Disclosure Brochure
March 15, 2024
This brochure provides information about the qualifications and business practices of CRA Financial Services, L.L.C. (hereinafter “CRA” or the “Firm”). If you have any questions about the contents of this brochure, please contact Donna Savastani at (609) 380-3500. 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 CRA is available on the SEC’s website at www.adviserinfo.sec.gov.
CRA is an SEC-registered investment adviser. Registration does not imply any level of skill or training.
Item 2. Material Changes
This Item discusses only the material changes that have occurred since CRA Financial’s last annual amendment dated March 16, 2023. Since our last annual amendment, there have been no material changes to this Disclosure Brochure.
The Firm has made disclosure changes, enhancements and additions at Item 4 below regarding socially responsible investing, cryptocurrency, and other assets.
ANY QUESTIONS: CRA’s Chief Compliance Officer, Donna Savastani, remains available to address any questions regarding the above changes, or any other issue pertaining to this Brochure.
Item 3. Table of Contents
Item 1. Cover Page
Item 2. Material Changes .
Item 3. Table of Contents
Item 4. Advisory Business
Item 5. Fees and Compensation
Item 6. Performance-Based Fees and Side-by-Side Management
Item 7. Types of Clients
Item 8. Methods of Analysis, Investment Strategies and Risk of Loss
Item 9. Disciplinary Information
Item 10. Other Financial Industry Activities and Affiliations
Item 11. Code of Ethics
Item 12. Brokerage Practices
Item 13. Review of Accounts
Item 14. Client Referrals and Other Compensation
Item 15. Custody
Item 16. Investment Discretion
Item 17. Voting Client Securities
Item 18. Financial Information
Item 4. Advisory Business
Since September 2000, CRA Financial has been in business as a comprehensive wealth management firm focused on fee-based asset management built on a foundation of solid financial planning. CRA is committed to providing value-added, wealth-enhancing services to its clients in a cost-effective manner that remains consistent with its philosophy that putting clients’ best interest first is CRA’s first priority. CRA provides financial planning, consulting, and investment management services. CRA’s principal owners are Thomas E. Reynolds, Matthew J. Reynolds, and Robert T. Martin.
As of December 31, 2023, CRA had $1,200,689,624 of assets under management, $1,026,017,478 of which was managed on a discretionary basis and $174,672,146 of which was managed on a non-discretionary basis.
Prior to engaging CRA to provide any of the foregoing investment advisory services, the client is required to enter into one or more written agreements with CRA setting forth the terms and conditions under which CRA renders its services (collectively the “Agreement”).
This Disclosure Brochure describes the business of CRA. Certain sections will also describe the activities of Supervised Persons. Supervised Persons are any of CRA’s officers, partners, directors (or other persons occupying a similar status or performing similar functions), or employees, or any other person who provides investment advice on CRA’s behalf and is subject to CRA’s supervision or control.
Financial Planning and Consulting Services
Please Note: All tax preparation services are provided by an affiliated third party, not subject to CRA’s supervision and oversight. If the client engages any affiliated tax preparer, 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 tax preparer, and not CRA, shall be responsible for the quality and competency of the tax preparation services provided. To the extent requested by the client, CRA will generally provide financial planning and related consulting services regarding matters such as tax and estate planning, insurance, etc. CRA’s planning fees are disclosed at Item 5 below. CRA may determine to provide such planning and consulting services inclusive of its investment management fee set forth at Item 5 below (exceptions will occur based upon assets under management, special projects, extraordinary services, stand-alone planning engagements, etc. for which CRA may charge a separate or additional fee). Please Note: CRA believes that it is important for the client to address financial planning issues on an ongoing basis. If CRA includes planning as part of its investment management fee as set forth at Item 5 below, CRA’s investment management fee, will remain the same regardless of whether or not the client determines to address financial planning issues with CRA. Please Also Note: CRA does not serve as an attorney, accountant, or insurance agent, and no portion of our services should be construed as same. Accordingly, CRA does not prepare legal documents, prepare tax returns, or sell insurance products. To the extent requested by a client, we may recommend the services of other professionals for non-investment implementation purpose (i.e. attorneys, accountants, insurance, etc.), including our affiliated accounting firm, Capaldi, Reynolds & Pelosi (“CPA”) for tax preparation and accounting-related services. If a client determines to engage CPA, he/she does so per the terms and conditions of a separate written agreement between CPA and the client, to which CRA is not a party. There is no fee-sharing arrangement between the CPA and CRA. The recommendation by CRA that a client engage CPA for tax preparation and/or accounting-related services, presents a conflict of interest because CRA’s affiliate will derive additional compensation from such engagement. No client or prospective client is obligated to engage CPA. Clients are reminded that they may engage other, non-affiliated, providers. CRA will work with the tax professional of the client’s choosing.
