Arlington Capital Management, Inc., Firm CRD Number 114801, is an SEC Registered
Investment Advisory firm, with one principal owner/officer: Joseph LoPresti, Owner,
President and Senior Portfolio Manager.
Commencing operations in 2000, Arlington Capital Management, Inc., DBA Arlington
Wealth Management (“AWM” or “Arlington”) provides Wealth Management Services
and on-going discretionary Investment Management/Supervisory Services. These
services are described further below, as well as in the firm’s Investment Advisory
Agreement, which all clients must sign prior to engagement of this firm’s services. As of
12/31/2023, the firm managed a total of $154,749,803.00 in Discretionary assets on
behalf of 745 client investment accounts.
Wealth Management Services
Arlington uses the following systematic consulting process for uncovering clients’ most
important goals and for designing and implementing appropriate solutions.
1. Discovery Meeting. At an initial meeting, we conduct a discovery interview. This
helps us identify the challenges clients and prospective clients face in achieving
all that is important to them and understand their most important financial issues.
We examine the current situation, the goals they would like to achieve and how
we can help them maximize the possibility of achieving those goals.
2. Investment Plan Meeting. At this meeting, we want to make sure something
wasn’t missed or misunderstood from the Discovery meeting. We’ll present our
diagnostic of the current situation and our recommendations for how we can
bridge the gaps in order to help the client or prospective client reach their goals.
This plan forms the foundation for all of our work together.
3. Mutual Commitment Meeting. At this meeting, we are ready to mutually decide
if we should begin working together and proceed with implementing the
investment plan. We should only mutually commit if we both agree that our firm
can add substantial value to their lives. Should we both choose to work together,
we will commit our resources toward helping the client achieve what is most
important to the client and their family. We also execute the documents necessary
to put the investment plan into motion, and then begin providing the applicable
Investment Management Services.
4. 45-Day Follow-up Meeting. At this meeting, we introduce the client to our team,
ensure they can access all of their accounts electronically and generally make sure
we get off on the right foot. We also answer any questions the client may have at
that time.
5. Regular Progress Meetings and Advanced Planning Recommendations.
These meetings, which are scheduled at intervals convenient to the client, provide
us an opportunity to review any major changes in personal or financial situation
since our last meeting. If these changes require an adjustment to the investment
plan, we make the recommendation. We also review overall progress toward
long-term financial goals. These meetings are also our opportunity to present and
discuss advanced planning recommendations that may be appropriate for the
client’s situation, so that we can prioritize those areas of greatest importance and
then address them systematically. Some of these advanced planning
recommendations may be developed in conjunction with outside professionals.
Some recommendations may involve the use of outside services for
implementation, and these services are not within the scope of this agreement.
The following areas are typically addressed depending on Client’s circumstances:
a. Wealth Enhancement: Tax mitigation and cash-flow planning
b. Wealth Transfer: Transferring wealth effectively
c. Wealth Protection: Risk mitigation, legal structures
d. Charitable Giving: Maximizing charitable impact
Wealth Management Services also includes the services identified in the Investment
Management section that follows.
Investment Management Services
All client accounts are placed in one of five basic risk type model portfolios based on the
client’s suitability and client’s total assets under firm’s management relative to financial
net worth. Each risk type model includes one of AWM’s growth strategies and/or
income strategy of varying degrees, with the aggressive models focused more on growth
than income and conservative models allocating more into the income strategy. Accounts
are managed on a discretionary basis; however, in instances where AWM provides advice
to accounts where AWM does not have trading authority, AWM shall promptly inform
clients of any recommended changes to client’s account, and it will be client’s
responsibility to review these recommendations and, if client approves the
recommendations, to place the recommended transactions with client’s custodian. Client
will also be responsible for obtaining custodial statements from the custodian and
providing them to Arlington as soon as practicable to allow Arlington to review client
Account’s positions, valuations and trading activity. In addition, if appropriate, AWM
may recommend private placements such as Delaware Statutory Trusts (DSTs).
Arlington’s investment strategies combine quantitative models with qualitative research,
seeking to achieve attractive risk-adjusted returns over a long-term investment horizon in
the management of client accounts. When indicated by the firm’s proprietary
management system, changes and rebalancing of the model portfolios is typically
affected. The proprietary management system includes indicators that seek to identify
significant market trends. If market trend indicators are negative or high risk, risk
management transactions may be employed. The risk management strategies typically
includes holding cash equivalent investments and/or short or inverse funds at times. The
risk management strategies seek to protect and potentially profit in client investment
portfolios during significant market downturns; however, there is risk of
underperformance if cash or short (inverse) funds are held while the market is rising.
Arlington’s Proactive Asset Allocation Strategy seeks to allocate client portfolios into
asset classes that exhibit leadership characteristics as identified by our proprietary
management system. This includes specific industry groups, commodity classes,
countries, etc. and security
selection (i.e. ETFs and/or individual stocks) to seek to
determine composition and reallocation decisions of model and client portfolios. If
market trend indicators are negative or high risk, risk management transactions may be
employed.
