Firm Brochure - Form ADV Part2A
This brochure provides information about the qualifications and business practices of Castle Wealth Advisors LLC. If you have any questions about the contents of this brochure, please contact us at (424) 209-2257 or by email at: . The information in this brochure has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority.
Additional information about Castle Wealth Advisors LLC is also available on the SEC’s website at . Castle Wealth Advisors LLC’s CRD number is: 283231.
1168 S. Barrington Ave, Suite 502
Los Angeles, CA, 90049
(424) 209-2257
Castle Wealth Advisors LLCis a registered investment adviser. Registration does not imply a certain level of skill or training.
Version Date: 10/14/2016
1
Item 2: Material Changes
Castle Wealth Advisors LLChas the following material changes to report.This list summarizes changes to policies, practices or conflicts of interests only.
- The firm now offers educational seminars and workshops.
- The firm is now using Wiser Advisor as a solicitor.
- The firm now participates in a Wrap Fee program.
1
Item 3: Table of Contents
Item 1: Cover Page
Item 2: Material Changes
Item 3: Table of Contents
Item 4: Advisory Business
A. Description of the Advisory Firm
B. Types of Advisory Services
Selection of Other Advisers
Educational Seminars and Workshops
C. Client Tailored Services and Client Imposed Restrictions
D. Wrap Fee Programs
E. Assets Under Management
Item 5: Fees and Compensation
A. Fee Schedule
Selection of Other Advisers Fees
Educational Seminar and Workshop Fees
B. Payment of Fees
Payment of Selection of Other Advisers Fees
Payment of Educational Seminars and Workshop Fees
C. Client Responsibility For Third Party Fees
D. Prepayment of Fees
E. Outside Compensation For the Sale of Securities to Clients
Item 6: Performance-Based Fees and Side-By-Side Management
Item 7: Types of Clients
Item 8: Methods of Analysis, Investment Strategies, & Risk of Loss
A.Methods of Analysis and Investment Strategies
B.Material Risks Involved
C.Risks of Specific Securities Utilized
Item 9: Disciplinary Information
A.Criminal or Civil Actions
B.Administrative Proceedings
C.Self-regulatory Organization (SRO) Proceedings
Item 10: Other Financial Industry Activities and Affiliations
A.Registration as a Broker/Dealer or Broker/Dealer Representative
B.Registration as a Futures Commission Merchant, Commodity Pool Operator, or a Commodity Trading Advisor
C.Registration Relationships Material to this Advisory Business and Possible Conflicts of Interests
D.Selection of Other Advisers or Managers and How This Adviser is Compensated for Those Selections
Item 11: Code of Ethics, Participation or Interest in Client Transactions and Personal Trading
A.Code of Ethics
B.Recommendations Involving Material Financial Interests
C.Investing Personal Money in the Same Securities as Clients
D.Trading Securities At/Around the Same Time as Clients’ Securities
Item 12: Brokerage Practices
A.Factors Used to Select Custodians and/or Broker/Dealers
1.Research and Other Soft Dollar Benefits
2.Brokerage for Client Referrals
3.Clients Directing Which Broker/Dealer/Custodian to Use
B.Aggregating (Block) Trading for Multiple Client Accounts
Item 13: Review of Accounts
A.Frequency and Nature of Periodic Reviews and Who Makes Those Reviews
B.Factors That Will Trigger a Non-Periodic Review of Client Accounts
C.Content and Frequency of Regular Reports Provided to Clients
Item 14: Client Referrals and Other Compensation
A.Economic Benefits Provided by Third Parties for Advice Rendered to Clients (Includes Sales Awards or Other Prizes)
B.Compensation to Non – Advisory Personnel for Client Referrals
Item 15: Custody
Item 16: Investment Discretion
Item 17: Voting Client Securities (Proxy Voting)
Item 18: Financial Information
A.Balance Sheet
B.Financial Conditions Reasonably Likely to Impair Ability to Meet Contractual Commitments to Clients
C.Bankruptcy Petitions in Previous Ten Years
Item 19: Requirements For State Registered Advisers
A.Principal Executive Officers and Management Persons; Their Formal Education and Business Background
B.Other Businesses in Which This Advisory Firm or its Personnel are Engaged and Time Spent on Those (If Any)
C.Calculation of Performance-Based Fees and Degree of Risk to Clients
D.Material Disciplinary Disclosures for Management Persons of this Firm
E.Material Relationships That Management Persons Have With Issuers of Securities (If Any)
1
Item 4: Advisory Business
A. Description of the Advisory Firm
Castle Wealth Advisors LLC (hereinafter “CWAL”) is a Limited Liability Company organized in the State of California.The firm was formed in February 2016, and the principal owner is Misty Heather Castle. CWAL is registered as an investment adviser with the State of California and the State of Alabama.