Investment Management Services
Clients can engage CRA to manage all or a portion of their assets on a discretionary or non-discretionary basis.
General
CRA primarily allocates clients’ investment management assets among Independent Managers (as defined below), mutual funds, exchange-traded funds (“ETFs”), individual debt and equity securities, real estate investment trusts (“REITs”), and/or options as well as the securities components of variable annuities in accordance with the investment objectives of the client. Where appropriate, CRA also provides advice about any type of investment held in clients' portfolios.
Where appropriate, CRA also renders non-discretionary investment management services to clients relative to variable annuity products that they may own, their individual employer-sponsored retirement plans, and/or 529 plans or other products. In so doing, CRA either directs or recommends the allocation of client assets among the various investment options that are available with the product. Client assets are maintained at the specific insurance company or custodian designated by the product.
CRA tailors its advisory services to the individual needs of clients. CRA consults with clients initially and on an ongoing basis to determine risk tolerance, time horizon and other factors that may impact the clients’ investment needs. CRA ensures that clients’ investments are suitable for their investment needs, goals, objectives and risk tolerance.
Clients are advised to promptly notify CRA if there are changes in their financial situation or investment objectives or if they wish to impose any reasonable restrictions upon CRA’s management services. Clients may impose reasonable restrictions or mandates on the management of their account (e.g., require that a portion of their assets be invested in socially responsible funds) if, in CRA’s sole discretion, the conditions will not materially impact the performance of a portfolio strategy or prove overly burdensome to its management efforts.
Use of Independent Managers
Independent Managers. CRA may allocate a portion of the client’s investment assets among unaffiliated independent investment managers in accordance with the client’s designated investment objective(s). In such situations, the Independent Manager[s] shall have day-to-day responsibility for the active discretionary management of the allocated assets, including, to the extent applicable, proxy voting responsibility. CRA shall continue to render investment supervisory services to the client relative to the ongoing monitoring and review of account performance, asset allocation and client investment objectives. Factors that CRA shall consider in recommending Independent Manager[s] include the client’s designated investment objective(s), management style, performance, reputation, financial strength, reporting, pricing, and research. Certain Independent Managers may maintain billing practices which differ from those of CRA. In such instances, CRA may alter its corresponding billing practices to accommodate those of the Independent Managers. In addition, clients are advised that certain Independent Managers may impose minimum account size and/or minimum asset level requirements. Please Note. The investment management fee charged by the Independent Manager[s] is separate from, and in addition to, CRA’s investment advisory fee disclosed at Item 5 below. ANY QUESTIONS: CRA’s Chief Compliance Officer, Donna Savastani, remains available to address any questions that a client or prospective client may have regarding the allocation of account assets to an Independent Manager(s), including the specific additional fee to be charged by such Independent Manager(s).
Retirement Plan Consulting Services
CRA provides various consulting services to qualified employee benefit plans and their fiduciaries. This suite of institutional services is designed to assist plan sponsors in structuring, managing and optimizing their corporate retirement plans. Each engagement is individually negotiated and customized, and includes any or all of the following services:
• Plan Design and Strategy
• Plan Review and Evaluation
• Executive Planning & Benefits
• Investment Selection
• Plan Fee and Cost Analysis
• Plan Committee Consultation
• Fiduciary and Compliance
• Participant Education
As disclosed in the Advisory Agreement, certain of the foregoing services are provided by CRA as a fiduciary under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). In accordance with ERISA Section 408(b)(2), each plan sponsor is provided with a written description of CRA’s fiduciary status, the specific services to be rendered and all direct and indirect compensation the Firm reasonably expects under the engagement.
