Description of Firm
We have been in business since April 25, 2011. Dr. Jeremy S. Office is the principal owner of our firm,
and Kilburn Sherman is the Chief Compliance Officer.
As used in this brochure, the words "we," "our," and "us" refer to Maclendon Wealth Management,
LLC and the words "you," "your," and "client" refer to you as either a client or prospective client of our
firm. Also, you may see the term Associated Person in this brochure. Our Associated Persons are our
firm's officers, employees, and all individuals providing investment advice on behalf of our firm.
We offer portfolio management services through a wrap-fee program ("Program") as described in this
wrap fee program brochure to prospective and existing clients. We are the sponsor and investment
adviser for the Program. A wrap-fee program is a type of investment program that provides clients with
asset management and brokerage services for one all-inclusive fee. If you participate in our wrap fee
program, you will pay our firm a single fee, which includes money management fees, certain
transaction costs, and custodial and administrative costs. You are not charged separate fees for the
respective components of the total services. We receive a portion of the wrap fee for our services. The
overall cost you will incur if you participate in our wrap fee program may be higher or lower than you
might incur by separately purchasing the types of securities available in the Program.
Prior to becoming a client under the Program, you will be required to enter into a separate written
agreement with us that sets forth the terms and conditions of the engagement and describes the scope
of the services to be provided, and the fees to be paid.
Client Investment Process
We offer discretionary portfolio management services through a wrap-fee program as described in this
wrap fee program brochure. Our investment advice is tailored to meet our clients' needs and
investment objectives.
If you participate in our wrap-fee program discretionary portfolio management services, we require you
to grant our firm discretionary authority to manage your account. Discretionary authorization will allow
us to determine the specific securities, and the amount of securities, to be purchased or sold for your
account without your approval prior to each transaction. Discretionary authority is typically granted by
the investment advisory agreement you sign with our firm and the appropriate trading authorization
forms.
You may limit our discretionary authority (for example, limiting the types of securities that can be
purchased or sold for your account) by providing our firm with your restrictions and guidelines in
writing.
Assets for program accounts are held at Charles Schwab & Co., Inc. ("Schwab") a registered broker-
dealer and member SIPC. Schwab acts as custodian and executing broker/dealer for transactions
placed in Program accounts, and provides other administrative services as described throughout this
Brochure. To compare the cost of the wrap fee program with non-wrap fee portfolio management
services, you should consider the frequency of trading activity associated with our investment
strategies and the brokerage fees and/or commissions charged by Schwab and the advisory fees
charged by investment advisers.
4
Use of Independent Managers
We recommend that certain clients authorize the active discretionary management of a portion of their
assets by and/or among certain independent investment managers ("Independent Managers"), based
upon the stated investment objectives of the client. The terms and conditions under which the client
engages the Independent Managers are set forth in a separate written agreement between our firm or
the client and the designated Independent Managers. We render services to the client relative to the
discretionary selection or recommendation of Independent Managers. We also monitor and review the
account performance and the client's investment objectives. We receive a quarterly advisory fee which
is based upon a percentage of the market value of the assets being managed by the
designated Independent Managers.
When recommending or selecting an Independent Manager for a client, we review information about
the Independent Manager such as its disclosure brochure and/or material supplied by the Independent
Manager or independent third parties for a description of the Independent Manager's investment
strategies, past performance and risk results to the extent available. Factors that we consider in
recommending an Independent Manager include the client's stated investment objectives,
management style, performance, reputation, financial strength, reporting, pricing, and research. The
investment management fees charged by the designated Independent Managers, together with the
fees charged by the corresponding designated broker-dealer/custodian of the client's assets, may be
exclusive of, and in addition to, our investment advisory fee set forth above. The client may incur
additional fees than those charged by our firm, the designated Independent Managers, and
corresponding broker-dealer and custodian.
