Towneley Capital Management, Inc. ("Towneley," "we," or "us") is an SEC-registered independent
investment advisory firm. Wesley G. McCain, Founder and Chair Emeritus, founded Towneley in 1971.
Towneley operates as a Delaware corporation. Majority ownership of the company is with the TCM
Employee Stock Ownership Trust.
We offer investment counseling, asset management, financial planning, business consulting and
fiduciary services on a fee-only basis to individuals, high net worth individuals, trusts, estates, pension
and profit sharing plans, nonprofit and charitable organizations, corporations and other business
entities ("you" or "client"). We do not sell insurance, annuities or other commission-based financial
products.
Approximately 90% of our business is providing investment supervisory services and portfolio review
and reporting services as described in Item No. 13: Review of Accounts, below. Approximately 10% of
our business is furnishing investment advice through consultation and providing financial planning and
consulting services. We do not sponsor or participate in any wrap fee programs.
Investment Advisory Services to Individual Clients
We tailor our advisory services to the individual needs of each client. We begin our investment
advisory relationship by defining your goals and objectives. We become familiar with your investment
history, tolerance for risk, time horizon, expected annual contributions and withdrawals and other
important factors. We then recommend an asset allocation specifically suited to you.
Once we understand your individual needs and preferences, we use our proprietary models to
construct your custom portfolio of no-load mutual funds and exchange traded funds. By carefully
selecting a variety of domestic and international equity, fixed income, and specialty funds, we design a
diversified portfolio aimed at furthering your goals with the least possible risk. For certain clients, we
may also use individual bonds, including Treasury securities, in the fixed income segment of their
portfolio.
When purchasing funds for your account, we may use cost averaging. By establishing equity and some
fixed income positions over a period of months rather than all at once, we strive to achieve an average
cost basis lower than the highest price paid. We will recommend a timetable for investing your portfolio
based on the types of investments in your portfolio, our analysis of the markets and your preferences.
You may impose reasonable restrictions on the investments in your Towneley portfolio. For example,
you may request that investments in a particular asset class, such as precious metals, be excluded
from your portfolio and we will honor your request.
We require that our clients give us full discretion to instruct the custodian/broker-dealer to invest cash
and to buy, sell and exchange securities in their accounts at any time. However, we never take
physical possession of your funds or securities, nor do we have the authority to withdraw (with the
exception of debiting fees) or transfer your funds without your express written consent. See Item No.
15: Custody, for more information about custody.
We encourage you to keep us informed of any changes in work, family, health or other life
circumstances that might warrant a reassessment of your investment goals or portfolio allocation. We
offer you the opportunity to meet with us annually or more often if you request. These meetings provide
an excellent opportunity for you to inform us of changes in your life or your business, and other matters
of importance to you.
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Investment Advisory Services to Charitable and Other Nonprofit Organizations
We begin our investment advisory relationship by defining and quantifying your goals and objectives.
Our first step is to review your organization's investment policy statement. We work with your
investment committee to help revise it, as appropriate. During this process, we talk with you to become
familiar with your investment history, tolerance for risk, time horizon, possible projected annual cash
flow and other important factors. We then recommend an asset allocation specifically suited to your
institution. We manage your accounts in accordance with your investment policy statement. As your
organization's needs and goals change and mature, we may recommend further revisions to your
investment policies during our periodic meetings with the investment committee and/or board of
directors.
Once we understand your organization's needs and preferences, we apply our expertise and
proprietary models to construct a custom portfolio of no-load mutual funds, exchange traded funds or a
combination of the two. We carefully select a variety of domestic and international equity, fixed income
and specialty funds, while honoring any restrictions specified by your IPS. For certain clients, we may
also use individual bonds, including Treasury securities, in the fixed income segment of their portfolio.
The result is a portfolio aimed at furthering your goals with the least possible risk.
When purchasing funds for your account, we may use cost averaging. By establishing equity and some
fixed income positions over a period of months rather than all at once, we strive to achieve an average
cost basis lower than the highest price paid. We will recommend a timetable for investing your portfolio
based on the types of investments in your portfolio, our analysis of the markets and your preferences.
You may impose reasonable restrictions on the investments in your Towneley portfolio. For example,
you may request that investments in a particular asset class, such as precious metals, be excluded
from your portfolio and we will honor your request.