Miscellaneous Disclosures
Retirement Plan 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 CRA recommends that a client roll over their retirement plan assets into an account to be managed by CRA, such a recommendation creates a conflict of interest if CRA will earn new (or increase its current) compensation as a result of the rollover. If CRA 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), CRA 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 are laws governing retirement accounts. No client is under any obligation to roll over retirement plan assets to an account managed by CRA, whether it is from an employer’s plan or an existing IRA. CRA’s Chief Compliance Officer, Donna Savastani, remains available to address any questions that a client or prospective client may have regarding the potential for conflict of interest presented by such rollover recommendation.
eMoney. CRA may provide its clients with access to an online platform hosted by “eMoney Advisor” (“eMoney”). The eMoney platform allows a client to view their complete asset allocation, including those assets that CRA does not manage (the “Excluded Assets”). CRA does not provide investment management, monitoring, or implementation services for the Excluded Assets. Unless otherwise specifically agreed to, in writing, CRA’s service relative to the Excluded Assets is limited to reporting only. Therefore, CRA shall not be responsible for the investment performance of the Excluded Assets. Rather, the client and/or their advisor(s) that maintain management authority for the Excluded Assets, and not CRA, shall be exclusively responsible for such investment performance. Without limiting the above, CRA shall not be responsible for any implementation error (timing, trading, etc.) relative to the Excluded Assets. The client may choose to engage CRA to manage some or all of the Excluded Assets pursuant to the terms and conditions of an Investment Advisory Agreement between CRA and the client. The eMoney platform also provides access to other types of information and applications including financial planning concepts and functionality, which should not, in any manner whatsoever, be construed as services, advice, or recommendations provided by CRA. Finally, CRA shall not be held responsible for any adverse results a client may experience if the client engages in financial planning or other functions available on the eMoney platform without CRA’s assistance or oversight.
Cash Management Accounts. Clients who seek to maintain substantial (in CRA’s determination) ongoing cash balances can request that CRA open a separate account for cash management services (the “Account”). The Account will invest in short-term fixed income instruments only (i.e., money market funds, Certificates of Deposit, Ultra-short term bond funds, US Treasury bills, etc.). Thus, the Account will not participate in equity market advances. The Account will not be considered part of the client’s overall asset allocation for Client Profile/investment objective purposes. CRA’s annual fee for cash management services shall generally range from 0% to 1%, depending upon the amount of Account assets per a separate Fee Schedule Addendum to the Investment Advisory Agreement.
Please Note: Cash Positions. CRA continues to treat cash as an asset class. As such, unless determined to the contrary by CRA, all cash positions (money markets, etc.) shall continue to be included as part of assets under management for purposes of calculating CRA’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), CRA 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, CRA’s advisory fee could exceed the interest paid by the client’s money market fund. ANY QUESTIONS: CRA’s Chief Compliance Officer, Donna Savastani, remains available to address any questions that a client or prospective client may have regarding the above fee billing practice.
Custodian Charges - Additional Fees. As discussed below at Item 12 below, when requested to recommend a broker-dealer/custodian for client accounts, CRA generally recommends that Schwab or Fidelity serve as the broker-dealer/custodian for client investment management assets. Broker-dealers such as Schwab and Fidelity charge brokerage commissions, transaction, and/or other type fees for effecting certain types of securities transactions (i.e., including transaction fees for certain mutual f unds, and mark-ups and mark-downs charged for fixed income transactions, etc.). The types of securities for which transaction fees, commissions, and/or other type fees (as well as the amount of those fees) shall differ depending upon the broker-dealer/custodian (while certain custodians, including Schwab and Fidelity, do not currently charge fees on individual equity transactions, others do). When beneficial to the client, individual fixed‐income and/or equity transactions may be effected through broker‐dealers with whom CRA 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 and/or Fidelity). These fees/charges are in addition to CRA’s investment advisory fee at Item 5 below. CRA does not receive any portion of these fees/charges. ANY QUESTIONS: CRA’s Chief Compliance Officer, Donna Savastani, remains available to address any questions that a client or prospective client may have regarding the above.