In addition to our written disclosure brochure, the client also receives the written disclosure brochure of
the designated Independent Managers. Certain Independent Managers may impose more restrictive
account requirements and varying billing practices than our firm. In such instances, we may alter our
corresponding account requirements and/or billing practices to accommodate those of the Independent
Managers.
If we refer a client to an Independent Manager where our compensation is included in the advisory fee
charged by such Independent Manager and the client engages the Independent Manager, we
are compensated for our services by receipt of a fee to be paid directly by the Independent Manager to
our firm in accordance with the requirements of Rule 206(4)-3 of the Investment Advisers Act of 1940,
as amended, and any corresponding state securities laws, rules, regulations, or requirements. Any
such fee is paid solely from the Independent Manager's investment management fee, and does not
result in any additional charge to the client.
The Program Fee
We charge an annual "wrap-fee" for participation in the Program depending upon the market value of
your assets under our management. You are not charged separate fees for the different components
of the services provided by the Program. Our firm pays all trade expenses of trades placed on your
behalf. Our Program fee includes the fee we pay to any portfolio manager for their management of
your account and TD Ameritrade's transaction or execution costs. Assets in each of your account(s)
are included in the fee assessment unless specifically identified in writing for exclusion. In special
circumstances, and in our sole discretion, we may negotiate a lesser management fee based upon
certain criteria (i.e., anticipated future earning capacity, dollar amount of assets to be managed, related
accounts, account composition, pre-existing client relationship, account retention, etc.).
New clients are billed as assets are deposited for the first two quarters. Thereafter, our annual fee is
prorated and charged quarterly, in advance, based upon the market value of the assets being
managed by our firm on the last day of the previous quarter. Adjustments will be made for singular
transactions (deposits / withdrawals) in excess of $500,000 during the quarter between non-qualified
5
asset accounts and external accounts. The annual fee varies (between 0.90% and 2.00%) depending
upon the market value of the assets under management and the type of investment management
services to be rendered.
We may, in our sole discretion, negotiate to charge a lesser management fee based upon certain
criteria (i.e., anticipated future earning capacity, anticipated future additional assets, dollar amount of
assets to be managed, related accounts, account composition, pre-existing client, account
retention, pro bono activities, etc.).
You should be aware that the wrap fee charged by our firm may be higher (or lower) than those
charged by others in the industry, and that it may be possible to obtain the same or similar services
from other firms at lower (or higher) rates. A client may be able to obtain some or all of the types of
services available through our firm's wrap fee program on an individual basis through other firms and,
depending on the circumstances, the aggregate of any separately paid fees may be lower or higher
than the annual fees shown above.
Termination of Advisory Relationship
You may terminate the wrap fee program agreement upon written notice to our firm. You will incur a
pro rata charge for services rendered prior to the termination of the wrap fee program agreement,
which means you will incur advisory fees only in proportion to the number of days in the quarter for
which you are a client.
Upon termination of accounts held at Schwab, they will deliver securities and funds held in the account
per your instructions unless you request that the account be liquidated. After the wrap fee program
agreement has been terminated, transactions are processed at the prevailing brokerage rates/fees.
You become responsible for monitoring your own assets and our firm has no further obligation to act
upon or to provide advice with respect to those assets.
Wrap Fee Program Disclosures
•The benefits under a wrap fee program depend, in part, upon the size of the Account, the
management fee charged, and the number of transactions likely to be generated in the
Account. For example, a wrap fee program may not be suitable for Accounts with little trading
activity. In order to evaluate whether a wrap fee program is suitable for you, you should
compare the Program Fee and any other costs of the Program with the amounts that would be
charged by other advisers, broker-dealers, and custodians, for advisory fees, brokerage and
other execution costs, and custodial services comparable to those provided under the Program.
•In considering the investment programs described in this brochure, you should be aware that
participating in a wrap fee program may cost more or less than the cost of purchasing advisory,
brokerage, and custodial services separately from other advisers or broker-dealers.
•Our firm and Associated Persons receive compensation as a result of your participation in the
Program. This compensation may be more than the amount our firm or the Associated
Persons
would receive if you paid separately for investment advice, brokerage, and other services.
