rollover Recommendations
When Seneca Financial Advisors provides investment advice about your retirement plan account or
individual retirement account (“IRA”) including whether to maintain investments and/or proceeds in the
retirement plan account, roll over such investment/proceeds from the retirement plan account to an IRA or
make a distribution from the retirement plan account, we acknowledge that Seneca Financial Advisors is
a “fiduciary” within the meaning of Title I of the Employee Retirement Income Security Act (“ERISA”)
and/or the Internal Revenue Code (“IRC”) as applicable, which are laws governing retirement accounts.
The way Seneca Financial Advisors makes money creates conflicts with your interests, so Seneca
Financial Advisors operates under a special rule that requires Seneca Financial Advisors to act in your
best interest and not put our interest ahead of you.
Under this special rule’s provisions, Seneca Financial Advisors must as a fiduciary to a retirement plan
account or IRA under ERISA/IRC:
• Meet a professional standard of care when making investment recommendations (e.g.,
give prudent advice);
• Never put the financial interests of Seneca Financial Advisors ahead of your financial
interests when making recommendations (e.g., give loyal advice);
• Avoid misleading statements about conflicts of interest, fees, and investments;
• Follow policies and procedures designed to ensure that Seneca Financial Advisors gives
advice that is in your best interest;
• Charge no more than is reasonable for the services of Seneca Financial Advisors; and
• Give you basic information about conflicts of interest.
To the extent we recommend you roll over your account from a current retirement plan account to an
individual retirement account managed by Seneca Financial Advisors, please know that Seneca Financial
Advisors and our investment adviser representatives may have a conflict of interest.
We can earn increased investment advisory fees by recommending that you roll over your account at the
retirement plan to an IRA managed by Seneca Financial Advisors. We may earn fewer investment
advisory fees if you do not roll over the funds in the retirement plan to an IRA managed by Seneca
Financial Advisors.
Thus, our investment adviser representatives may have an economic incentive to recommend a rollover
of funds from a retirement plan to an IRA which is a conflict of interest because our recommendation that
you open an IRA account to be managed by our firm can be based on our economic incentive and not
based exclusively on whether or not moving the IRA to our management program is in your overall best
interest.
We have taken steps to manage this conflict of interest. We have adopted an impartial conduct standard
whereby our investment adviser representatives will (i) provide investment advice to a retirement plan
participant regarding a rollover of funds from the retirement plan in accordance with the fiduciary status
described below, (ii) not recommend investments which result in Seneca Financial Advisors receiving
unreasonable compensation related to the rollover of funds from the retirement plan to an IRA, and (iii)
fully disclose compensation received by Seneca Financial Advisors and our supervised persons and any
material conflicts of interest related to recommending the rollover of funds from the retirement plan to an
IRA and refrain from making any materially misleading statements regarding such rollover.
When providing advice to you regarding a retirement plan account or IRA, our investment advisor
representatives will act with the care, skill, prudence, and diligence under the circumstances then
prevailing that a prudent person acting in a like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims, based on the investment objectives, risk,
tolerance, financial circumstances, and a client’s needs, without regard to the financial or other interests
of Seneca Financial Advisors or our affiliated personnel.
Client Assets Managed by Seneca Financial Advisors
The amount of client assets managed by Seneca Financial Advisors
totaled $520,499,794 as of
December 31, 2022. $461,661,023 is managed on a discretionary basis and $58,838,771 is managed on
a non-discretionary basis.