ITEM
4
Who We Are
Powell Investment Advisors, LLC (hereinafter referred to as “PIA”, “the Company”, “we”, “us”
and “our”) is a fee-only registered investment advisor1 offering portfolio management services
since 2012 to assist you, our client2, achieve the financial security and independence you
desire.
Principals
The Company is controlled by the following persons:
Name Title CRD#
Earl W. Powell Managing Member 1350954
Jesse A. Wachs
Chief Investment Officer & Chief Compliance
Officer
4437874
Todd J. Gross Portfolio Manager & Chief Financial Officer 5105277
Assets Under Management
As of January 31, 2023, PIA held $475,600,000 under management on a discretionary basis;
no assets were managed on a non-discretionary basis.
Our Mission
Our mission is to assist you in managing time horizons and market volatility by implementing
asset management strategies designed to maximize wealth, maintain investment expectations,
and minimize investment risk relative to your financial goals.
What We Do
We manage wealth. Our portfolio management services begin with stressing the importance of
you making fiscally responsible decisions and disciplined economic choices in your personal life
so we can effectively help you achieve your monetary goals.
Focus of our portfolio management will be to identify your unique investment parameters that,
once defined, will allow us to provide clear perspective and insight into the investment
alternatives to be most effective for your situation. These identifying parameters are a
beginning point to successful portfolio management that includes:
1 The term “registered investment advisor” is not intended to imply that Powell Investment Advisors, LLC has attained a certain level of skill or
training. It is used strictly to reference the fact that we are “registered” as a licensed “investment advisor” with the United States Securities &
Exchange Commission – and “Notice Filed” with such other State Regulatory Agencies that may have limited regulatory jurisdiction over our
business practices.
2 A client could be an individual and their family members, a family office, a foundation or endowment, a corporation and/or small business, a
trust, a guardianship, an estate, a hedge fund, or any other type of entity to which we choose to give investment advice.
❖ Risk Assessment – An attempt to identify your level of tolerable risk to an
acceptable level of market volatility and expected investment return.
❖ Investment Composition – An investment strategy designed to achieve your unique
financial expectations relative to your risk factors and predetermined benchmarks.
❖ Tax Management – Analyze tax implications to your investment portfolio.
From these identifying factors we will construct managed portfolios consisting of equity
(“stock”) positions, fixed income/debt (“bond”) instruments, investment company (“mutual
funds”) products, exchange traded funds (“ETFs”), and alternative investments. You can find
more information about our management fees and services under “Portfolio Management” in
Item 5, “Fees & Compensation” and further description of our management style under Item
8, “Methods of Analysis, Investment Strategies & Risk of Loss”.
ERISA and Individual Retirement Accounts Disclosure
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.
How We Get to Know You
As a new client, we will conduct pre-advisory consultations with you to discuss issues such as
your current income and expenses, career, personal goals, investment return expectations and
prior investment experience. In addition, we will have you complete a profile questionnaire3
to gain greater insight into your financial needs.
With the complexity of today’s marketplace, it is critical for us to understand who you are and
what you want to accomplish financially. We must have a clear picture of your unique financial
3 The profile questionnaire we use is an important tool in gathering information about your investment methodology, risk tolerance, income/tax
bracket, liquidity, time horizons, etc. If you elect not to answer the questionnaire or choose to respond with limited input, it is possible that we
could operate in a handicapped capacity contrary to your investment needs. Therefore, if you desire the most effective and accurate
recommendations regarding your managed account(s), you should make every effort to provide us with your detailed personal needs and
objectives, along with detailed financial and tax information.
composition and risk tolerance so that we can develop a successful portfolio management
strategy and tailored asset allocation guideline. In return, we will have:
❖ Defined and narrowed objectives and investment options;
❖ Identified areas of greatest distress;
❖ Developed a strategy for addressing concerns about the future;
❖ Cultivated peace of mind; and,
❖ Created a unique picture of your overall economic personality.
Once your financial parameters have been identified, we will prepare an asset allocation plan
that outlines what asset mix is most suitable for your unique investment expectations and risk
tolerance. This asset allocation plan will guide us in the management of your account(s), and
as a standard against which to measure future results and to make modifications where
necessary.
FEES & COMPENSATION
ITEM
5
Portfolio Management
Portfolio management is provided on an asset-based fee arrangement. Management fees are
calculated based on the aggregate market value of your account on the last business day of the
previous calendar quarter multiplied by the annual percentage rate for each portion of your
portfolio assets that fall within each tier, that value is then divided by the number of days in
the year and again multiplied by the number of days in the quarter being billed (See “Billing”
below under “Protocols for Portfolio Management” for more information.).
We retain discretion to negotiate the management fee within each tier on a client-by-client
basis depending on the size and complexity of the portfolio managed. In addition, a fee break
will occur as assets in your portfolio increase past the following tier:
Account Value
Annual Fee
Rate
Not to Exceed
First $3,000,000 ...................................................... 1.00%
Next $2,000,000 ...................................................... 0.75%
Next $2,000,000 ......................................................
0.65%
Next $3,000,000 ...................................................... 0.50%
Over $10,000,000 .................................................... 0.35%
We have a $10,000 minimum annual fee requirement ($2,500 billed quarterly), which may be
waived or reduced if we feel circumstances are warranted. Accounts with portfolio values
that fall below $1,000,000 will be subject to this minimum annual fee, which can exceed
our highest published 1.00% Annual Fee Rate (e.g., a managed account of $500,000 with a
minimum annual fee charge of $10,000, will translate into an annual fee rate of 2.00%).
