A. JMG Financial Group, Ltd. (the “Registrant”) is a corporation formed on March 20, 1984
in the State of Delaware. The Registrant became registered as an Investment Adviser Firm
in February 1985. Anthony D. Cecchini is the Registrant’s Chief Executive Officer.
B. As discussed below, the Registrant offers to its clients (individuals, trusts, pension and
profit sharing plans, business entities, charitable organizations, etc.) investment advisory
services, and, to the extent specifically requested by a client, financial advisory and related
consulting services, investment consulting services, and retirement consulting services.
INVESTMENT ADVISORY SERVICES
The client can determine to engage the Registrant to provide 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, is negotiable, and varies upon the scope of and type of services to be provided
as follows:
Non-Sub-Advised and Sub-Advised Portfolios (exclusive of sub-advisors fees)*
Market Value of Portfolio % of Assets
First $2,000,000 1.000%
Next $2,000,000 0.750%
Next $2,000,000 0.600%
Next $14,000,000 0.500%
Over $20,000,000 0.350%
*PLEASE NOTE: Generally, the above fee schedule is for new clients that engage
Registrant subsequent to December 31, 2017 or for existing financial advisory clients that
have not previously engaged Registrant to provide investment advisory services. The fee
schedule does not apply to existing investment advisory clients of Registrant (see
Grandfathered Fee Schedules disclosure below), nor does the fee schedule apply to
Registrant’s other advisory services including financial advisory and consulting services,
or services provided under the Schwab Advisor Network® fee schedule documented below.
Rather, as discussed below, such services are available on a stand-alone, separate fee basis,
per the terms and conditions of a separate written agreement. In addition, many clients
have and will continue to be grandfathered under fee schedules that preceded the client’s
engagement of Registrant. Registrant has grown, and expects to continue to grow, by
acquisition of other advisory firms. The acquired firms could have fee schedules or other
fee arrangements with its clients that differ from the above fee schedule. Upon acquisition,
an acquired firm will generally maintain its pre-existing fee schedule subsequent to
Registrant’s acquisition. As a result, Registrant’s clients could be subject to various
different fee schedules and/or arrangements, including those that may be higher or lower
than Registrant’s fee schedule set forth above. Annual advisory fees applicable to a client
engagement are detailed in the Advisory Agreement executed between Registrant and the
client. Clients engaged under grandfathered fee schedules are advised to consult their
Advisory Agreement, which may be provided on request, for more information on the fees
applicable to their account.
Non-Sub-Advised portfolios (direct management by Registrant), Sub-Advised Fixed
Income portfolios, and Sub-Advised Equity portfolios are aggregated when applying the
fee percentages described above.
A separate sub-advisor fee, in addition to Registrant’s fee, will be charged for Sub-Advised
Fixed Income portfolios and Sub-Advised Equity portfolios. Unless otherwise specifically
indicated to the contrary, the annual fee charged by the designated sub-advisor (generally
ranging between 0.090% and 0.750% depending upon the type of management services
required and the market value of the assets to be managed), is exclusive of, and in addition
to, Registrant’s investment advisory fee.
Alternative Investments (exclusive of charges imposed by the alternative investment,
for example management fees)
Market Value of Portfolio % of Assets
Less than $10,000,000 1.000%
At least $10,000,000 0.900%
Although Registrant requires a minimum account size of $1,000,000 when Registrant is
providing only investment advisory services to a client, Registrant may accept an amount
less than the minimum. Registrant, in its sole discretion, may reduce its account minimum.
Registrant may group related client accounts for the purpose of achieving the minimum
account size requirement. Registrant’s investment advisory fee is negotiable, therefore,
Registrant may charge a lesser investment advisory fee based upon certain criteria (i.e.,
anticipated future earning capacity, anticipated future additional assets, dollar amount of
assets to be managed, related accounts, account composition, negotiations with client, etc.).
Grandfathered Fee Schedules. Registrant’s investment advisory fee schedule may be
amended from time to time. Many clients have been, and will continue to be, grandfathered
under fee schedules that preceded an amended fee schedule. In addition, many clients have
and will continue to be grandfathered under fee schedules that preceded the client’s
engagement of Registrant. Registrant has grown, and expects to continue to grow, by
acquisition of other advisory firms. The acquired firms could have fee schedules or other
fee arrangements with its clients that differ from the fee schedules set forth in Item 4 and
Item 5. Upon acquisition, an acquired firm will generally maintain its pre-existing fee
schedule subsequent to Registrant’s acquisition. As a result, Registrant’s clients could be
subject to different investment advisory fee schedules than those set forth in Item 4 and
Item 5, including those that may be higher or lower than Registrant’s fee schedule. Annual
advisory fees applicable to a client engagement are detailed in the Advisory Agreement
executed between Registrant and the client. Clients engaged under grandfathered fee
schedules are advised to consult their Advisory Agreement, which may be provided on
request, for more information on the fees applicable to their account.