B. Types of Advisory Services
Portfolio Management Services
CWAL offers ongoing portfolio management services based on the individual goals, objectives, time horizon, and risk tolerance of each client. CWAL creates an Investment Policy Statement for each client, which outlines the client’s current situation (income, tax levels, and risk tolerance levels). Portfolio management services include, but are not limited to, the following:
•Investment strategy•Personal investment policy
•Asset allocation•Asset selection
•Risk tolerance•Regular portfolio monitoring
CWAL evaluates the current investments of each client with respect to their risk tolerance levels and time horizon. Risk tolerance levels are documented in the Investment Policy Statement, which is given to each client.
CWAL seeks to provide that investment decisions are made in accordance with the fiduciary duties owed to its accounts and without consideration of CWAL’s economic, investment or other financial interests. To meet its fiduciary obligations, CWAL attempts to avoid, among other things, investment or trading practices that systematically advantage or disadvantage certain client portfolios, and accordingly, CWAL’s policy is to seek fair and equitable allocation of investment opportunities/transactions among its clients to avoid favoring one client over another over time. It is CWAL’s policy to allocate investment opportunities and transactions it identifies as being appropriate and prudent, including initial public offerings ("IPOs") and other investment opportunities that might have a limited supply, among its clients on a fair and equitable basis over time.
Pension Consulting Services
CWAL offers ongoing consulting services to pension or other employee benefit plans (including but not limited to 401(k) plans) based on the demographics, goals, objectives, time horizon, and/or risk tolerance of the plan’s participants.
Financial Planning
Financial plans and financial planning may include, but are not limited to: investment planning; life insurance; estate planning (including special needs estate planning); tax concerns; retirement & income planning; young investor guidance; college planning; small business planning; divorce planning; and debt/credit planning.
In offering financial planning, a conflict exists between the interests of the investment adviser and the interests of the client. The client is under no obligation to act upon the investment adviser's recommendation, and, if the client elects to act on any of the recommendations, the client is under no obligation to effect the transaction through the investment adviser. This statement is required by California Code of Regulations, 10CCR Section 260.235.2.
Selection of Other Advisers
CWALmay direct clients to thirdparty investment advisers. Before selecting other advisers for clients, CWAL will always ensure those other advisers are properly licensed or registered as investment adviser.
Educational Seminars and Workshops
CWAL provides day-long educational seminars and workshops to all clients and potential clients that include topics on Investing Principals, Investing for Women, Estate Planning Presentation, Best Practices of General Wealth Transfer and Senior Living.
Services Limited to Specific Types of Investments
CWAL generally limits its investment advice to mutual funds, fixed income securities, insurance products including annuities, equities, ETFs, treasury inflation protected/inflation linked bonds and non-U.S. securities. CWAL may use other securities as well to help diversify a portfolio when applicable.
C. Client Tailored Services and Client Imposed Restrictions
CWAL offers the same suite of services to all of its clients. However, specific client investment strategies and their implementation are dependent upon the client Investment Policy Statement which outlines each client’s current situation (income, tax levels, and risk tolerance levels). Clients may impose restrictions in investing in certain securities or types of securities in accordance with their values or beliefs. However, if the restrictions prevent CWAL from properly servicing the client account, or if the restrictions would require CWAL to deviate from its standard suite of services, CWAL reserves the right to end the relationship.