Protocols for Portfolio Management
The following protocols establish how we handle our portfolio management accounts and what
you should expect when it comes to: (i) managing your account; (ii) your bill for investment
services; and (iii) other fees charged to your account(s).
Discretion
We will establish discretionary trading authority on all management accounts to execute
securities transactions at anytime without your prior consent or advice. At anytime
however, you may impose restrictions, in writing, on our discretionary authority (i.e., limit
the types/amounts of particular securities purchased for your account, exclude the ability to
purchase securities with an inverse relationship to the market, limit our use of leverage,
etc.).
Billing
Your account will be billed a blended fee quarterly in advance based on the fair market
value for the portion of your portfolio that fall within each tier of our fee schedule. For
example:
Account Value:
$7,500,000
Annual Fee %
(Per Tier)
Annual Fee
(Billed per Tier)
First $3,000,000 1.00% $30,000
Next $2,000,000 0.75% $15,000
Next $2,000,000 0.65% $13,000
Next $500,000 0.50% $2,500
Total Annual Fee: $60,500
Blended Annual Fee % 0.8067%
For new managed accounts opened in mid-quarter, our fee will be based upon a pro-rated
calculation of your assets to be managed for the current quarterly period. Advisory fees will
be deducted first from any money market funds or cash balances. If such assets are
insufficient to satisfy payment of such fees, a portion of the account assets will be liquidated
to cover the fees.
Deposits and Withdrawals
Assets deposited by you into your portfolio management account between billing cycles will
not result in additional management fees being billed to your account unless such deposits
exceed $50,000. We do not want to discourage you from investing additional capital for
your future but deposits of this amount or greater, in most cases, will require modifications
and adjustments to your investment allocation. Therefore, we reserve the right to bill your
account a pro-rated fee based upon the number of days remaining in the current quarterly
period for deposits exceeding the above amount.
For assets you may withdraw during the quarter, we do not make partial refunds of our
quarterly portfolio management fee. Just as with deposits, withdrawals from your account
will require modifications and adjustments to be made to correct the allocation of assets in
your portfolio.
Fee Exclusions
The above fees for all of our management services are exclusive of any charges imposed by
the custodial firm including, but not limited to: (i) any Exchange/SEC fees; (ii) certain
transfer taxes; (iii) service or account charges, including, postage/handling fees, electronic
fund and wire transfer fees, auction fees, debit balances, margin interest, certain odd-lot
differentials and mutual fund short-term redemption fees; and (iv) brokerage and execution
costs associated with securities held in your managed account. There can also be other fees
charged to your account that are unaffiliated with our management services.
In addition, all fees paid to us for portfolio management services are separate from any fees
and expenses charged on mutual fund shares by the investment company or by the
investment advisor managing the mutual fund portfolios. These expenses generally include
management fees and various fund expenses, such as: redemption fees, account fees, and
purchase fees. Details on fees and expenses charged by investment companies can be found
in each mutual fund’s prospectus. You are encouraged to carefully read the fund prospectus.
Termination of Portfolio Management Services
To terminate our investment advisory services, either party (you or us) by written notification
to the other party, may terminate the Investment Advisory Agreement at any time, provided
such written notification is received at least 30 days prior to the date of termination (i.e.; To
terminate services on October 1st, a request for termination should be received in our office by
September 1st.). Such notification should include the date the termination will go into effect
along with any final instructions on the account (i.e., liquidate the account, finalize all
transactions and/or cease all investment activity).
In the event termination does not fall on the last day of a calendar quarter, you shall be
entitled to a pro-rated refund of the prepaid quarterly management fee based upon the
number of days remaining in the quarter after the termination notice goes into affect. Once
the termination of investment advisory services has been implemented, neither party has any
obligation to the other – we no longer earn management fees or give investment advice and you
become responsible for making your own investment decisions.
PERFORMANCE-BASED FEES & SIDE-BY-SIDE MANAGEMENT
ITEM
6
Performance-Based Management
PIA serves as the sole investment manager to the CEF Total Return Opportunity Fund LP (the
“Fund”). For more information on the Fund, please see “Private Investment Fund Affiliation”
under Item 10 below, “Other Financial Industry Activities & Affiliations”.
The fee structure for the Fund is performance-based. For you to participate you must be
defined to be one of the following: (i) an “accredited investor”, as defined in Rule 501 of
Regulation D under the 1933 Act; (ii) a “qualified client” as defined in Rule 205-3 under the
1940 Investment Advisor Act; or (iii) a “qualified purchaser” under Section 2(a)(51) of the 1940
Investment Company Act.
Performance-Based Management Conflicts
With the performance-based management structure of the Fund, we can earn a substantially
higher fee over our portfolio management accounts (See “Portfolio Management” in Item 5
above, “Fees & Compensation”). This creates a potential conflict of interest to our
fiduciary duty to be impartial with our advice and to keep your interests ahead of our own
when making investment recommendations to you. In addition, the incentive to earn a
performance-based fee could affect the objectivity in the direct management of the Fund in
the following ways:
❖ The performance-based fee structure of the Fund creates greater incentive for us
to be more aggressive so as to achieve higher returns.
❖ Focus on the Fund could consume much of our time and our portfolio management
accounts could lose out on valuable time that should be devoted to all investment
accounts.
Notwithstanding these potential conflicts, we strive to serve your best interest and maintain
our fiduciary responsibility by making you aware of circumstances that could adversely affect
the management of your account(s) in compliance with the Investment Advisor Act of 1940,
Rule 275.206.