Cybersecurity Risk. The information technology systems and networks that CRA and its third-party service providers use to provide services to CRA’s clients employ various controls, which are designed to prevent cybersecurity incidents stemming from intentional or unintentional actions that could cause significant interruptions in CRA’s operations and result in the unauthorized acquisition or use of clients’ confidential or non-public personal information. Clients and CRA are nonetheless subject to the risk of cybersecurity incidents that could ultimately cause them to incur losses, including for example: financial losses, cost and reputational damage to respond to regulatory obligations, other costs associated with corrective measures, and loss from damage or interruption to systems. Although CRA has established its systems to reduce the risk of cybersecurity incidents from coming to fruition, there is no guarantee that these efforts will always be successful, especially considering that CRA does not directly control the cybersecurity measures and policies employed by third-party service providers. Clients could incur similar adverse consequences resulting from cybersecurity incidents that more directly affect issuers of securities in which those clients invest, broker-dealers, qualified custodians, governmental and other regulatory authorities, exchange and other financial market operators, or other financial institutions.
Interval Funds/Risks and Limitations:
Where appropriate, CRA may utilize interval funds. An interval fund is a non-traditional type of closed-end mutual fund that periodically offers to buy back a percentage of outstanding shares from shareholders. Investments in an interval fund involve additional risk, including lack of liquidity and restrictions on withdrawals. During any time periods outside of the specified repurchase offer window(s), investors will be unable to sell their shares of the interval fund. There is no assurance that an investor will be able to tender shares when or in the amount desired. There can also be situations where an interval fund has a limited amount of capacity to repurchase shares and may not be able to fulfill all purchase orders. In addition, the eventual sale price for the interval fund could be less than the interval fund value on the date that the sale was requested. While an internal fund periodically offers to repurchase a portion of its securities, there is no guarantee that investors may sell their shares at any given time or in the desired amount. As interval funds can expose investors to liquidity risk, investors should consider interval fund shares to be an illiquid investment. Typically, the interval funds are not listed on any securities exchange and are not publicly traded. Thus, there is no secondary market for the fund’s shares. Because these types of investments involve certain additional risk, these funds will only be utilized when consistent with a client’s investment objectives, individual situation, suitability, tolerance for risk and liquidity needs. Investment should be avoided where an investor has a short-term investing horizon and/or cannot bear the loss of some, or all, of the investment. There can be no assurance that an interval fund investment will prove profitable or successful. In light of these enhanced risks, a client may separately direct CRA, in writing, not to employ any or all such strategies for the client’s account.
Please Note: Inverse/Enhanced Market Strategies. CRA may utilize long and short mutual funds and/or exchange traded funds that are designed to perform in either an: (1) inverse relationship to certain market indices (at a rate of 1 or more times the inverse [opposite] result of the corresponding index) as an investment strategy and/or for the purpose of hedging against downside market risk; and (2) enhanced relationship to certain market indices (at a rate of 1 or more times the actual result of the corresponding index) as an investment strategy and/or for the purpose of increasing gains in an advancing market. There can be no assurance that any such strategy will prove profitable or successful. In light of these enhanced risks/rewards, a client may separately direct CRA in writing, not to employ any or all such strategies for his/her/their/its accounts. ANY QUESTIONS: CRA’s Chief Compliance Officer, Donna Savastani, remains available to address any questions that a client or prospective client may have regarding the above.
ESG: We don’t have or recommend a strategy:
Please Note: Socially Responsible (ESG) Investing Limitations. Socially Responsible Investing involves the incorporation of Environmental, Social and Governance (“ESG”) considerations into the investment due diligence process. ESG investing incorporates a set of criteria/factors used in evaluating potential investments: Environmental (i.e., considers how a company safeguards the environment); Social (i.e., the manner in which a company manages relationships with its employees, customers, and the communities in which it operates); and Governance (i.e., company management considerations). The number of companies that meet an acceptable ESG mandate can be limited when compared to those that do not, and could underperform broad market indices. Investors must accept these limitations, including potential for underperformance. As with any type of investment (including any investment and/or investment strategies recommended and/or undertaken by CRA), there can be no assurance that investment in ESG securities or funds will be profitable, or prove successful. CRA does not maintain or advocate an ESG investment strategy, but will seek to employ ESG if directed by a client to do so. If implemented, CRA shall rely upon the assessments undertaken by the unaffiliated mutual fund, exchange traded fund or separate account manager to determine that the fund’s or portfolio’s underlying company securities meet a socially responsible mandate.
