A. RZH Advisors (the “Registrant”) is a limited liability company formed on February 7,
2000, in the state of Connecticut. The Registrant became registered as an Investment
Adviser Firm in May 2010. The Registrant is owned by Carl J. Zuckerberg, Spencer
Cooper and Lauren Rowland. Mr. Cooper, Mr. Zuckerberg, and Ms. Rowland are the
Registrant’s Principals.
The Registrant generally provides its clients with wealth management services (i.e.,
combined financial planning and investment management services) on a fee-basis per its
fee schedule set forth in Item 5 below. In limited circumstances, Registrant, in its sole
discretion, may enter into investment management services only engagements for those
types of clients that do not require wealth management services (i.e., ERISA plans,
endowments, trusts, etc.) per the terms and conditions of a mutually agreeable fee
arrangement.
B.
INVESTMENT ADVISORY SERVICES
The Registrant provides discretionary investment advisory services on a fee basis. Before
engaging the Registrant to provide investment advisory services, clients are required to
enter into an Investment Advisory Agreement with the Registrant setting forth the terms
and conditions of the engagement (including termination), describing the scope of the
services to be provided, and the fee that is due from the client. The Registrant’s annual
investment advisory fee is based upon a percentage (%) of the market value of client
assets placed under Registrant’s management.
Registrant's annual investment advisory fee may include both investment management
services and initial and/or ongoing financial planning and consulting services. In the
event that the client requires extraordinary planning and/or consultation services (to be
determined in the sole discretion of the Registrant), the Registrant may determine to
charge for such additional services, the dollar amount of which shall be set forth in a
separate written notice to the client.
During the initial engagement year, a client who desires financial planning and consulting
services may pay an additional fee of up to 0.15% (for limited planning services-
generally limited to consulting services incidental to the investment management process)
to 0.25% (for planning) of the anticipated total assets to be placed under the Registrant’s
management/advisement as compensation for the initial desired/anticipated planning and
consulting services to be provided.
FINANCIAL PLANNING AND CONSULTING SERVICES (STAND-ALONE)
The Registrant may be engaged to provide financial planning and/or consulting services
(including investment and non-investment related matters, including estate planning,
insurance planning, etc.) on a stand-alone separate fee basis. Registrant’s planning and
consulting fees are negotiable, but generally range from $2,500 to $50,000 on a fixed fee
basis, and from $400 to $600 on an hourly rate basis, depending upon the level and scope
of the service(s) required and the professional(s) rendering the service(s). Prior to
engaging the Registrant to provide planning or consulting services, clients are generally
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required to enter into a Financial Planning and Consulting Agreement with Registrant
setting forth the terms and conditions of the engagement (including termination),
describing the scope of the services to be provided, and the portion of the fee that is due
from the client prior to Registrant commencing services.
If requested by the client, Registrant may recommend the services of other professionals
for implementation purposes (i.e., attorneys, accountants, insurance, etc.). The client is
under no obligation to engage the services of any such recommended professional. The
client retains absolute discretion over all such implementation decisions and is free to
accept or reject any recommendation from the Registrant.
If the client engages any recommended unaffiliated professional, and a dispute arises
thereafter relative to such engagement, the client agrees to seek recourse exclusively from
and against the engaged professional. At all times, the engaged licensed professional[s]
(i.e., attorney, accountant, insurance agent, etc.), and not the Registrant, shall be
responsible for the quality and competency of the services provided.
It remains the client’s responsibility to promptly notify the Registrant if there is ever any
change in their financial situation or investment objectives for the purpose of reviewing,
evaluating or revising Registrant’s previous recommendations and/or services.
DIVORCE CONSULTANT SERVICES
The Registrant may provide financial planning services for people going through a
divorce. Divorce consultation services may be provided in any of the following areas: tax
planning analysis, estate planning analysis, investment, pension and profit sharing,
business, insurance and cash flow management. All arrangements concerning fees and
services will be agreed upon in advance and will be in a written contract.
MISCELLANEOUS
Limitations of Financial Planning and Non-Investment Consulting/Implementation
Services. As indicated above, to the extent requested by a client, Registrant may provide
financial planning and related consulting services. Neither the Registrant nor its
investment adviser representatives assist clients with the implementation of any financial
plan, unless they have agreed to do so in writing. The Registrant does not monitor a
client’s financial plan, and it is the client’s responsibility to revisit the financial plan with
the Registrant, if desired.