ANY QUESTIONS: Registrant’s Chief Compliance Officer, Jeffrey G. Dohner,
remains available to address any questions regarding Registrant’s service offerings
and fees.
FINANCIAL ADVISORY AND CONSULTING SERVICES (STAND-ALONE)
To the extent specifically requested by a client, the Registrant may determine to provide
financial advisory and related consulting services (including investment consulting
services, retirement planning, cash flow planning, estate consulting services (not involving
legal or accounting advice/services), and budget analysis and review, etc.) on a stand-alone
separate fee basis. Registrant’s financial advisory and consulting fees are negotiable, but
generally range from $10,000 to $50,000 on a fixed fee basis, depending upon the level
and scope of the service(s) required and the professional(s) rendering the service(s). In
very limited instances and/or unique circumstances (to be determined in the sole discretion
of the Registrant), Registrant’s financial advisory and consulting fees may be based on an
hourly rate, ranging from $100 to $600, depending on the level and scope of the service(s)
required and the professional(s) rendering the service(s). Long term clients of Registrant
may continue to be grandfathered under financial advisory fee schedules which fall outside
the general fee range described above. Prior to engaging the Registrant to provide financial
advisory or consulting services, clients are generally required to enter into an Advisory
Agreement with Registrant setting forth the terms and conditions of the engagement
(including termination), describing the scope of the services to be provided, and the portion
of the fee that is due from the client prior to Registrant commencing services. If requested
by the client, Registrant may recommend the services of other professionals for
implementation purposes. Certain professionals recommended by Registrant are clients of
the Registrant. 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. Please Also Note: It remains the
client’s responsibility to promptly notify the Registrant, in writing, 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.
Combined Investment Advisory and Financial Advisory Services
Generally, this fee arrangement is unique to long term clients of Registrant that continue
to be grandfathered. Under this fee arrangement, the client can determine to engage the
Registrant to provide discretionary investment advisory services and financial advisory and
consulting services (including investment consulting services, retirement planning, cash
flow planning, estate consulting services (not involving legal or accounting
advice/services), and budget analysis and review, etc.) and pay a combined fee for both
services. The Registrant’s annual combined investment advisory and financial advisory
fee is based upon a percentage (%) of the market value of the assets set forth on the exhibit
to the Advisory Agreement and generally ranges between 0.30% and 1.00%.
Alternatively, Registrant’s annual combined investment advisory and financial advisory
fee may be a fixed fee.
The Registrant’s annual combined investment advisory and financial advisory fee is
negotiable and generally subject to a minimum annual fee of $20,000. To the extent assets
are directed to a sub-advisor, a separate fee (as described below), in addition to the
combined fee, will be charged to the client for the services of the sub-advisor.
In addition, many clients have and will continue to be grandfathered under fee schedules
that preceded the client’s engagement of Registrant. Registrant has grown, and expects to
continue to grow, by acquisition of other advisory firms. The acquired firms could have
fee schedules or other fee arrangements with its clients that differ from the fee schedules
set forth in Item 4 and Item 5. Upon acquisition, an acquired firm will generally maintain
its pre-existing fee schedule subsequent to Registrant’s acquisition. As a result,
Registrant’s clients could be subject to various different fee schedules and/or arrangements,
including, but not limited to, a combined investment advisory and financial advisory fee
based upon a percentage (%) of the market value of the assets placed under Registrant’s
management, which may be higher or lower than Registrant’s fee schedules set forth in
the Advisory Agreement executed between Registrant and the client. Clients engaged
under grandfathered fee schedules are advised to consult their Advisory Agreement, which
may be provided on request, for more information on the fees applicable to their account.
RETIREMENT CONSULTING SERVICES
The Registrant also provides non-discretionary pension consulting services, pursuant to
which it assists plan sponsors of trustee and participant directed retirement plans with the
selection and/or monitoring of investment alternatives (generally open-end mutual funds).
