June 30, 2020. This document provides a summary of the services and fees SVB Wealth Advisory, Inc. (“we” or “us”) offer to retail investors such as yourself, to help you make informed decisions when you work with us. We are registered with the Securities and Exchange Commission as a broker-dealer and an investment adviser. Brokerage and investment advisory services and fees differ and it is important for you to understand the differences. Free and simple tools are available to research firms and financial professionals at SEC site https://www.investor.gov/home/welcome-investor-gov-crs and FINRA https://brokercheck.finra.org/, which also provides educational materials about broker-dealers, investment advisers, and investing.
1. What investment services and advice can you provide me?We offer both brokerage and investment advisory services to retail investors.
About our brokerage services. We act in our capacity as a broker-dealer when you open a brokerage account with us and we execute securities transactions on your behalf or, without charging you a separate fee for investment advice, we make investment recommendations for your brokerage account or we recommend that you roll over or transfer assets from a retirement or other account to your brokerage account.
Our principal brokerage services involve buying and selling securities at your direction. We may recommend securities and offer investment strategy recommendations. We may also take orders from you to buy or sell securities where we have not made any recommendation to you. In either case, all activity in your brokerage account is conducted on a nondiscretionary basis, meaning you make the ultimate decision regarding whether to buy, sell, or hold any investments. We offer a broad range of securities products, including: equity securities, corporate and government debt securities, securities options, money market funds and private placement securities representing interests in affiliated and unaffiliated alternative investment vehicles. We also offer margin trading to eligible clients.
We trade securities only as your agent. We do not trade securities as a principal, by which we mean, we do not buy securities from you or sell securities to you as your counterparty.
Unless we state otherwise in writing, we do not monitor your brokerage account for you. If you prefer on-going monitoring of your account(s) or investments, you should speak with a financial advisor about whether an advisory services relationship is more appropriate for you.
Brokerage accounts have no minimums. For a more detailed description of our brokerage services, please refer to our disclosure(s) on our website at svb.com/private-bank
About our advisory services. We act in our capacity as an investment adviser when you open an advisory account and, for a separate advisory fee as discussed below, we provide investment advice, manage investment portfolios in your advisory account and offer financial planning services.
Our principal advisory services involve providing discretionary investment advice, whereby we will have discretion to decide which investments to buy or sell for your account. We offer a broad range of securities products, including: equity securities, corporate and government debt securities, securities options, money market funds and private placement securities representing interests in affiliated and unaffiliated alternative investment vehicles. We offer two types of discretionary advisory programs:
- Fully Managed Discretionary Program. In our Fully Managed Discretionary Account offering, we will design a customized investment portfolio based on your investment objectives, resources and needs, and implement, review, and rebalance investment portfolio(s) on a discretionary basis. You may limit our discretionary authority (for example, limiting the types of securities that can be purchased or sold for your account) by providing us with your restrictions and guidelines in writing. Where appropriate, we will select, retain or replace third-party managers to manage your accounts.
We will monitor accounts on a periodic basis to assess account performance, asset allocation, liquidity needs, and performance objectives. We will also automatically review accounts in response to changes in your needs, major market events, or when account performance drifts too far from portfolio benchmarks. In general, we do not require a minimum dollar amount to open and maintain an advisory account; however, we have the right to terminate your account if it falls below a minimum size which, in our sole opinion, is too small to manage effectively. In addition, some third-party sub-managers have minimum funding requirements, and as a result, may not be available to clients that are unable to meet such requirements.
- Betterment Wrap Fee Program. Through our partnership with Betterment LLC (“Betterment”), we offer a cost-effective alternative to the Fully Managed Discretionary Program. The Betterment Wrap Fee Program is a fully-automated investment advisory services where Betterment will serve as the exclusive sub-advisor and provide ancillary custody and brokerage services, for an all-inclusive “wrap” fee. Betterment is sometimes called a “robo-advisor” because it is an online wealth management service that provides fully-automated, algorithm-based portfolio management advice based on a client’s responses to screening questions and other information the client provides. You may, as permitted by Betterment, impose reasonable restrictions on Betterment’s ongoing management of your assets.
