A. Waters, Parkerson & Co., LLC (the “Registrant”) was founded in 1933. The Registrant is
principally owned by J. Baldwin Montgomery, Devin J. Wakeman, David T. Pointer,
Michael B. Whealdon and L. Reiss Eagan. Mr. Montgomery and Mr. Wakeman are the
Registrant’s Co-Managing Partners.
B. As discussed below, the Registrant offers to its clients (individuals, business entities,
trusts, estates and charitable organizations, etc.) investment advisory services.
INVESTMENT ADVISORY SERVICES
The client can determine to engage the Registrant to provide discretionary and/or non-
discretionary investment advisory services on a fee-only basis. The Registrant’s annual
investment advisory fee is based upon a percentage (%) of the market value of the assets
placed under the Registrant’s management (between negotiable and 1.00%) as follows:
Market Value of Portfolio % of Assets
Initial $1,000,000 1.00%
From $1,000,000 to $5,000,000 0.75%
Amounts over $5,000,000 0.50%
*The above fee schedule is subject to a minimum annual fee of $10,000-see disclosure at
Item 5 below
MISCELLANEOUS
Consulting/Implementation Services. To the extent requested by the client, the
Registrant shall generally provide consultation services to its individual and family
investment management clients on investment and non-investment related matters, such
as estate planning, tax planning, insurance, etc. Registrant shall not receive any separate
or additional fee for any such consultation services. Please Note: Registrant does not
serve as an attorney, accountant, or insurance agent, and no portion of our services should
be construed as same. Accordingly, Registrant does not prepare legal documents, prepare
or file tax returns, or sell insurance products. To the extent requested by a client, the
Registrant may recommend the services of other professionals for certain non-investment
implementation purposes (i.e., attorneys, accountants, insurance, etc.). The client is under
no obligation to engage the services of any such recommended professional. The client
retains absolute discretion over all such implementation decisions and is free to accept or
reject any recommendation from the Registrant. Please Note: If the client engages any
such recommended professional, and a dispute arises thereafter relative to such
engagement, the client agrees to seek recourse exclusively from and against the engaged
professional. At all times, the engaged licensed professional[s] (i.e., attorney, accountant,
insurance agent, etc.), and not Registrant, shall be responsible for the quality and
competency of the services provided.
Non-Discretionary Service Limitations. Clients that determine to engage the Registrant
on a non-discretionary investment advisory basis must be willing to accept that the
Registrant cannot effect any account transactions without obtaining prior verbal consent
to any such transaction(s) from the client. Thus, in the event of a market or individual
holding correction during which the client is unavailable, the Registrant will be unable to
effect any account transactions (as it would for its discretionary clients) without first
obtaining the client’s verbal consent.
Custodian Charges-Additional Fees: As discussed in Items 5 and 12 below, when
requested to recommend a broker-dealer/custodian for client accounts, Registrant
generally recommends that Schwab serve as the broker-dealer/custodian for client
investment management assets. Broker-dealers such as Schwab charge brokerage
commissions, transaction, and/or other types of fees for effecting certain types of
securities transactions (i.e., including transaction fees for certain mutual funds, and mark-
ups and mark-downs charged for fixed income transactions, etc.). The types of securities
for which transaction fees, commissions, and/or other types of fees (as well as the amount
of those fees) shall differ depending upon the broker-dealer/custodian. While certain
custodians, including Schwab, do not currently charge fees on individual equity
transactions (including ETFs), others do. Please Note: there can be no assurance that
Schwab will not change its transaction fee pricing in the future. When beneficial to the
client, individual fixed‐income and/or equity transactions may be effected through
broker‐dealers with whom Registrant and/or the client have entered into arrangements for
prime brokerage clearing services, including effecting certain client transactions through
other SEC registered and FINRA member broker‐dealers (in which event, the client
generally will incur both the transaction fee charged by the executing broker‐dealer and a
“trade-away” fee charged by Schwab). These fees/charges are in addition to Registrant’s
investment advisory fee at Item 5 below. Registrant does not receive any portion of these
fees/charges.
Retirement Rollovers-Potential for Conflict of Interest: A client or prospective client
leaving an employer typically has four options regarding an existing retirement plan (and
may engage in a combination of these options): (i) leave the money in the former
employer’s plan, if permitted, (ii) roll over the assets to the new employer’s plan, if one is
available and rollovers are permitted, (iii) roll over to an Individual Retirement Account
(“IRA”), or (iv) cash out the account value (which could, depending upon the client’s
age, result in adverse tax consequences). If Registrant recommends that a client roll over
their retirement plan assets into an account to be managed by Registrant, such a
recommendation creates a conflict of interest if Registrant will earn new (or increase its
current) compensation as a result of the rollover. If Registrant provides a
recommendation as to whether a client should engage in a rollover or not (whether it is
from an employer’s plan or an existing IRA), Registrant is acting as a fiduciary within the
meaning of Title I of the Employee Retirement Income Security Act and/or the Internal
Revenue Code, as applicable, which have laws governing retirement accounts.
Trustee Directed ERISA Plans. Registrant may be engaged to provide investment
advisory services to ERISA retirement plans, whereby the Firm shall manage Plan assets
consistent with the investment objective designated by the Plan trustees. In such
engagements, Registrant will serve as an investment fiduciary as that term is defined
under The Employee Retirement Income Security Act of 1974 (“ERISA”). Registrant
will generally provide services on an “assets under management” fee basis per the terms
and conditions of an Investment Advisory Agreement between the Plan and the Firm.