The Registrant does not serve as an attorney or accountant, and no portion of its services
should be construed as legal or accounting services. Accordingly, Registrant does not
prepare estate planning documents or tax returns. To the extent requested by a client,
Registrant may recommend the services of other professionals for certain non-investment
implementation purpose (i.e., attorneys, accountants, insurance agents, etc.). The client is
under no obligation to engage the services of any such recommended professional. The
client retains absolute discretion over all such implementation decisions and is free to
accept or reject any recommendation from Registrant and/or its representatives.
If the client engages any recommended unaffiliated professional, and a dispute arises
thereafter relative to such engagement, the client agrees to seek recourse exclusively from
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and against the engaged professional. At all times, the engaged licensed professional[s]
(i.e., attorney, accountant, insurance agent, etc.), and not the Registrant, shall be
responsible for the quality and competency of the services provided.
Retirement Plan Rollovers – No Obligation / Conflict of Interest. A client or
prospective client leaving an employer typically has four options regarding an existing
retirement plan (and may engage in a combination of these options): (i) leave the money
in the former employer’s plan, if permitted, (ii) roll over the assets to the new employer’s
plan, if one is available and rollovers are permitted, (iii) roll over to an Individual
Retirement Account (“IRA”), or (iv) cash out the account value (which could, depending
upon the client’s age, result in adverse tax consequences). If Registrant recommends that
a client roll over their retirement plan assets into an account to be managed by Registrant,
such a recommendation creates a conflict of interest if Registrant will earn new (or
increase its current) compensation as a result of the rollover. If Registrant provides a
recommendation as to whether a client should engage in a rollover or not, Registrant is
acting as a fiduciary 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. No client is under any obligation to roll over retirement plan assets
to an account managed by Registrant.
Mutual and Exchange Traded Funds. Most mutual funds and exchange traded funds
are available directly to the public. Therefore, a prospective client can obtain many of the
funds that may be utilized by the Registrant independent of engaging Registrant as an
investment advisor. However, if a prospective client determines to do so, he/she will not
receive the Registrant’s initial and ongoing investment advisory services.
DFA Mutual Funds. Registrant utilizes mutual funds issued by Dimensional Fund
Advisors (“DFA”). DFA funds are generally only available through registered investment
advisers. Therefore, if the client was to terminate the Registrant’s services, and not
transition to another adviser who utilizes DFA funds, restrictions regarding additional
purchases of, or reallocation among other, DFA funds will generally apply.
Interval Funds/Risks and Limitations: Where appropriate, Registrant may utilize
interval funds (and other types of securities that could pose additional risks, including
lack of liquidity and restrictions on withdrawals). An interval fund is a non-traditional
type of closed-end mutual fund that periodically offers to buy back a percentage of
outstanding shares from shareholders. Investments in an interval fund involve additional
risk, including lack of liquidity and restrictions on withdrawals.
During any time periods outside of the specified repurchase offer window(s), investors
will be unable to sell their shares of the interval fund. There is no assurance that an
investor will be able to tender shares when or in the amount desired. There can also be
situations where an interval fund has a limited amount of capacity to repurchase shares
and may not be able to fulfill all purchase orders. In addition, the eventual sale price for
the interval fund could be less than the interval fund value on the date that the sale was
requested.
While an internal fund periodically offers to repurchase a portion of its securities, there is
no guarantee that investors may sell their shares at any given time or in the desired
amount. As interval funds can expose investors to liquidity risk, investors should consider
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interval fund shares to be an illiquid investment. Typically, the interval funds are not
listed on any securities exchange and are not publicly traded. Therefore, there is no
secondary market for the fund’s shares.
Because these types of investments involve certain additional risk, these funds will only
be utilized when consistent with a client’s investment objectives, individual situation,
suitability, tolerance for risk and liquidity needs. Investment should be avoided where an
investor has a short-term investing horizon and/or cannot bear the loss of some, or all, of
the investment. There can be no assurance that an interval fund investment will prove
profitable or successful. In light of these enhanced risks, a client may direct Registrant, in
writing, not to purchase interval funds for the client’s account.