D. Wrap Fee Programs
CWAL participates in and sponsors a wrap fee program, which is an investment program where the client pays one stated fee that includes management fees, transaction costs, fund expenses, and other administrative fees. CWAL manages the investments in the wrap fee program, but does not manage those wrap fee accounts any differently than it would manage non-wrap fee accounts. Fees paid under the wrap fee program will be given to CWAL as a management fee
E. Assets Under Management
CWAL has the following assets under management:
Discretionary Amounts: / Non-discretionary Amounts: / Date Calculated:$0 / $0 / March 2016
Item 5: Fees and Compensation
Lower fees for comparable services may be available from other sources.
A. Fee Schedule
Asset-Based Fees for Portfolio Management
Total Assets Under Management / Annual Fee$0 - $500,000 / 1.50%
$500,001 - $1,000,000 / 1.25%
$1,000,001 – And Up / 1.05%
These fees are generally negotiable and the final fee schedule is attached as Exhibit II of the Investment Advisory Contract. Clients may terminate the agreement without penalty for a full refund of CWAL's fees within five business days of signing the Investment Advisory Contract. Thereafter, clients may terminate the Investment Advisory Contract generally with 15 days' written notice.
CWAL uses an average of the daily balance in the client's account throughout the billing period, after taking into account deposits and withdrawals, for purposes of determining the market value of the assets upon which the advisory fee is based.
Pension Consulting Services Fees
Asset-Based Fees for Pension Consulting
Total Assets / Annual FeeAll Assets / 1.50%
CWAL uses an average of the daily balance in the client’s account throughout the billing period, after taking into account deposits and withdrawals, for purposes of determining the market value of the assets upon which the advisory fee is based.
Fixed Fees
The rate for creating client pension consulting plans is between $10,000 and $90,000.
Clients may terminate the agreement without penalty for a full refund of CWAL's fees within five business days of signing the client contract. Thereafter, clients may terminate the client contractgenerally with 15 days' written notice.
Fixed Financial Planning Fees
The negotiated fixed rate for creating client financial plans is between $2,500 and $5,000. Clients may terminate the agreement without penalty for a full refund of CWAL's fees within five business days of signing the Financial Planning Agreement. Thereafter, clients may terminate the Financial Planning Agreement generally upon written notice.
Selection of Other Advisers Fees
CWAL may direct clients to third-party investment advisers. CWAL will be compensated via a fee share from the advisers to which it directs those clients. This relationship will be memorialized in each contract between CWAL and each third-party adviser. The fees shared are negotiable and will not exceed any limit imposed by any regulatory agency. The notice of termination requirement and payment of fees for third-party investment advisers will depend on the specific third-party adviser selected.
Educational Seminar and Workshop Fees
CWAL will charge from $0 - $1,500 for speaking events.The fee will not exceed $1,500. Some events there will not be a fee to attend. For events with a fee the fee may be negotiable.
B. Payment of Fees
Payment of Asset-Based Portfolio Management Fees
Asset-based portfolio management fees are paid quarterly in arrears. Fees are withdrawn directly from the advisory account with written authorization or may be invoiced and paid via check, cash, or wire; clients may select the method in which they are billed.
Payment of Asset-Based Pension Consulting Fees
Asset-based pension consulting fees are paid quarterly in arrears. Fees are withdrawn directly from the advisory account with written authorization or may be invoiced and paid via check, cash, or wire; the client may select either billing method.
Payment of Fixed Pension Consulting Services Fees
Fixed pension consulting fees are paid via check, cash, or wire. These fees are paid in arrears upon completion.
Payment of Selection of Other Advisers Fees
Fees are paid quarterly in arrears. The timing, frequency, and method of paying fees for selection of thirdparty managers will depend on the specific third-party adviser selected and will be disclosed to the client prior to entering into a relationship with the third-party advisor.