We encourage you to keep us informed of any changes in your organization's circumstances that might
warrant a reassessment of investment goals or objectives. We also schedule periodic client meetings,
which provide an excellent opportunity for you to discuss with us any developments that may affect
your asset allocation and the management of your portfolio.
The Fiduciary EdgeTM, our investment advisory
and consulting solution for nonprofit institutions,
includes several value-added services that help nonprofit board and committee members to discharge
prudently their fiduciary duties. Our solution for nonprofit institutions helps board and investment
committee members maintain best practices as investment stewards in compliance with the Uniform
Prudent Management of Institutional Funds Act. The Fiduciary EdgeTM program is included in
Towneley's investment advisory fee for nonprofit institutions that are Towneley investment advisory
clients, and may be offered on a stand-alone basis to other charitable nonprofit organizations for a flat
or hourly fee.
Investment Management Services to Trusts
We collaborate with corporate and individual trustees to provide discretionary investment management
services to charitable and other types of trusts. In addition to managing the trust portfolio, we provide
custom reporting and assist trustee with cash flow management and distribution processing.
Investment Advisory Services to Qualified Retirement Plan Sponsors
Retirement plan consulting
We provide retirement plan consulting services to employer plan sponsors on a one-time or ongoing
basis. Generally, such retirement plan consulting services consist of assisting employer plan sponsors
in establishing, monitoring and reviewing their company's participant-directed retirement plan. As the
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needs of the plan sponsor dictate, areas of consulting could include investment options, plan structure
and vendor search assistance. With respect to these services, we acknowledge in our Investment
Advisory Agreement for Qualified Plans that we are a fiduciary within the meaning of Section 3(21) of
ERISA.
Retirement plan asset management
We provide retirement plan asset management services on an ongoing basis. Generally, such asset
management services consist of selecting, monitoring, removing, and/or replacing the investment
options under the plan, consistent with the objectives, written guidelines and/or investment objectives
set forth in the written investment policy statement accepted and adopted by the client. As the needs of
the plan sponsor dictate, areas of management could include plan investment options, asset allocation,
plan structure, and vendor search assistance. With respect to these services, we acknowledge in our
Investment Advisory Agreement for Qualified Plans that we are a fiduciary within the meaning of
Section 3(38) of ERISA.
Financial Planning Services
In addition to investment counseling and management, we offer financial planning services to our
individual clients and prospective clients. Our services include:
Pre-retirement planning
We help you determine whether your current retirement goals are attainable or may need some
adjustment, suggest how much you should accumulate to retire when and as you would like, and
where you should be saving your money, e.g. in an IRA, 401(k) and/or a taxable account.
Post-retirement distribution planning
When you are ready to retire, and periodically during your retirement years, we help you determine
how much you can withdraw from your invested assets without outliving your money.
Spending and budget analysis
We evaluate your income and expenditures and provide you with an analysis that includes our
suggestions for reducing spending and increasing savings. Although we do not provide specific tax
advice, our analysis may include suggestions that can help reduce your taxes. If appropriate, we can
also evaluate your mortgage or other outstanding loans and help you determine if you might benefit
from refinancing or from discharging those debts sooner than scheduled.
College cost analysis and planning
We estimate how much you should save for future college expenses depending on which college you
ask us to target, and other variables. We can also recommend the best type of account to hold your
college savings and help you determine the appropriate asset allocation for that account.
Business consulting
Under certain circumstances we may offer business and financial consulting services to small
businesses. The services provided are tailored for specific client situations.
Rollover Recommendations
Effective December 20, 2021 (or such later date as the US Department of Labor ("DOL") Field
Assistance Bulletin 2018-02 ceases to be in effect), for purposes of complying with the DOL's
Prohibited Transaction Exemption 2020-02 ("PTE 2020-02") where applicable, we are providing the
following acknowledgment to you.
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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.
We benefit financially from the rollover of your assets from a retirement account to an account that we
manage or provide investment advice, because the assets increase our assets under management
and, in turn, our advisory fees. As a fiduciary, we only recommend a rollover when we believe it is in
your best interest.
Assets under Management
As of December 31, 2023, we provide continuous management services for $882,417,396 in client
assets on a discretionary basis.