Accordingly, a conflict of interest exists because our firm and our Associated Persons have a
financial incentive to recommend the Program.
•Similar advisory services may be available from other registered investment advisers for lower
fees.
Additional Fees And Expenses
The Program Fee includes the costs of brokerage commissions for transactions executed through the
Qualified Custodian (or a broker-dealer designated by the Qualified Custodian), and charges relating to
the settlement, clearance, or custody of securities in the Account. The Program Fee does not include
mark-ups and mark-downs, dealer spreads or other costs associated with the purchase or sale of
6
securities, interest, taxes, or other costs, such as national securities exchange fees, charges for
transactions not executed through the Qualified Custodian, costs associated with exchanging
currencies, wire transfer fees, or other fees required by law or imposed by third parties. The Account
will be responsible for these additional fees and expenses.
The wrap program fees that you pay to our firm for portfolio management services are separate and
distinct from the fees and expenses charged by mutual funds or exchange traded funds (described in
each fund's prospectus) to their shareholders. These fees will generally include a management fee and
other fund expenses. To fully understand the total cost you will incur, you should review all the fees
charged by mutual funds, exchange traded funds, our firm, and others.
Margin Accounts
We may trade client accounts on margin. Each client must sign a separate margin agreement before
margin is extended to that client account. Fees for advice and execution on these securities are based
on the total asset value of the account, which includes the value of the securities purchased on margin.
While a negative amount may show on a client's statement for the margined security as the result of a
lower net market value, the amount of the fee is based on the absolute market value. This creates a
conflict of interest where we have an incentive to encourage the use of margin to create a higher
market value and therefore receive a higher fee. The use of margin may also result in interest charges
in addition to all other fees and expenses associated with the security involved.
Brokerage Practices
If you participate in the Program, you will be required to establish an account with Schwab. If you do
not direct our firm to execute transactions through Schwab, we reserve the right to not accept your
account. Not all advisers require their clients to direct brokerage. We believe that Schwab provides
quality execution services based on several factors, including, but not limited to, its financial strength,
reputation, execution, pricing, research and service. In seeking best execution, the determinative factor
is not the lowest possible cost, but whether the transaction represents the best qualitative execution,
taking into consideration the full range of Schwab's services, including among others, the value of
research provided, execution capability, commission rates, and responsiveness. We periodically and
systematically review our policies and procedures regarding our recommendation of Schwab in light of
our duty to obtain best execution.
Transactions for each client generally will be effected independently, unless we decide to purchase or
sell the same securities for several clients at approximately the same time. We may (but are not
obligated to) combine or "batch" such orders to obtain best execution, to negotiate more favorable
commission rates, or to allocate equitably among our clients differences in prices and or other costs
that might have been obtained had such orders been placed independently. Under this procedure,
transactions will generally be averaged as to price and allocated among our clients pro rata to the
purchase and sale orders placed for each client on any given day. To the extent that we determine to
aggregate client orders for the purchase or sale of securities, including securities in which
our Supervised Persons may invest, we generally do so in accordance with applicable rules
promulgated under the Advisers Act and no-action guidance provided by the staff of the U.S. Securities
and Exchange Commission. We do not receive any additional compensation or remuneration as a
result of the aggregation. In the event that we determine that a prorated allocation is not appropriate
under the particular circumstances, the allocation will be made based upon other relevant factors,
which may include: (i) when only a small percentage of the order is executed, shares may be allocated
to the account with the smallest order or the smallest position or to an account that is out of line with
respect to security or sector weightings relative to other portfolios, with similar mandates; (ii)
allocations may be given to one account when one account has limitations in its investment guidelines
which prohibit it from purchasing other securities which are expected to produce similar investment
results and can be purchased by other accounts; (iii) if an account reaches an investment guideline
7
limit and cannot participate in an allocation, shares may be reallocated to other accounts (this may be
due to unforeseen changes in an account's assets after an order is placed); (iv) with respect to sale
allocations, allocations may be given to accounts low in cash; (v) in cases when a pro rata allocation of
a potential execution would result in a de minimis allocation in one or more accounts, we may exclude
the account(s) from the allocation; the transactions may be executed on a pro rata basis among the
remaining accounts; or (vi) in cases where a small proportion of an order is executed in all accounts,
shares may be allocated to one or more accounts on a random basis.