Payment of Fixed Financial Planning Fees
Financial planning fees are paid via check, cash, or wire.Fixed financial planning fees are paid 100% in advance, but never more than six months in advance.
Payment of Educational Seminars and Workshop Fees
Fees for educational seminars and workshops will be paid via a check.
C. Client Responsibility For Third Party Fees
Clients are responsible for the payment of all third party fees (i.e. custodian fees, brokerage fees, mutual fund fees, transaction fees, etc.). Those fees are separate and distinct from the fees and expenses charged by CWAL. Please see Item 12 of this brochure regarding broker-dealer/custodian.
D. Prepayment of Fees
CWAL collects certain fees in advance and certain fees in arrears, as indicated above. Refunds for fees paid in advance will be returned within fourteen days to the client via check, or return deposit back into the client’s account.
Fixed fees that are collected in advance will be refunded based on the prorated amount of work completed at the point of termination.
E. Outside Compensation For the Sale of Securities to Clients
Misty Heather Castle, via her outside business activities, may accept compensation for the sale of securities or other investment products, including asset-based sales charges or services frees from the sale of mutual funds.
1. This is a Conflict of Interest
Supervised persons may accept compensation for the sale of securities or other investment products, including asset based sales charges or service fees from the sale of mutual funds to CWAL's clients. This presents a conflict of interest and gives the supervised person an incentive to recommend products based on the compensation received rather than on the client’s needs. When recommending the sale of securities or investment products for which the supervised persons receives compensation, CWAL will document the conflict of interest in the client file and inform the client of the conflict of interest.
2. Clients Have the Option to Purchase Recommended Products From Other Brokers
Clients always have the option to purchase CWAL recommended products through other brokers or agents that are not affiliated with CWAL.
3. Commissions are not CWAL's primary source of compensation for advisory services
Commissions are not CWAL’s primary source of compensation for advisory services.
4. Advisory Fees in Addition to Commissions or Markups
Advisory fees that are charged to clients are not reduced to offset the commissions or markups on securities or investment products recommended to clients.
Item 6: Performance-Based Fees and Side-By-Side Management
CWAL does not accept performance-based fees or other fees based on a share of capital gains on or capital appreciation of the assets of a client.
Item 7: Types of Clients
CWAL generally provides advisory services to the following types of clients:
Individuals
High-Net-Worth Individuals
Pension and Profit Sharing Plans
Charitable Organizations
There is no account minimum for any of CWAL’s services.
Item 8: Methods of Analysis, Investment Strategies, Risk of Loss
A.Methods of Analysis and Investment Strategies
Methods of Analysis
CWAL’s methods of analysis include technical analysis, cyclical analysis, quantitative analysis and modern portfolio theory.
Technical analysis involves the analysis of past market data; primarily price and volume.
Cyclical analysis involves the analysis of business cycles to find favorable conditions for buying and/or selling a security.
Quantitative analysis deals with measurable factors as distinguished from qualitative considerations such as the character of management or the state of employee morale, such as the value of assets, the cost of capital, historical projections of sales, and so on.
Modern portfolio theory is a theory of investment that attempts to maximize portfolio expected return for a given amount of portfolio risk, or equivalently minimize risk for a given level of expected return, each by carefully choosing the proportions of various asset.
Investment Strategies
CWAL uses long term trading, short term trading, short sales and options trading (including covered options, uncovered options, or spreading strategies).
Investing in securities involves a risk of loss that you, as a client, should be prepared to bear.
B.Material Risks Involved
Methods of Analysis
Technical analysis attempts to predict a future stock price or direction based on market trends. The assumption is that the market follows discernible patterns and if these patterns can be identified then a prediction can be made. The risk is that markets do not always follow patterns and relying solely on this method may not take into account new patterns that emerge over time.
Cyclical analysis assumes that the markets react in cyclical patterns which, once identified, can be leveraged to provide performance. The risks with this strategy are two-fold: 1) the markets do not always repeat cyclical patterns; and 2) if too many investors begin to implement this strategy, then it changes the very cycles these investors are trying to exploit.