Arlington’s Core Strategy provides exposure to a more broadly diversified portfolio of
assets (typically ETFs) than the Proactive Asset Allocation Strategy, such as Large Cap
Growth, Developed International, etc. If market trend indicators are negative or high
risk, risk management transactions may be employed.
Arlington’s Buffered Strategy is designed to help reduce uncertainty in the stock
market by potentially taking advantage of market growth while maintaining a downside
buffer. In this strategy the client’s assets are invested in one or more “Defined Outcome”
ETFs. These ETFs, which are based on market indices (such as the S&P 500), are
designed to achieve the following over a defined period of time (the “outcome period”):
(a) absorb a certain amount of loss in declining markets (the “buffer”);
(b) limit the amount for growth the ETF may achieve in rising markets (the “cap”).
For example, assume that we purchase a “Defined Outcome” ETF based on the S&P 500
with an outcome period of one year, a buffer of 9%, and a cap of 14%. We buy the ETF
on the first day of the outcome period and sell it on the last day.
If the S&P 500 declined by 5% during that year, the ETF would be approximately the
same value that it was when purchased minus the fund expenses. If, however, the S&P
500 declined by 15% that year, the ETF would lose approximately 6% (a 15% loss less
the 9% buffer), minus the fund expenses.
If the S&P 500 rose 10% during that year, the ETF would also increase in value by
approximately the same amount minus the fund expenses. If, however, the S&P 500 rose
20% that year, the ETF’s gains would be capped at approximately 14% minus the fund
expenses.
As the price of the index and the ETF will fluctuate during the outcome period, the
effective percentage of the buffer or cap may be greater or lower than they were at the
beginning of the outcome period when the ETF is purchased after the beginning of the
outcome period or sold before the end of the outcome period.
Please note that the percentages listed above are only meant to serve as an example and do
not represent the actual buffers and caps used by any particular “Defined Outcome” ETF.
Returns will be reduced by internal ETF fees and charges as well as by Arlington’s
advisory fee.
The Buffered Strategy does not guarantee income or return on investment. If market
trend indicators are negative or high risk, Arlington Capital Management may employ
risk management strategies.
We strongly recommend that clients interested Arlington’s Buffered Strategy review this
strategy with an Account Manager before investing.
Arlington’s Proactive Faith-Based Strategy seeks to allocate client portfolios into
stocks or funds that meet certain religious, as well as Environmental, Social and
Governance (ESG) criteria. Arlington then applies our proprietary management system
to identify securities exhibiting potential leadership characteristics. Allocations may at
times include commodity classes or broad market index funds. If market trend indicators
are negative or high risk, risk management transactions may be employed.
Private Placements: In certain circumstances, private placements, such as DSTs, may be
recommended by Arlington. Arlington may also provide consulting services regarding
private placements. We often use outside firms to assist with the development of
recommendations of private placements.
The above listed advisory services can be tailored to each client – as such, if any client
requires any restrictions on any types of stocks or market segments, the client is required
to inform Arlington of the restrictions in writing. If, for any reason, the firm is not able
to meet reasonable client restrictions, the firm will notify the client of that fact so that the
client can determine their requirements and needs.
Arlington Capital Management continues to provide ongoing Investment Advisory
Services by monitoring the portfolio and in providing continuous advice and
recommendations. Client portfolios are generally reviewed with clients annually (or at
an interval mutually agreed upon) during client meetings or phone discussion, while the
firm’s risk model portfolios are typically rebalanced and reviewed daily. However,
account reviews could also occur at the time of significant new deposits or withdrawals,
material changes in client’s financial information, changes in the overall market or
economic situation, or at Arlington’s discretion.
Arlington encourages frequent client contact but will seek out contact no less than
annually. Clients may call the office at any time during normal business hours to
discuss investment matters directly with their Advisory Representative. However,
please note that clients are obligated to promptly notify Arlington of any changes in the
client’s financial status or information in order to give the firm an opportunity to
review the current investment strategies designed for the client to ensure they continue
to meet the client’s changing needs or to determine if changes are warranted.
Arlington offers Lifetime Retirement Income Planning Services to investment
management clients. Lifetime Retirement Income Plans (“plans”) provide a personalized
strategy that includes all of the client’s retirement income resources integrated into one
plan. These resources may include 401(k) accounts, IRA accounts, Trusts, Social
Security, Pensions, etc. The resulting plans are designed to provide a tax efficient
withdrawal strategy for retirement income. Plans will not provide specific securities
recommendations, although general allocation strategies may be discussed.
Certain legacy accounts are managed in a way that differs from the foregoing. Such
client have been provided details regarding the methods used, and the strategies are
subject to Arlington’s oversight.
Arlington offers Consulting Services related to financial, tax and investment planning.
The scope of each consulting engagement is described in an advisory agreement specific
to the engagement.