A. Vital Wealth Management, LLC
Vital Wealth Management, LLC (“VWM” and/or “the firm”), is an Illinois limited liability company
and an investment adviser registered with the SEC. VWM is solely owned and managed by
Anthony Kratofil.
B. Advisory Services Offered
VWM is an independent asset management and financial planning firm offering a variety of
financial services to individuals and high-net-worth individuals, trusts, corporations,
partnerships, retirement plans, tax exempt, municipal and state governments, and other legal
entities.
Portfolio Management Services
VWM offers portfolio management services with the implementation of a financial plan or as a
standalone service. This service includes analysis of risk tolerance and investment knowledge,
counseling regarding various investments, and discussions of the client's financial goals and
objectives. The client is given an outline of recommended investment vehicles and their
percentage allocation to asset classes needed to achieve appropriate diversification. The analysis
and design of the portfolio is based on portfolio optimization models and efficient frontier
analysis. Factors used in the analysis include where the U.S. and global economies are in the
business cycle, interest rate projections, growth projections and historical data. VWM selects one
or more mutual funds or exchange-traded funds (“ETFs”) in each asset class to use as the
specific investment vehicle. These mutual funds or ETFs may be passively managed (index funds)
or actively managed funds. Mutual funds and ETFs are primarily held for the long term unless
one of the analysis factors, a change in client risk tolerance (or circumstances), or a problem in
the management of the fund indicates the need to move to another asset class or another fund
in the asset class. At least annually the portfolio is reviewed and assets are redistributed
maintaining the optimum percentage allocation. The client will authorize VWM to effect
switches between mutual funds.
For its discretionary asset management services, VWM receives a limited power of attorney to
effect securities transactions on behalf of its clients that include securities and strategies
described in Item 8 of this brochure.
VWM’s discretionary asset management services are predicated on the client's investment
objectives, goals, tolerance for risk, and other personal and financial circumstances. VWM will
analyze each client's current investments, investment objectives, goals, age, time horizon,
financial circumstances, investment experience, investment restrictions and limitations, and risk
tolerance and implement a portfolio consistent with such investment objectives, goals, risk
tolerance and related financial circumstances VWM’s objective is to review the client’s tax,
financial, and estate planning objectives and goals in connection with the client’s investment
objectives, goals, tolerance for risk, and other personal and financial circumstances and make
appropriate recommendations and implementation decisions. VWM may engage third-party
service providers to assist with the tax and estate planning portion of the services provided to
clients. In addition, VWM may utilize third-party software to analyze individual security holdings
and separate account managers utilized within the client’s portfolio.
VWM’s investment advisory services to clients take into account a client's personal financial
circumstances, investment objectives and tolerance for risk (e.g., cash-flow, tax and estate).
VWM’s engagement with a client will include, as appropriate, the following:
▪ Providing assistance in reviewing the client's current investment portfolio against the
client's personal and financial circumstances as disclosed to VWM in response to a
questionnaire and/or in discussions with the client and reviewed in meetings with VWM.
▪ Analyzing the client's financial circumstances, investment holdings and strategy, and
goals.
▪ Providing assistance in identifying a targeted asset allocation and portfolio design.
▪ Implementing and/or recommending individual equity and fixed income securities,
mutual funds and ETFs.
▪ Reporting to the client on a quarterly basis or at some other interval agreed upon with
the client, information on contributions and withdrawals in the client's investment
portfolio, and the performance of the client's portfolio measured against appropriate
benchmarks (including benchmarks selected by the client).
▪ Proposing changes in the client's investment portfolio in consideration of changes in the
client's personal circumstances, investment objectives and tolerance for risk, the
performance record of any of the client's investments, and/or the performance of any
fund retained by the client.
Clients have the right to provide the firm with any reasonable investment restrictions that should
be imposed on the management of their portfolio, and to promptly notify the firm in writing of
any changes in such restrictions or in the client's personal financial circumstances, investment
objectives, goals and tolerance for risk. VWM will remind clients of their obligation to inform the
firm of any such changes or any restrictions that should be imposed on the management of the
client’s account. VWM will also contact clients at least annually to determine whether there have
been any changes in a client's personal financial circumstances, investment objectives and
tolerance for risk.
Financial Planning Services
Comprehensive Financial Planning
With comprehensive personal financial planning, the client completes a questionnaire and
provides other relevant information and authorizations. VWM will prepare a written plan which
describes the client’s current situation, identifies needs and opportunities, and makes
recommendations designed to help the client achieve his or her goals. Comprehensive personal
financial planning is primarily an analytical process designed to help the client articulate and
quantify goals, organize financial data, identify needs and opportunities, and evaluate alternative
courses of action. It includes an analysis of current net worth, income taxes, cash flow,
investments, employee benefits, estate and gift tax planning, and risk management.
Attention is directed toward restructuring existing assets to achieve the planning objectives. For
example, a plan might recommend that a particular security or securities be sold to realize a tax
loss, provide diversification, or to change from a growth-related investment to an income-
related investment.
While comprehensive financial planning includes investment advice concerning securities, it also
includes investment advice with respect to products that may not constitute "securities," such as
certificates of deposit, life insurance, and annuities. It also takes into consideration tax and
estate planning issues which may not constitute "investment advice."