WE DON’T RECOMMEND Cryptocurrency: For clients who want exposure to cryptocurrencies, including Bitcoin, CRA, will advise the client to consider a potential investment in corresponding exchange traded securities, or an allocation to separate account managers and/or private funds that provide cryptocurrency exposure. Cryptocurrency is a digital currency that can be used to buy goods and services, but uses an online ledger with strong cryptography (i.e., a method of protecting information and communications through the use of codes) to secure online transactions. Unlike conventional currencies issued by a monetary authority, cryptocurrencies are generally not controlled or regulated and their price is determined by the supply and demand of their market. Because cryptocurrency is currently considered to be a speculative investment, CRA will not exercise discretionary authority to purchase a cryptocurrency investment for client accounts. Rather, a client must expressly authorize the purchase of the cryptocurrency investment. Please Note: CRA does not recommend or advocate the purchase of, or investment in, cryptocurrencies. CRA considers such an investment to be speculative. Please Note - Use of Mutual and Exchange Traded Funds: CRA utilizes mutual funds and exchange traded funds for its client portfolios. In addition to CRA’s investment advisory fee described below, and transaction and/or custodial fees discussed below, 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).
Cross Transactions. In limited circumstances, when determined to be in the best interest of its clients, CRA may engage in a cross-transaction pursuant to which CRA may effect transactions between two of its managed client accounts (i.e., arranging for the clients’ securities trades by “crossing” these trades when CRA believes that such transactions [generally, thinly traded bonds] are beneficial to its clients). This may present a conflict of interest. For all such transactions, neither CRA nor any affiliate will be acting as a broker. CRA will not receive any commission or transaction-based compensation, although CRA has an interest in the price at which the cross trades are conducted since CRA’s asset-based fees will be negatively impacted by lower bond values. These transactions will be generally effected through Fidelity or Schwab, the account custodians. The client may revoke CRA’s cross-transaction authority at any time upon written notice to CRA. ANY QUESTIONS: Our Chief Compliance Officer, Donna Savastani, remains available to address any questions that a client or prospective client may have regarding cross transactions.
Please Note: Non-Discretionary Service Limitations. Clients that determine to engage CRA on a non-discretionary investment advisory basis must be willing to accept that CRA cannot effect any account transactions without obtaining prior consent to any such transaction(s) from the client. Thus, in the event that CRA would like to make a transaction for a client’s account, and client is unavailable, CRA will be unable to effect the account transaction (as it would for its discretionary clients) without first obtaining the client’s consent.
Pontera Platform. CRA uses an investment platform made available by Pontera Solutions, Inc. (“Pontera”), a third-party online platform, to assist with management of clients’ “held-away” accounts, including 401(k)s, 403(b)s, annuities, and 529 education savings plans. The Pontera platform permits advisers to manage held-away assets without having to reflect that it has custody of such assets on Part 1 of Form ADV. The advisory fee charged by CRA for the management of held-away assets is established in the client’s Investment Advisory Agreement. Pontera charges CRA an annual fee based upon the percentage of assets managed in the held-away accounts. Other than CRA’s advisory fee, clients do not pay any additional fee to Pontera or to CRA in connection with the use of Pontera platform.
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,
• 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 positons 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, CRA does not recommend such borrowing unless it is for specific short-term purposes (i.e. a bridge loan to purchase a new residence). CRA does not recommend such borrowing for investment purposes (i.e. to invest borrowed funds in the market). Regardless, if the client was to determine to utilize margin or a pledged assets loan, the following economic benefits would inure to CRA:
• by taking the loan rather than liquidating assets in the client’s account, CRA continues to earn a fee on such Account assets, net of debit; and
• if the client invests any portion of the loan proceeds in an account to be managed by CRA, CRA will receive an advisory fee on the invested amount.