Socially Responsible (ESG) Investing Limitations. Socially Responsible Investing
involves the incorporation of Environmental, Social and Governance (“ESG”)
considerations into the investment due diligence process. ESG investing incorporates a
set of criteria/factors used in evaluating potential investments: Environmental (i.e.,
considers how a company safeguards the environment); Social (i.e., the manner in which
a
company manages relationships with its employees, customers, and the communities
in which it operates); and Governance (i.e., company management considerations). The
number of companies that meet an acceptable ESG mandate can be limited when
compared to those that do not, and could underperform broad market indices. Investors
must accept these limitations, including potential for underperformance.
Correspondingly, the number of ESG mutual funds and exchange-traded funds are
limited when compared to those that do not maintain such a mandate. As with any type of
investment (including any investment and/or investment strategies recommended and/or
undertaken by Registrant), there can be no assurance that investment in ESG securities or
funds will be profitable or prove successful. Registrant generally relies on the
assessments undertaken by the unaffiliated mutual fund, exchange traded fund or separate
account portfolio manager to determine that the fund’s or portfolio’s underlying company
securities meet a socially responsible mandate.
Cash Positions. Registrant treats cash as an asset class. As such, all cash positions
(money markets, etc.) shall be included as part of assets under management for purposes
of calculating the Registrant’s advisory fee. At any specific point in time, depending
upon perceived or anticipated market conditions/events (there being no guarantee that
such anticipated market conditions/events will occur), the Registrant may maintain cash
positions for defensive purposes. In addition, while assets are maintained in cash, such
amounts could miss market advances. Depending upon current yields, at any point in
time, Registrant’s advisory fee could exceed the interest paid by the client’s money
market fund.
Cash Sweep Accounts. Certain account custodians can require that cash proceeds from
account transactions or new deposits, be swept to and/or initially maintained in a
specific custodian designated sweep account. The yield on the sweep account will
generally be lower than those available for other money market accounts. When this
occurs, to help mitigate the corresponding yield dispersion Registrant shall (usually
within 30 days thereafter) generally (with exceptions) purchase a higher yielding money
market fund (or other type security) available on the custodian’s platform, unless
Registrant reasonably anticipates that it will utilize the cash proceeds during the
subsequent 30-day period to purchase additional investments for the client’s account.
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Exceptions and/or modifications can and will occur with respect to all or a portion of the
cash balances for various reasons, including, but not limited to the amount of dispersion
between the sweep account and a money market fund, the size of the cash balance, an
indication from the client of an imminent need for such cash, or the client has a
demonstrated history of writing checks from the account.
The above does not apply to the cash component maintained within a Registrant actively
managed investment strategy (the cash balances for which shall generally remain in the
custodian designated cash sweep account), an indication from the client of a need for
access to such cash, assets allocated to an unaffiliated investment manager and cash
balances maintained for fee billing purposes.
The client shall remain exclusively responsible for yield dispersion/cash balance
decisions and corresponding transactions for cash balances maintained in any Registrant
unmanaged accounts.
Independent Managers. The Registrant may allocate (and/or recommend that the client
allocate) a portion of a client’s investment assets among unaffiliated independent
investment managers and/or sub-advisers in accordance with the client’s designated
investment objective(s). In such situations, the Independent Manager(s) shall have day-
to-day responsibility for the active discretionary management of the allocated assets. The
Registrant shall continue to render investment supervisory services to the client relative
to the ongoing monitoring and review of account performance, asset allocation and client
investment objectives. Factors which the Registrant shall consider in recommending
Independent Manager(s) include the client’s designated investment objective(s),
management style, performance, reputation, financial strength, reporting, pricing, and
research. The investment management fee charged by the Independent Manager(s) is
separate from, and in addition to, the Registrant’s investment advisory fee as set forth in
Item 5.
Account Aggregation Tools. Registrant, in conjunction with the services provided
through Orion Adviser Services (“Orion”) and ByAllAccounts, Inc., a resource made
available through Orion, may also provide periodic comprehensive reporting services
which may incorporate all of the client’s investment assets, including those investment
assets that are not part of the assets managed by Registrant (the “Excluded Assets”). The
Registrant’s service relative to the Excluded Assets is limited to reporting services only,
which does not include investment implementation. Because the Registrant does not have
trading authority for the Excluded Assets, to the extent applicable to the nature of the
Excluded Assets (assets over which the client maintains trading authority vs. trading
authority designated to another investment professional), the client (and/or the other
investment professional), and not the Registrant, shall be exclusively responsible for
directly implementing any recommendations relative to the Excluded Assets. The client
and/or their other advisors that maintain trading authority, and not the Registrant, shall be
exclusively responsible for the investment performance of the Excluded Assets. Without
limiting the above, the Registrant shall not be responsible for any implementation error
(timing, trading, etc.) relative to the Excluded Assets. In the event the client desires that
the Registrant provide non-discretionary investment management services (whereby the
Registrant would have trading authority) with respect to the Excluded Assets, the client
may engage the Registrant to do so pursuant to the terms and conditions of the Investment
Advisory Agreement between the Registrant and the client.
