Firm Background
Jacobi Capital Management LLC was granted registration with the Securities and Exchange
Commission on August 7, 2008, as an Investment Adviser under Section 203(c) of the
Investment Adviser Act of 1940. Michael J. Hirthler is the sole owner and Chief Investment
Officer. Jacobi Capital Management, LLC also conducts business under the name Jacobi Wealth
Advisors. Use of the term “JCM” in this document refers to both Jacobi Capital Management,
LLC, and its d/b/a Jacobi Wealth Advisors.
Jacobi Capital Management LLC Advisory Services Offered
JCM primarily provides investment advisory services to its clients. This advice is provided on a
limited discretionary basis. Investment advisory services include, among other things, providing
advice regarding asset allocation and the selection of investments. Investment types advised
upon or utilized may be equity securities, which are listed on various exchanges or traded over
the counter or from foreign issuers, warrants, corporate debt securities, commercial paper,
certificates of deposit, municipal securities, mutual fund shares offered by investment
companies, United States government securities and options contracts on listed securities.
Our investment advice relies upon the principles of fundamental security analysis. We use
various sources for information which may include but are not limited to financial newspapers
and magazines, reviewing corporate activities through annual reports, prospectuses and filings
with the Securities and Exchange Commission, company press releases, corporate rating
services and research materials prepared by others. Our investment advice is given with regard
to long term time horizons but may include both short term (under 12 months) and long term
(over 12 months) holding periods for purchases, short sales, transactions which may utilize
margin borrowing and option writing consisting of covered call option, cash secured put
options, or spread strategies.
Investment advice and account management is guided by the stated objectives of the client. In
addition, JCM considers the client’s risk profile and financial status prior to making any
recommendations or transactions. A client profile considers their goals and objectives with
regard to time horizon, performance expectations, income needs, liquidity requirements, tax
considerations and current investments. This helps determine the construction of their
portfolio and assists in ascertaining suitability.
We also offer financial planning, consulting, and plan update services. These services may
include, among other things, non-securities advice on topics that include, but are not limited to,
business, retirement, estate, budgetary, college, personal and business tax planning.
JCM continually monitors and manages the client’s accounts by consulting with the client
periodically to determine whether any data in the client’s profile needs to be updated and
whether any changes should be made to the client’s investment Playbook, risk tolerance or
other factors pertaining to the continued suitability of the investments made for the client.
Clients are also encouraged to contact JCM promptly to notify of any changes to the
information previously provided or any other changes in the client’s financial circumstances or
investment goals. In addition, the client should feel free to contact JCM with any questions
they have about their accounts.
While accounts may utilize the same investment models, each account is managed on an
individualized basis. Further restrictions and guidelines imposed by the client affect the
composition and performance of the portfolio. For these reasons, performance of portfolios
with the same stated investment objective may differ and clients should not expect that the
performance of their portfolios will be identical with an average client of JCM.
Third-Party Sponsored Services Offered
JCM may offer clients various types of programs sponsored by a third party. All third-party
investment advisers to whom the Adviser may refer clients will be licensed as Investment
Advisers by their resident state and any applicable jurisdictions or Registered Investment
Advisers with the Securities and Exchange Commission. After gathering information about a
client's financial situation and investment objectives, JCM will assist the client in selecting a
particular third-party program.
Typically, JCM will provide these advisory services through certain programs sponsored by LPL
Financial LLC (“LPL”), a registered investment adviser and broker-dealer. Below is a brief
description of each LPL advisory program available to JCM. For more information regarding the
LPL programs, including more information on the advisory services and fees that apply, the types
of investments available in the programs and the potential conflicts of interest presented by the
programs please see the program account packet (which includes the account agreement and
LPL Form ADV program brochure) and the Form ADV, Part 2A of LPL or the applicable program.
Manager Access Select Program (MAS)
Manager Access Select offers clients the ability to participate in the Separately Managed
Account Platform (the “SMA Platform”) or the Model Portfolio Platform (the “MP
Platform”). In the SMA Platform, JCM will assist client in identifying a third-party portfolio
manager (SMA Portfolio Manager) from a list of SMA Portfolio Managers made available
by LPL, and the SMA Portfolio Manager manages client’s assets on a discretionary basis.
JCM will provide initial and ongoing assistance regarding the SMA Portfolio Manager
selection process. In the MP Platform, clients authorize LPL to direct the investment and
reinvestment of the assets in their accounts, in accordance with the selected model
portfolio provided by LPL’s Research Department or a third-party investment adviser.
Optimum Market Portfolios Program (OMP)
OMP offers clients the ability to participate in a professionally managed asset allocation
program using Optimum Funds shares. Under OMP, client will authorize LPL on a
discretionary basis to purchase and sell Optimum Funds pursuant to investment
objectives chosen by the client. JCM will assist the client in determining the suitability of
OMP for the client and assist the client in setting an appropriate investment objective.
JCM will have discretion to select a mutual fund asset allocation portfolio designed by LPL
consistent with the client’s investment objective. LPL will have discretion to purchase
and sell Optimum Funds pursuant to the portfolio selected for the client. LPL will also
have authority to rebalance the account.