Please Note: The Client must accept the above risks and potential corresponding consequences associated with the use of margin or a pledged assets loan.
Portfolio Activity. CRA has a fiduciary duty to provide services consistent with the client’s best interest. As part of its investment advisory services, CRA will review client portfolios on an ongoing basis to determine if any changes are necessary based upon various factors, including, but not limited to, investment performance, market conditions, mutual fund manager tenure, style drift, 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 CRA determines that changes to a client’s portfolio are neither necessary nor prudent. Clients nonetheless remain subject to the fees described in Item 5 below during periods of account inactivity. Of course, as indicated below, there can be no assurance that investment decisions made by CRA will be profitable or equal any specific performance level(s).
Other Assets. A client may:
- hold securities that were purchased at the request of the client or acquired prior to the client’s engagement of CRA. Generally, with potential exceptions, CRA does not/would not recommend nor follow such securities, and absent mitigating tax consequences or client direction to the contrary, would prefer to liquidate such securities. Please Note: If/when liquidated, it should not be assumed that the replacement securities purchased by CRA will outperform the liquidated positions. To the contrary, different types of investments involve varying degrees of risk, and there can be no assurance that future performance of any specific investment or investment strategy (including the investments and/or investment strategies recommended or undertaken by CRA) will be profitable or equal any specific performance level(s). In addition, there may be other securities and/or accounts owned by the client for which CRA does not maintain custodian access and/or trading authority; and,
- hold other securities and/or own accounts for which CRA does not maintain custodian access and/or trading authority.
Corresponding Services/Fees: When agreed to by CRA, CRA shall: (1) remain available to discuss these securities/accounts on an ongoing basis at the request of the client; (2) monitor these securities/accounts on a regular basis, including, where applicable, rebalancing with client consent;(3) shall generally consider these securities as part of the client’s overall asset allocation; and, (4) report on such securities/accounts as part of regular reports that may be provided by CRA; and, (5) include the market value of all such securities for purposes of calculating advisory fee.
ANY QUESTIONS: CRA’s Chief Compliance Officer, Donna Savastani, remains available to address any questions regarding the above.
Please Note: 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 CRA) will be profitable or equal any specific performance level(s).
Client Obligations. In performing its services, CRA shall not be required to verify any information received from the client or from the client’s other designated professionals and is expressly authorized to rely thereon. Moreover, each client is advised that it remains their responsibility to promptly notify CRA if there is ever any change in their financial situation or investment objectives for the purpose of reviewing/evaluating/revising CRA’s previous recommendations and/or services.
Disclosure Brochure. A copy of CRA’s written Brochure as set forth on Part 2A of Form ADV and Form CRS (Client Relationship Summary) shall be provided to each client prior to, or contemporaneously with, the execution of an agreement between the client and CRA.
Item 5. Fees and Compensation
CRA offers its services on a fee basis, which may include hourly and/or fixed fees, as well as fees based upon assets under management.
Financial Planning and Consulting Fees
CRA charges a fixed fee and/or hourly fee for financial planning and consulting services depending on the particular client engagement. These fees are negotiable, but generally range from $1,000 to $5,000 on a fixed fee basis and/or $300 on an hourly rate basis, depending upon the level and scope of the services and the professional rendering the financial planning and/or the consulting services. Financial planning and consulting clients may also engage CRA for additional investment advisory services, including investment management. In such instances, CRA may offset all or a portion of its financial planning and consulting services against the fees incurred for investment management.
Prior to engaging CRA to provide financial planning and/or consulting services, the client is required to enter into a written agreement with Error! Reference source not found. setting forth the terms and conditions of the engagement. Generally, Error! Reference source not found. requires one-half of the financial planning/consulting fee (estimated hourly or fixed) payable upon entering the written agreement. The balance is generally due upon delivery of the financial plan or completion of the agreed upon services.