Neither we (SVB Wealth Advisory) nor our financial professionals will have or exercise discretionary investment management authority over the assets held in your accounts under the Betterment Wrap Fee Program. Because Betterment is a fully-automated robo-advisor, you generally will not be able to interact directly with Betterment’s investment advisory personnel who manage the investment algorithm. In addition, you will have only limited in-person interactions with our (SVB Wealth Advisory) financial professionals with respect to your accounts.
While Betterment will provide continuous, automated review and monitoring of your account to ensure your investment positions conform to your investment profile, your account generally will not be actively monitored by an investment advisory personnel. There is no required minimum dollar amount to open and maintain a Betterment Wrap Fee Program account.
Please refer to SVB WA Form ADV Part 2A Appendix 1 and to the Betterment Form ADV Part 2A Appendix 1 for a more detailed description of the Betterment Wrap Fee Program, including how it compares with the Fully Management Discretionary Program.
- Other Advisory Services. We are currently phasing out our non-discretionary advisory program and are in the process of transitioning clients’ non-discretionary advisory accounts to brokerage accounts. In a non-discretionary advisory account, you make the ultimate decision to buy or sell securities. We do not charge any investment advisory fees for non-discretionary advisory accounts and we do not provide ongoing investment advice or monitoring services.
|Key Questions to Ask Your Financial Professional
2. What fees will I pay?The principal fees you will pay for brokerage and advisory services are as follows:
Principal Fees: Brokerage Services
The principal fees and costs you will pay for brokerage services are commissions, which are transaction-based fees charged each time you buy or sell securities. Commissions may be charged on a per share basis, per trade basis or both.
Because we are compensated for transactions, there is an incentive to encourage you to trade more frequently and in greater amounts.
Principal Fees: Advisory Services
Fully Managed Discretionary Program. Our principal fee is an advisory fee, calculated as a percentage of the assets in your advisory account. The fee you pay is for our investment advice, most trading costs, and custody and performance reporting, among other ancillary services, but does not include the investment management fee for a third-party manager we may appoint, which could result in an additional fee for you.
The fee may be more or less than the cost of the services included in the discretionary program if they were provided separately.
Betterment Wrap Fee Program. The principal fee is an all-inclusive wrap-fee equal on an annualized basis to 0.40% of the value of the assets in your Betterment Wrap Fee Program account. Of this, 0.25% of the wrap fee is received by Betterment and 0.15% is received by us. Betterment will calculate and automatically debit wrap fees from your account, generally on a quarterly basis; we will not charge our portion of the wrap fee directly to you.
The wrap fee may be more or less than the cost of the services included in the discretionary program if they were provided separately.
For both the Fully Managed Discretionary Program and the Betterment Wrap Fee Program, we reserve the right to waive or modify the wrap fee at any time and charge a proportionately lower or higher fee (following 30 days’ prior written notice to you in the event of any increase in fees) and to change the manner in which the wrap fee is calculated and paid or other aspects of the fee structure, as determined on a case-by-case basis.
Asset-based fees give us an incentive to increase your advisory account assets, which creates a conflict especially for those accounts holding illiquid or hard-to-value assets. The wrap fee may create an incentive for us to, and for Betterment to design the asset allocation algorithms used by the program in such a way as to, limit trading in program accounts because the execution costs of each trade will reduce the potential profit from the wrap fee.
Additional Fees: Brokerage Services
For brokerage accounts, you will be charged additional fees from the principal fees described above, such as: transaction fees charged by Fidelity National Financial Services LLC, our clearing broker; annual custodial and account maintenance fees; various assessments and usage fees (such as processing and handling fees for trades, wire fees, transfer fees and bank charges); fees for using a margin account; and amounts that are included in the expense ratios of investments such as mutual funds, exchange traded funds and other alternative investments.