Consistent with obtaining best execution, brokerage transactions may be directed to certain broker-
dealers in return for investment research products and/or services which assist us in our investment
decision-making process. Such research generally will be used to service all of our clients, but
brokerage commissions paid by one client may be used to pay for research that is not used in
managing that client's portfolio. The receipt of investment research products and/or services as well as
the allocation of the benefit of such investment research products and/or services poses a conflict of
interest because we do not have to produce or pay for the products or services.
Schwab Advisor ServicesTM
While MWM may recommend that you use Schwab as custodian/broker, you will decide whether to
do so and will open your account with Schwab by entering into an account agreement directly with
them. You should consider these conflicts of interest when selecting your custodian. Schwab Advisor
ServicesTM is Schwab's business serving independent investment advisory firms like ours. They
provide us and our clients with access to their institutional brokerage services (trading, custody,
reporting , and related services), many of which are not typically available to Schwab retail customers.
However, certain retail investors may be able to get institutional brokerage services from Schwab
without going through our firm. Schwab also makes available various support services. Some of those
services help us manage or administer our clients' accounts, while others help us manage and grow
our business. Schwab's support services are generally available at no charge to us.
MWM does not open the account for you, although we may assist you in doing so. MWM seeks
to recommend a custodian/broker that will hold your assets and execute transactions. When
considering whether the terms that Schwab provides are, overall, most advantageous to you when
compared with other available providers and their services, MWM considers a wide range of factors,
including:
• Combination of transaction execution services and asset custody services (generally without
a separate fee for custody)
• Capability to execute, clear, and settle trades (buy and sell securities for your accounts)
• Capability to facilitate transfers and payments to and from accounts (wire transfers,
check requests, bill payment, etc.)
• Breadth of available investment products (stocks, bonds, mutual funds, exchange-traded
funds [ETFs], etc.)
• Availability of investment research and tools that assist us in making investment decisions.
• Quality of services
For our clients' accounts that Schwab maintains, Schwab generally does not charge you separately
for custody services but is compensated by charging you commissions or other fees on trades that
it executes or that settle into your Schwab account. Certain trades (for example, many mutual funds,
and U.S. exchange-listed equities and ETFs) may not incur Schwab commissions or transaction fees.
Schwab is also compensated by earning interest on the uninvested cash in your account in Schwab's
Cash Features Program. We are not required to select the broker or dealer that charges the lowest
transaction cost, even if that broker provides execution quality comparable to other brokers or dealers.
Although we are not required to execute all trade through Schwab, we have determined that having
8
Schwab execute most trades is
consistent with our duty to seek "best execution" of your trades. Best execution means the most
favorable terms for a transaction based on all relevant factors, including those listed above. By using
another broker or dealer you may pay lower transaction costs. The availability of these services from
Schwab benefits us because we do not have to produce or purchase them. We don't have to pay for
Schwab's services. The fact that we receive these benefits from Schwab is an incentive for us to
recommend the use of Schwab rather than making such decision based exclusively on your interest in
receiving the best value in custody services and the most favorable execution of your transactions.
This is a conflict of interest. MWM believes, however, that taken in the aggregate, our recommendation
of Schwab as custodian and broker is in the best interests of our clients. Our selection is primarily
supported by the scope, quality, and price of Schwab's services not Schwab's services that benefit only
us.
Research and Other Soft Dollar Benefits
We do not have any soft dollar arrangements.
Brokerage for Client Referrals
We do not receive client referrals from broker-dealers in exchange for cash or other compensation,
such as brokerage services or research.