Plan participants shall choose the investments for their individual retirement accounts. In
addition, to the extent requested by the plan sponsor, the Registrant may also provide
participant education designed to assist participants in identifying the appropriate
investment strategy for their retirement plan accounts. The terms and conditions of the
engagement shall generally be set forth in the Investment Consulting Services Agreement
between the Registrant and the plan sponsor.
The Registrant’s annual consulting fixed fee arrangements are negotiable depending on the
time and complexity of the engagement. The Registrant’s annual consulting fees based
upon a percentage of the market value of the plan’s assets are negotiable and generally
range between 0.35% and 1.00% of the market value of the plan’s assets. Generally,
Registrant’s annual consulting fee shall be calculated and paid quarterly, in advance.
Consulting fees based on a percentage of the market value of the plan’s assets are based
upon the market value of the plan’s assets on the last day of the previous quarter.
SCHWAB ADVISOR NETWORK® (Combined Services)
Registrant receives client referrals from Charles Schwab & Co., Inc. (“Schwab”) through
Registrant’s participation in the Schwab Advisor Network® (“the Service”). See a
description of the Service in Item 12 and Item 14 below.
Registrant provides clients referred through the Service discretionary investment advisory
services and financial advisory and consulting services (including investment consulting
services, retirement planning, cash flow planning, estate consulting services (not involving
legal or accounting advice/services), and budget analysis and review, etc.) for a combined
fee for both services. The Registrant’s annual combined investment advisory and financial
advisory fee is based upon a percentage (%) of the market value of the assets placed under
Registrant’s management, is negotiable, and varies upon the scope of and type of services
to be provided as follows:
Non-Sub-Advised and Sub-Advised Portfolios (exclusive of sub-advisors fees)
Market Value of Portfolio % of Assets
First $4,000,000 1.000%
Next $2,000,000 0.750%
Next $14,000,000 0.500%
Over $20,000,000 0.350%
Non-Sub-Advised portfolios (direct management by Registrant), Sub-Advised Fixed
Income portfolios, and Sub-Advised Equity portfolios are aggregated when applying the
fee percentages described above.
To the extent assets are directed to a sub-advisor, a separate fee (as described below), in
addition to the combined fee, will be charged to the client for the services of the sub-
advisor.
Alternative Investments (exclusive of charges imposed by the alternative investment,
for example management fees)
Market Value of Portfolio % of Assets
Less than $10,000,000 1.000%
At least $10,000,000 0.900%
Registrant requires a minimum account size of $500,000 for clients referred through
Registrant’s participation in the Service. For clients referred through the Service with an
account size greater than $4 million, generally, Registrant will provide income tax
preparation services for no additional fee. Registrant may charge an additional fee for
providing income tax preparation services to clients with an account size less than $4
million.
Commencement of Registrant Compensation. Registrant’s financial advisory and
consulting services shall commence on the date that the client and the Registrant have
executed an Advisory Agreement. The Registrant’s annual advisory fee shall commence
on the date that Schwab has transitioned the client’s investment assets to an account(s) to
be managed by the Registrant, regardless of the date on which
the Registrant and the client
confirm the investment objective(s) for the account(s), which will generally be a date
subsequent to the execution of the Advisory Agreement.
TAX CONSULTING AND PREPARATION SERVICES
To the extent specifically requested by a client, the Registrant may determine to provide
its clients with tax consulting and preparation services, on either a mutually agreed upon
fixed fee or hourly rate basis.
MISCELLANEOUS
Financial Advisory and Related Consulting - Implementation. To the extent requested
by the client, the Registrant may determine to provide financial advisory and related
consulting services (including investment consulting services, retirement planning, cash
flow planning, estate consulting services (not involving legal or accounting
advice/services), and budget analysis and review, etc.). Neither the Registrant, nor any of
its representatives, serves as an attorney, accountant, or licensed insurance agent, and no
portion of the Registrant’s services should be construed as same. To the extent requested
by a client, the Registrant may recommend the services of other professionals for certain
implementation purposes (i.e., attorneys, accountants, licensed insurance agents, mortgage
brokers, etc.), including professionals that are clients of the Registrant as discussed below.
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. Please Also Note: It remains the client’s responsibility to
promptly notify the Registrant, in writing, 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.