Additional Fees: Advisory Services
- Fees included in the expense ratios or investments such as mutual funds, exchange traded funds and other alternative investments; as well as any management fees charged by third-party subadvisors that we may appoint to manage all or a portion of our discretionary account assets.
You will pay fees and costs whether you make or lose money on your investments. Fees and costs will reduce any amount of money you make on your investments over time. Please make sure you understand what fees and costs you are paying. For additional information regarding our brokerage fees and costs, please see Reg BI Disclosure on our website svb.com/private-bank. For information regarding our advisory fees and costs, please see our Form ADV Part 2A brochure (Items 5.A, B., C.) and Form ADV Part 2A Appendix 1 by clicking on this https://adviserinfo.sec.gov/firm/summary/168116 or visiting our website.
|Key Questions to Ask Your Financial Professional
When we provide you with a recommendation as your broker-dealer or act as your investment adviser, we have to act in your best interest and not put our interest ahead of yours. At the same time, the way we make money creates some conflicts with your interests. You should understand and ask us about these conflicts because they can affect the recommendations and investment advice we provide you. Here are some examples to help you understand what this means.
3. What are your legal obligations to me when providing recommendations as my broker-dealer or when acting as my investment adviser? How else does your firm make money and what conflicts of interest do you have?
|Source of Conflict||Direct or Indirect Revenue Source||Incentive / Conflict of Interest|
|Proprietary Products||We are affiliated with entities that manage private funds (private pooled investment vehicles) in which you may be solicited to invest.||While we are not compensated directly for making referrals, there is an incentive for us to recommend services and funds provided by our affiliates over those of a third-party.|
|Affiliate Relationships||We have relationships with and cooperate with our parent company, Silicon Valley Bank, and affiliated companies to provide integrated financial services to our brokerage and advisory clients.||While we are not compensated directly for making referrals, these relationships can create incentives for us to promote the products and services of our affiliated companies and to act to increase their revenues.|
|12b-1 Fees||Some mutual funds pay 12b-1 fees to us when we invest in these funds on your behalf; or recommend them to you or execute transactions in those fund shares on your behalf.||Such compensation creates a conflict because it creates an incentive for us to invest on your behalf in, or recommend to you, mutual funds that pay compensation to its distributors or to invest in or recommend mutual fund share classes with higher fees when lower cost share classes may be available in those funds.|
|Revenue Sharing||When you hold an advisory account through the Betterment Wrap Fee Program, you are charged an all-inclusive wrap-fee equal on an annualized basis to 0.40% of the value of your assets in the account. Of this, 0.25% is received by Betterment and 0.15% is received by us.||There is an incentive for us to recommend the Betterment Wrap Fee Program in order to increase the account value of your assets held with Betterment.|
In our view, these conflicts of interest are mitigated by this disclosure, our duty to act in your best interest, as well as strict regulatory requirements applicable to investment advisers and broker-dealers under which we operate.
To help you understand what conflicts exist, please see the disclosures on our website, available svb.com/private-bank and refer to our Form ADV Part 2A (Items 5, 10, 12, and 14) and Form ADV Part 2A Appendix 1, by clicking on this https://adviserinfo.sec.gov/firm/summary/168116 or visiting our website.
|Key Questions to Ask Your Financial Professional
4. How do your financial professionals make money?The financial professionals servicing your account(s) are compensated based on a salary and a discretionary bonus. In determining the amount of incentive compensation, we consider a variety of qualitative factors, such as the firm’s overall performance, the individual’s contributions to his or her team or the amount of assets under management attributable to the individual. While incentive compensation is not determined in a formulaic manner based on the amount of net new money or return on investments, it could create a conflict of interest.
5. Do you or your financial professionals have legal or disciplinary history?Yes. Visit Investor.gov/CRS, a free and simple research tool, to research our firm and our financial professionals.
|Key Questions to Ask Your Financial Professional
SVB Wealth Advisory Form CRS 06-30-2020