Model Wealth Portfolios (MWP)
MWP offers clients a professionally managed mutual fund asset allocation program. JCM
will obtain the necessary financial data from the client, assist the client in determining the
suitability of the MWP program and assist the client in setting an appropriate investment
objective. JCM will initiate the steps necessary to open an MWP account and have
discretion to select a model portfolio designed by LPL’s Research Department consistent
with the client’s stated investment objective. LPL’s Research Department, a third-party
portfolio strategist and/or Adviser, through its IAR, may act as a portfolio strategist
responsible for selecting the mutual funds or ETFs within a model portfolio and for
making changes to the mutual funds or ETFs selected.
The client will authorize LPL to act on a discretionary basis to purchase and sell mutual
funds and ETFs and to liquidate previously purchased securities. The client will also
authorize LPL to effect rebalancing for MWP accounts.
Guided Wealth Portfolios (GWP)
GWP offers clients the ability to participate in a centrally managed, algorithm-based
investment program, which is made available to users and clients through a web-based,
interactive account management portal (“Investor Portal”). Investment
recommendations to buy and sell exchange-traded funds and open-end mutual funds are
generated through proprietary, automated, computer algorithms (collectively, the
“Algorithm”) of FutureAdvisor, Inc. (“FutureAdvisor”), based upon model portfolios
constructed by LPL and selected for the account as described below (such model
portfolio selected for the account, the “Model Portfolio”). Communications concerning
GWP are intended to occur primarily through electronic means (including but not limited
to, through email communications or through the Investor Portal), although JCM will be
available to discuss investment strategies, objectives or the account in general in person
or via telephone.
Investors participating in the Managed Service (“clients” and each, a “client”) complete
an account application (the “Account Application”) and enter into an account agreement
(the “Account Agreement”) with LPL, JCM and FutureAdvisor. As part of the account
opening process, clients are responsible for providing complete and accurate information
regarding, among other things, their age, risk tolerance, and investment horizon
(collectively, “Client Profile”). LPL, JCM and FutureAdvisor rely on the information in the
Client Profile in order to provide services under the Program, including but not limited to,
determination of suitability of the Program for clients and an appropriate Investment
Objective and Model Portfolio for clients. The Model Portfolios have been designed and
are maintained by LPL or, in the future, a third-party investment strategist (as applicable,
the “Portfolio Strategist”) and shall
include a list of securities holdings, relative
weightings and a list of potential replacement securities for tax harvesting purposes.
FutureAdvisor, JCM and clients cannot access, change, or customize the Model Portfolios.
Only one Model Portfolio is permitted per account.
Based upon a client’s risk tolerance as indicted in the Client Profile, the client is assigned
an investment allocation track (currently Fixed Income Tilt, Balance Tilt or Equity Tilt), the
purpose of which is to slowly rotate the client’s equity allocation to fixed income over
time. LPL Research created these tracks using academic research on optimal retirement
allocations, the industry averages as calculated by Morningstar for the target date fund
universe, and input from FutureAdvisor.
Within the applicable allocation track and based upon a client’s chosen Retirement Age in
the Client Profile, the client will be assigned a Model Portfolio and one of five of LPL’s
standard investment objectives:
• Income with capital preservation. Designed as a longer-term accumulation
account, this investment objective is considered generally the most
conservative. Emphasis is placed on generation of current income with
minimal risk of capital loss. Lowering the risk generally means lowering the
potential income and overall return.
• Income with moderate growth. This investment objective emphasizes
generation of current income with a secondary focus on moderate capital
growth.
• Growth with income. This investment objective emphasizes modest capital
growth with some focus on generation of current income.
• Growth. This investment objective emphasizes achieving high long-term
growth and capital appreciation. There is little focus on generation of
current income.
• Aggressive growth. This investment objective emphasizes aggressive growth
and maximum capital appreciation, with no focus on generation of current
income. This objective has a very high level of risk and is for investors with a
longer timer horizon.
Both the client and JCM are required to review and approve the initial Investment
Objective. As a client approaches the Retirement Age, the Algorithm will automatically
adjust the client’s asset allocation. Any change to the Investment Objective directed by a
client due to changes in the Client’s risk tolerance and/or Retirement Age will require
written approval from the client and JCM before implementation. Failure to approve the
change in Investment Objective may result in a client remaining in a Model Portfolio that
is no longer aligned with the applicable Client Profile. The Investment Objective selected
for the account is an overall objective for the entire account and may be inconsistent
with a particular holding and the account’s performance at any time and may be
inconsistent with other asset allocations suggested to client by LPL, JCM or FutureAdvisor
prior to client entering into the Account Agreement. Achievement of the stated
investment objective is a long-term goal for the account, and asset withdrawals may
impair the achievement of client’s investment objectives. A Client Profile that includes a
conservative risk tolerance over a long-term investment horizon may result in the
selection of an Investment Objective that is riskier than would be selected over a shorter-
term investment horizon. Clients should contact JCM if they believe the Investment
Objective does not appropriately reflect the Client Profile, such as their risk tolerance.