Please Note: Non-Discretionary Service. Registrant primarily provides investment
management services on a discretionary basis. In very limited instances, Registrant may
provide these same investment services on a non-discretionary basis. Any such client for
whom the Registrant agrees to provide non-discretionary investment management services
must be willing to accept that the Registrant cannot effect any account transactions
without obtaining prior oral consent to any such transaction(s) from the client. Thus, in
the event of a market 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 oral consent.
Sub-Advisory Arrangements. The Registrant may engage sub-advisors for the purpose
of assisting the Registrant with the management of its client accounts. The sub-advisor(s)
shall have discretionary authority for the day-to-day management of the assets that are
allocated to it by the Registrant. The sub-advisor shall continue in such capacity until such
arrangement is terminated or modified by the Registrant. Unless otherwise specifically
indicated to the contrary, the annual fee charged by the designated sub-advisor (generally
ranging between 0.090% and 0.750% depending upon the type of management services
required and the market value of the assets to be managed), is exclusive of, and in addition
to, Registrant’s investment advisory fee. Factors which Registrant shall consider in
engaging sub-advisors include the client’s stated investment objective(s), and the sub-
advisor’s management style, performance, reputation, financial strength, reporting, pricing,
and research. The Registrant’s Chief Compliance Officer, Jeffrey G. Dohner, remains
available to address any questions concerning the Registrant’s sub-advisory
arrangements.
Pontera Solutions Inc. (“Pontera”). Registrant engaged Pontera, a third party platform
provider, to facilitate the management of held away assets such as defined contribution
plan participant accounts, with discretion. Those clients who choose to engage Registrant
to service their held away accounts will be provided a link to connect their outside accounts
to the platform. Once the client’s account is connected to the platform, Registrant will
review the client's current account allocation. Registrant will rebalance the connected
outside accounts consistent with the client’s investment goals and risk tolerance. To
facilitate use of the Pontera platform, the client securely logs into the Pontera site and
entitles Registrant to manage the assets. Pontera charges Registrant 0.30% for each
managed account. Clients do not pay any additional fee to Pontera or to Registrant in
connection with their platform participation; however, Registrant will charge an
investment advisory fee for the management of held away assets. Registrant is not
affiliated with Pontera in any way and receives no compensation from them for using their
platform.
Private Investment Funds. Registrant may provide investment advice regarding private
investment funds. The Registrant’s role relative to the private investment funds shall be
limited to its initial and ongoing due diligence and investment monitoring services. If a
client determines to become a private fund investor, the amount of assets invested in the
fund(s) shall be included as part of “assets under management” for purposes of Registrant
calculating its investment advisory fee. Registrant’s clients are under absolutely no
obligation to consider or make an investment in a private investment fund(s).
Please Note: Private investment funds generally involve various risk
factors, including, but not limited to, potential for complete loss of
principal, liquidity constraints and lack of transparency, a complete
discussion of which is set forth in each fund’s offering documents, which
will be provided to each client for review and consideration. Unlike liquid
investments that a client may maintain, private investment funds do not
provide daily liquidity or pricing. Each prospective client investor will be
required to complete a Subscription Agreement, pursuant to which the
client shall establish that he/she is qualified for investment in the fund, and
acknowledges and accepts the various risk factors that are associated with
such an investment.
Please Also Note: Valuation. In the event that the Registrant references
private investment funds owned by the client on any supplemental account
reports prepared by the Registrant, the value(s) for all private investment
funds owned by the client shall reflect the most recent valuation provided
by the fund sponsor. If no subsequent valuation post-purchase is provided
by the fund sponsor, then the valuation shall reflect the initial purchase
price (or a value as of a previous date). If the valuation reflects the initial
purchase price (or a value as of a previous date), the current value(s) (to
the extent ascertainable) could be significantly more or less than the
original purchase price. The client’s advisory fee shall be based upon
reflected fund value(s).
Recommended Professionals. Registrant may recommend the services of other
professionals for certain implementation purposes (i.e., attorneys, accountants, licensed
insurance agents, mortgage brokers, etc.), including professionals that are clients of the
Registrant. This arrangement presents a conflict of interest, such that Registrant could be
deemed to have an incentive to recommend these client professionals to Registrant’s other
clients. The Registrant’s Chief Compliance Officer, Jeffrey G. Dohner, remains
available to address any questions that a client or prospective client may have
regarding the above conflicts of interest.
Retirement Plans and Retirement Plan Participants. When Registrant provides
investment advice to clients regarding their retirement plan account or individual
retirement account, it is a fiduciary 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 Registrant makes money creates some
conflicts with client interests, so Registrant operates under a special rule that requires it to
act in a client’s best interest and not put its interest ahead of the client’s.