Cash Positions. Registrant continues to treat cash as an asset class. As such, unless
determined to the contrary by Registrant, all cash positions (money markets, etc.) shall
continue to be included as part of assets under management for purposes of calculating
Registrant’s advisory fee. At any specific point in time, depending upon perceived or
anticipated market conditions/events (there being no guarantee that such anticipated
market conditions/events will occur), Registrant may maintain cash positions for
defensive purposes. In addition, while assets are maintained in cash, such amounts
could
miss market advances. Depending upon current yields, at any point in time, Registrant’s
advisory fee could exceed the interest paid by the client’s money market fund.
Borrowing Against Assets/Risks. A client who has a need to borrow money could
determine to do so by using:
• Margin-The account custodian or broker-dealer lends money to the client. The
custodian charges the client interest for the right to borrow money and uses the assets
in the client’s brokerage account as collateral; and/or,
• Pledged Assets Loan- In consideration for a lender (i.e., a bank, etc.) to make a loan
to the client, the client pledges its investment assets held at the account custodian as
collateral.
These above-described collateralized loans are generally utilized because they typically
provide more favorable interest rates than standard commercial loans. These types of
collateralized loans can assist with a pending home purchase, permit the retirement of
more expensive debt, or enable borrowing in lieu of liquidating existing account positions
and incurring capital gains taxes. However, such loans are not without potential material
risk to the client’s investment assets. The lender (i.e., custodian, bank, etc.) will have
recourse against the client’s investment assets in the event of loan default or if the assets
fall below a certain level. For this reason, Registrant does not recommend such
borrowing unless it is for specific short-term purposes (i.e., a bridge loan to purchase a
new residence). Registrant does not recommend such borrowing for investment purposes
(i.e., to invest borrowed funds in the market). If the client decides to utilize margin,
Registrant will earn a fee based on the higher margined account value which could
provide the Registrant with a disincentive to recommend that the client terminate the use
of margin.
Please Note: The Client must accept the above risks and potential corresponding
consequences associated with the use of margin or a pledged assets loan.
Cybersecurity Risk. The information technology systems and networks that Registrant
and its third-party service providers use to provide services to Registrant’s clients employ
various controls that are designed to prevent cybersecurity incidents stemming from
intentional or unintentional actions that could cause significant interruptions in
Registrant’s operations and/or result in the unauthorized acquisition or use of clients’
confidential or non-public personal information. Clients and Registrant are nonetheless
subject to the risk of cybersecurity incidents that could ultimately cause them to incur
financial losses and/or other adverse consequences. Although the Registrant has
established processes to reduce the risk of cybersecurity incidents, there is no guarantee
that these efforts will always be successful, especially considering that the Registrant
does not control the cybersecurity measures and policies employed by third-party service
providers, issuers of securities, broker-dealers, qualified custodians, governmental and
other regulatory authorities, exchange and other financial market operators and providers.
Please Note-Use of Mutual and Exchange Traded Funds: If the Registrant utilizes
mutual funds and exchange traded funds for its client portfolios, additional fees will be
incurred. In addition to Registrant’s investment advisory fee described below, and
transaction and/or custodial fees discussed above, clients will also incur, relative to all
mutual fund and exchange traded fund purchases, charges imposed at the fund level (e.g.,
management fees and other fund expenses).
Cash Sweep Accounts. Certain account custodians can require that cash proceeds from
account transactions or new deposits be swept to and/or initially maintained in a
specific custodian designated sweep account. The yield on the sweep account will
generally be lower than those available for other money market accounts. When this
occurs, to help mitigate the corresponding yield dispersion, Registrant shall (usually
within 30 days thereafter) generally (with exceptions) purchase a higher yielding money
market fund (or other type security) available on the custodian’s platform unless
Registrant reasonably anticipates that it will utilize the cash proceeds during the
subsequent 30-day period to purchase additional investments for the client’s account.
Exceptions and/or modifications can and will occur with respect to all or a portion of the
cash balances for various reasons including, but not limited to, the amount of dispersion
between the sweep account and a money market fund, the size of the cash balance, an
indication from the client of an imminent need for such cash or the client has a
demonstrated history of writing checks from the account. Please Note: The above does
not apply to the cash component maintained within a Registrant actively managed
investment strategy (the cash balances for which shall generally remain in the custodian
designated cash sweep account), an indication from the client of a need for access to such
cash, assets allocated to an unaffiliated investment manager and cash balances maintained
for fee billing purposes. Please Also Note: The client shall remain exclusively
responsible for yield dispersion/cash balance decisions and corresponding transactions
for cash balances maintained in any Registrant unmanaged accounts.
Client Obligations. In performing its services, Registrant shall not be required to verify
any information received from the client or from the client’s other professionals and is
expressly authorized to rely thereon. Moreover, each client is advised that it remains
his/her/its responsibility to promptly notify the Registrant if there is ever any change in
his/her/its financial situation or investment objectives for the purpose of
reviewing/evaluating/revising Registrant’s previous recommendations and/or services.
Investment Risk. Different types of investments involve varying degrees of risk, and it
should not be assumed that future performance of any specific investment or investment
strategy (including the investments and/or investment strategies recommended or
undertaken by Registrant) will be profitable or equal any specific performance level(s).
Disclosure Brochure. A copy of the Registrant’s written Brochure as set forth on Part
2A of Form ADV shall be provided to each client prior to, or contemporaneously with,
the execution of the Investment Advisory Agreement.
C. The Registrant shall provide investment advisory services specific to the needs of each
client. Prior to providing investment advisory services, an investment adviser
representative will ascertain each client’s investment objective(s). Thereafter, the
Registrant shall allocate and/or recommend that the client allocate investment assets
consistent with the designated investment objective(s). The client may, at anytime,
impose reasonable restrictions, in writing, on the Registrant’s services.
D. The Registrant does not participate in a wrap fee program.
E. As of December 31, 2023, the Registrant had $2,363,107,883 in assets under
management on a discretionary basis and $125,980,824 in assets under management on a
non-discretionary basis.