By executing the Account Agreement, clients authorize LPL and FutureAdvisor to have
discretion to buy and sell only exchange-traded funds (“ETFs”) and open-end mutual
funds (“Mutual Funds”) (collectively, “Program Securities”) according to the Model
Portfolio selected and, subject to certain limitations described in the Account Agreement,
hold or liquidate previously purchased non-model securities that are transferred into the
account (“Legacy Securities”). In order to be transferred into an account, Legacy
Securities must be Mutual Funds with which LPL has a full or partial selling agreement,
ETFs or individual U.S. listed stocks. Securities that are not Program Securities included
within the Model Portfolio will not be purchased for an account, and FutureAdvisor, in its
sole discretion, will determine whether to hold or sell Legacy Securities, generally, but
not solely, with the goal of optimizing tax impacts for accounts that are subject to tax.
Additional Legacy Securities will not be purchased for the account. Clients may not
impose restrictions on liquidating any Legacy Securities for any reason. Clients should
not transfer in Legacy Securities that they are not willing to have liquidated at the
discretion of FutureAdvisor.
In addition, uninvested cash may be invested in money market funds, the Multi-Bank
Insured Cash Account (“ICA”) or the Deposit Cash Account (“DCA”), as applicable, as
described in the Account Agreement. Dividends paid by the Program Securities in the
account will be contributed to the cash allocation and ultimately reinvested into the
account based on the Model Portfolio once the tolerance within cash allocation is
surpassed.
Pursuant to the Account Agreement, FutureAdvisor is authorized to perform tax
harvesting when deemed acceptable by the Algorithm based on the Legacy Securities’
respective tax lot information. If tax lot information is missing for a Legacy Security, the
Legacy Security will be retained in the Account while FutureAdvisor and JCM use
reasonable efforts to obtain the missing information. If the information cannot be
obtained within a reasonable timeframe (generally no longer than 30 days), the Legacy
Security will be sold and replaced with a Program Security in the Model Portfolio. LPL,
JCM and clients cannot alter trades made for tax harvesting purposes. In order to permit
trading in a tax-efficient manner, the Account Agreement also grants FutureAdvisor the
authority to select specific tax lots when liquidating securities within the account.
Although the Algorithm attempts to achieve tax efficiencies, by doing so a client’s
portfolio may not directly align with Model Portfolio. As a result, a client may receive
advice that differs from the advice received by accounts using the same Model Portfolio,
and the client’s account may perform differently than other accounts using the same
Model Portfolio.
During the term of the Account Agreement, FutureAdvisor will perform a daily review of
the account to determine if rebalancing is appropriate based on tolerance thresholds
established by LPL and/or FutureAdvisor. At each rebalancing review, the account will be
rebalanced if at least one of the account positions is outside such thresholds, subject to a
minimum transaction amount established by LPL and/or FutureAdvisor. In addition, LPL
and/or FutureAdvisor may review the account for rebalancing in the event that the
Portfolio Strategist changes a Model Portfolio. FutureAdvisor may delay placing
rebalancing transactions for non-qualified accounts by a number of days, to be
determined by FutureAdvisor, in an attempt to limit short-term tax treatment for any
position being sold. In addition, trading in the account at any given time is also subject to
certain conditions, including but not limited to, conditions related to trade size,
compliance tests, the target cash allocation and allocation tolerances. LPL, JCM and
clients can alter the rebalancing frequency.
Under JCM’s agreement with LPL, JCM was provided the opportunity to offer GWP, which
utilizes FutureAdvisor’s Algorithm as described herein, to prospective clients. JCM is not
otherwise affiliated with FutureAdvisor. FutureAdvisor is compensated directly by LPL for
its services, including the Algorithm and related software, through an annual sub-
advisory fee (tiered based on assets under management by FutureAdvisor, at a rate
ranging from 0.10% to 0.17%). As each asset tier is reached, LPL’s share of the
compensation shall increase and clients will not benefit from such asset tiers. No
additional fee is charged for FutureAdvisor’s services.
JCM believes that certain clients may benefit from GWP’s advisor-enhanced advisory
services, particularly due to the relatively low minimum account balance and the
combination of a digital advice solution with access to an advisor. Unlike direct-to-
consumer robo platforms, JCM is responsible on an ongoing basis as investment adviser
and fiduciary for the client relationship, including for recommending the program for the
client; providing ongoing monitoring of the program, the performance of the account,
the services of LPL and FutureAdvisor; determining initial and ongoing suitability of the
program for the client; reviewing clients’ suggested portfolio allocations; reviewing and
approving any change in Investment Objective due to changes clients make to their Client
Profile; answering questions regarding the program, assisting with paperwork and
administrative and operational details for the account; and being available to clients to
discuss investment strategies, changes in financial circumstances, objectives or the
account in general in person or via telephone. JCM can also recommend other suitable
investment programs if clients have savings goals or investment needs for which GWP is
not the optimal solution.
Assets Under Management
As of year-end, December 31, 2023, total discretionary assets under management for JCM were
$1,654,012,700 consisting of 5522 accounts.