Under this special rule's provisions, the Registrant must:
• Meet a professional standard of care when making investment recommendations
(give prudent advice);
• Never put its financial interests ahead of the client’s when making
recommendations (give loyal advice);
• Avoid misleading statements about conflicts of interest, fees, and investments;
• Follow policies and procedures designed to ensure that it gives advice that is in the
client’s best interest;
• Charge no more than is reasonable for its services; and
• Give the client basic information about conflicts of interest.
Rollover Recommendations. 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 the assets 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 the Registrant recommends that a client roll over their retirement plan
assets into an account managed by the Registrant, such a recommendation creates a conflict
of interest if the Registrant will earn a new or increase its advisory fee as a result of the
rollover. No client is under any obligation to roll over retirement plan assets to an account
managed by Registrant. The Registrant’s Chief Compliance Officer, Jeffrey G.
Dohner, remains available to address any questions that a client or prospective client
may have regarding the potential for conflict of interest presented by such roll over
recommendation.
Please Note: Asset Based Pricing Limitations: Registrant, in limited circumstances,
may recommend clients enter into an asset based pricing agreement with the account
custodian, generally Charles Schwab & Co., Inc. Under an asset based pricing
arrangement, the amount the client will pay the custodian for account
commission/transaction fees is based upon a percentage (%) of the market value of the
client’s account (generally, the greater the market value, the lower the %). This differs
from transaction-based pricing, which assesses a separate commission/transaction fee
against the client’s account for each account transaction. Account investment decisions
are driven by security selection and anticipated market conditions and not the amount of
transaction fees payable by the client to the account custodian. Registrant does not receive
any portion of the asset based transaction fees payable by the client to the account
custodian. Registrant continues to believe, in limited circumstances, clients benefit from
an asset based pricing arrangement. However, a client can request at any time to switch
from asset based pricing to transaction based pricing. However, there can be no assurance
that the volume of transactions will be consistent from year-to-year given changes in
market events and security selection. Therefore, given the variances in trading volume,
any decision by a client to switch to transaction based pricing could prove to be
economically disadvantageous. The Registrant’s Chief Compliance Officer, Jeffrey G.
Dohner, remains available to address any questions that a client or prospective client
may have regarding the above arrangement.
Trade Error Policy. From time to time Registrant may make an error in submitting a trade
order on a client’s behalf. When this occurs, Registrant may place a correcting trade with
the broker-dealer which has custody of the client’s account. When Registrant corrects an
error, the client must not be disadvantaged; the client must be “made whole”, neither
recognizing any loss nor gain from the error. Accordingly, if Registrant makes an error
while submitting a trade for a client’s account, then Registrant, in order to comply with its
fiduciary obligation to the client, must bear any costs of correcting such a trade.
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, in writing, 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.
Please Note: Neither the Registrant, nor any of its employees, serve as an attorney,
accountant, or insurance agent for any of the Registrant’s clients, and no portion of the
Registrant’s services should be construed as same. Accordingly, Registrant does not
prepare estate planning documents, nor does Registrant sell insurance products. Registrant
does offer income tax preparation services as disclosed herein.
Please Note – Use of Mutual Funds: Most mutual funds are available directly to the
public. Thus, a prospective client can obtain some of the mutual funds that may be
recommended and/or utilized by Registrant independent of engaging Registrant as an
investment advisor. However, if a prospective client determines to do so, he/she will not
receive Registrant’s initial and ongoing investment advisory services.
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 any time, impose
reasonable restrictions, in writing, on the Registrant’s services.
The Registrant has a fiduciary duty to provide services consistent with the client’s best
interest. As part of its investment advisory services, the Registrant will review client
portfolios on an ongoing basis to determine if any changes are necessary based upon
various factors, including, but not limited to, market conditions, investment performance,
account additions/withdrawals, and/or a change in the client’s investment objective. Based
upon these factors, there may be extended periods of time when the Registrant determines
that changes to a client’s portfolio are neither necessary nor prudent. The Registrant’s
advisory fee remains payable during periods of account inactivity.
D. The Registrant does not participate in a wrap fee program.
E. As of December 31, 2023, the Registrant had $5,210,989,000 in assets under management
on a discretionary basis and $204,864,000 in assets under management on a non-
discretionary basis.