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Cryptocurrency: For clients who want exposure to cryptocurrencies, including Bitcoin,
the Registrant, will advise the client to consider a potential investment in corresponding
exchange traded securities, or an allocation to separate account managers and/or private
funds that provide cryptocurrency exposure. Crypto is a digital currency that can be
used to buy goods and services but uses an online ledger with strong cryptography (i.e.,
a method of protecting information and communications through the use of codes) to
secure online transactions. Unlike conventional currencies issued by a monetary
authority, cryptocurrencies are generally not controlled or regulated and their price is
determined by the supply and demand of their market. Because cryptocurrency is
currently considered to be a speculative investment, the Registrant will not exercise
discretionary authority to purchase a cryptocurrency investment for client accounts.
Rather, a client must expressly authorize the purchase of the cryptocurrency investment.
The Registrant does not recommend or advocate the purchase of, or investment in,
cryptocurrencies. The Registrant considers such an investment to be speculative. Clients
who authorize the purchase of a cryptocurrency investment must be prepared for the
potential for liquidity constraints, extreme price volatility and complete loss of principal.
Portfolio Activity. Registrant has a fiduciary duty to provide services consistent with the
client’s best interest. As part of its investment advisory services, Registrant will review
client portfolios on an ongoing basis to determine if any changes are necessary based
upon various factors, including, but not limited to, investment performance, fund
manager tenure, style drift, account additions/withdrawals, and/or a change in the client’s
investment objective. Based upon these factors, there may be extended periods of time
when Registrant determines that changes to a client’s portfolio are neither necessary nor
prudent. Clients nonetheless remain subject to the fees described in Item 5 below during
periods of account inactivity.
Client Obligations. In performing its services, Registrant shall not be required to verify
any information received from the client or from the client’s other professionals, and is
expressly authorized to rely thereon. Moreover, each client is advised that it remains their
responsibility to promptly notify the Registrant if there is ever any change in their
financial situation or investment objectives for the purpose of reviewing, evaluating or
revising Registrant’s previous recommendations and/or services.
Cybersecurity Risk. The information technology systems and networks that Registrant
and its third-party service providers use to provide services to Registrant’s clients employ
various controls, which are designed to prevent cybersecurity incidents stemming from
intentional or unintentional actions that could cause significant interruptions in
Registrant’s operations and result in the unauthorized acquisition or use of clients’
confidential or non-public personal information. Clients and Registrant are nonetheless
subject to the risk of cybersecurity incidents that could ultimately cause them to incur
losses, including for example: financial losses, cost and reputational damage to respond
to regulatory obligations, other costs associated with corrective measures, and loss from
damage or interruption to systems. Although Registrant has established procedures to
reduce the risk of cybersecurity incidents, there is no guarantee that these efforts will
always be successful, especially considering that Registrant does not directly control the
cybersecurity measures and policies employed by third-party service providers. Clients
could incur similar adverse consequences resulting from cybersecurity incidents that
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more directly affect issuers of securities in which those clients invest, broker-dealers,
qualified custodians, governmental and other regulatory authorities, exchange and other
financial market operators, or other financial institutions.
Disclosure Statement. A copy of the Registrant’s written Brochure and Client
Relationship Summary, as set forth on Part 2A of Form ADV and Form CRS
respectively, shall be provided to each client prior to, or contemporaneously with, the
execution of the Investment Advisory Agreement or Financial Planning and Consulting
Agreement.
C. The Registrant shall provide investment advisory services specific to the needs of each
client. Prior to providing investment advisory services, an investment adviser
representative will ascertain each client’s investment objective(s). Thereafter, the
Registrant shall allocate and/or recommend that the client allocate investment assets
consistent with the designated investment objective(s). The client may, at any time,
impose reasonable restrictions, in writing, on the Registrant’s services.
D. The Registrant does not participate in a wrap fee program.
E. As of February 2, 2024, the Registrant had $1,718,028,015 in assets under management
on a discretionary basis.