Specialized Financial Analysis
In addition to comprehensive financial planning, VWM provides specialized services which
focus
on particular client needs. These services are provided on a time and disbursements basis,
pursuant to a written agreement. The kinds of services listed below are representative of those
requested by VWM clients:
▪ Education funding analysis
▪ Analysis of life, health and disability insurance coverage
▪ Estate liquidity and survivor income analysis
▪ Financial planning for closely held businesses
▪ Retirement income analysis and projection
▪ Retirement plan disbursement option analysis
▪ Employee benefit plan analysis
▪ Employer-sponsored financial planning
▪ Analysis of investment portfolios
▪ Future plan development for parents of disabled children
▪ Financial planning for the seriously ill
Private and Public Retirement Plan Advisory Services
VWM will provide discretionary or non-discretionary investment advisory and portfolio
management services to private and public retirement plans and plan participants. For
retirement plans governed by ERISA, VWM may provide 3(21) non-discretionary or 3(38)
discretionary fiduciary services. Following is a list of services VWM may provide as mutually
agreed upon with the client. Such services may include a combination of ERISA 3(21) and 3(38)
fiduciary services.
Non-Discretionary 3(21) Fiduciary Services
▪ Investment Policy Statement (“IPS”): VWM will review with Plan Sponsor the investment
objectives, risk tolerance, and goals of the Plan. If the Plan does not have an IPS, VWM
will provide recommendations to Plan Sponsor to assist the Plan Sponsor with
establishing an IPS. If the Plan has an existing IPS, VWM will review it for consistency with
the Plan’s objectives. If the IPS does not represent the objectives of the Plan, VWM will
recommend to Plan Sponsor revisions to align the IPS with the Plan’s objectives, which
recommendations may be considered by Plan Sponsor.
▪ Designated Investment Alternatives (“DIA”): Based on the Plan’s IPS, VWM will review the
investment options available to the Plan and will make recommendations to assist Plan
Sponsor with selecting DIAs to be offered to Participants. Once Plan Sponsor selects the
DIAs, VWM will, on a periodic basis and/or upon reasonable request, provide reports and
information to assist Plan Sponsor with monitoring the DIAs. If the IPS criteria require a
DIA to be removed, VWM will provide recommendations to assist Plan Sponsor with
replacing the DIA.
▪ Model Asset Allocation Portfolios (“Models”): Based on the Plan’s IPS or other investment
guidelines established by the Plan, VWM will review the DIAs available to the Plan and
will make recommendations to assist Plan Sponsor with creating risk-based Models
comprised solely among the Plan’s DIAs. Once Plan Sponsor approves the Models, VWM
will provide reports, information and recommendations, on a periodic basis, designed to
assist Plan Sponsor with monitoring the Models. If the IPS criteria require any DIA(s) to
be removed, VWM will provide recommendations to assist Plan Sponsor with evaluating
replacement DIA(s) to be included in the Models. Upon reasonable request, and
depending upon the capabilities of the recordkeeper, VWM will make recommendations
to Plan Sponsor to reallocate and/or rebalance the Models to maintain their desired
allocations.
▪ Qualified Default Investment Alternative (“QDIA”): Based on the Plan’s IPS or other
guidelines established by the Plan, VWM will review the investment options available to
the Plan and will make recommendations to assist Plan Sponsor with selecting the Plan’s
QDIA(s). Once Plan Sponsor selects the Plan’s QDIA(s), VWM will provide reports and
information, on a periodic basis and/or upon reasonable request, to assist Plan Sponsor
in monitoring the QDIA(s). If the IPS criteria require a QDIA to be replaced, VWM will
provide recommendations to assist Plan Sponsor with evaluating replacement QDIA(s).
Discretionary 3(38) Fiduciary Services
▪ VWM will implement the IPS by investing and reinvesting the Plan’s assets consistent
with the IPS.
▪ VWM will reallocate and/or rebalance the models to maintain their desired allocations.
▪ VWM will select investment options that are available under the Plan.
Account Aggregation and Performance Monitoring Services (Plan Participants)
VWM is offering an account aggregation service and a performance monitoring service provided
by a third party whereby a client may elect to aggregate their outside assets with an existing
advisory portfolio in custody at Schwab for central viewing. Further, a client may elect to have
performance reporting on such outside assets. For existing clients, an amended advisory
agreement may be required because the client’s individual negotiated fee, although within the
posted fee schedule listed in Item 5.A.3, may be higher than the advisory fee currently in effect.
Please note the outside assets are not commingled with other assets; rather, they are simply
included as a separate line item in the aggregated report.
Retirement Plan Participant Account Management (Discretionary)
We use a third-party platform (Pontera Order Management System) to facilitate management of
held away assets such as defined contribution plan participant accounts, with discretion.
The platform allows us to avoid being considered to have custody of client funds since we do
not have direct access to client log-in credentials to effect trades. We are not affiliated with the
platform in any way and receive no compensation from them for using their platform. A link will
be provided to the client allowing them to connect an account(s) to the platform. Once client
account(s) is connected to the platform, we will review the current account allocations. When
deemed necessary, we will rebalance the account considering client investment goals and risk
tolerance, and any change in allocations will consider current economic and market trends. The
goal is to improve account performance over time, minimize loss during difficult markets, and
manage internal fees that harm account performance. Client account(s) will be reviewed at least
quarterly and allocation changes will be made as deemed necessary.
We may provide these services or, alternatively, may arrange for the Plan’s other providers to
offer these services, as agreed upon between our firm and the client.
C. Client-Tailored Services and Client-Imposed Restrictions
Each client’s account will be managed on the basis of the client’s financial situation and
investment objectives and in accordance with any reasonable restrictions imposed by the client
on the management of the account—for example, restricting the type or amount of security to
be purchased in the portfolio.
D. Wrap Fee Programs
VWM does not participate in wrap fee programs. (Wrap fee programs offer services for one all-
inclusive fee.)
E. Client Assets Under Management
As of December 31, 2023, VWM managed $208,160,378 in client assets on a discretionary basis
and $10,439,697 in client assets on a non-discretionary basis.