Investment Management Fee
CRA provides investment management services for an annual fee based upon a percentage of the market value of the assets being managed by CRA. CRA's annual fee is exclusive of, and in addition to brokerage commissions, transaction fees, and other related costs and expenses which are incurred by the client. CRA does not, however, receive any portion of these commissions, fees, and costs. In certain circumstances, CRA provides complimentary financial planning services to clients who engage CRA for investment management services.
CRA's annual fee is prorated and charged quarterly, in advance, based upon the market value of the assets being managed by CRA on the last day of the previous quarter. No fee adjustments are made for account deposits and withdrawals made during a fee period. The annual fee varies (generally between 0.75% and 1.00%) depending upon the market value of the assets under management per the fee schedule that is a part of its Investment Advisory Agreement.
Please Note: Fee Differentials. CRA shall generally price its advisory services based upon various objective and subjective factors. As a result, our clients could pay diverse fees based upon the type, amount and market value of their assets, the anticipated complexity of the engagement, the anticipated level and scope of the overall investment advisory services to be rendered, and negotiations. Additional factors effecting pricing can include related accounts, employee accounts, competition, and negotiations. As a result of these factors, similarly situated clients could pay diverse fees, and the services to be provided by CRA to any particular client could be available from other advisers at lower fees. All clients and prospective clients should be guided accordingly. ANY QUESTIONS: CRA’s Chief Compliance Officer, Donna Savastani, remains available to address any questions regarding advisory fees.
Retirement Plan Consulting Fees
CRA charges an asset-based fee to provide clients with retirement plan consulting services. These fees typically range from 0.40% - 1.00% annually.
Fees Charged by Financial Institutions
As further discussed in response to Item 12 (below), CRA recommends that clients utilize the brokerage and clearing services of National Financial Services LLC and Fidelity Brokerage Services LLC (together with affiliates, “Fidelity”) or Charles Schwab & Co., Inc. through its Schwab Advisor Services division (“Schwab”) for investment management accounts.
CRA may only implement its investment management recommendations after the client has arranged for and furnished Error! Reference source not found. with all information and authorization regarding accounts with appropriate financial institutions. Financial institutions include, but are not limited to, Fidelity, Schwab, any other broker-dealer recommended by Error! Reference source not found., any broker-dealer directed by the client, trust companies, banks etc. (collectively referred to herein as the “Financial Institutions”).
In addition to the fees charged by CRA, clients incur certain charges imposed by the Financial Institutions and other third parties such as brokerage commissions and other transaction costs, fees charged by Independent Managers, custodial fees, charges imposed directly by a mutual fund or ETF in the account, which are disclosed in the fund’s prospectus (e.g., fund management fees and other fund expenses), margin costs, reporting charges, deferred sales charges, odd-lot differentials, transfer taxes, wire transf er and electronic fund fees, and other fees and taxes on brokerage accounts and securities transactions.
Fee Debit
CRA’s Agreement and the separate agreement with any Financial Institutions generally authorize CRA or Independent Managers to debit the client’s account for the amount of CRA’s fee and to directly remit that management fee to CRA or the Independent Managers. Any Financial Institution that serves as a qualified custodian on behalf of CRA’s clients have agreed to send a statement to the client, at least quarterly, indicating all amounts disbursed from the account including the amount of management fees paid directly to CRA. Alternatively, clients may elect to have send an invoice for payment.
Fees for Management During Partial Quarters of Service
For the initial period of investment management services, the fees are calculated on a pro rata basis.
The Agreement between CRA and the client will continue in effect until terminated by either party pursuant to the terms of the Agreement. CRA’s fees are prorated through the date of termination and any remaining balance is charged or refunded to the client, as appropriate.
In certain circumstances, CRA is authorized to use margin in the management of the client’s investment portfolio. In these cases, the fee payable will be assessed net of any outstanding margin balance. Please see item 8 below for further discussion regarding the use of margin.
Clients may make additions to and withdrawals from their account at any time, subject to CRA’s right to terminate an account. Additions may be in cash or securities provided that CRA reserves the right to liquidate any transferred securities or decline to accept particular securities into a client’s account. Clients may withdraw account assets on notice to CRA, subject to the usual and customary securities settlement procedures. However, CRA designs its portfolios as long-term investments and the withdrawal of assets may impair the achievement of a client’s investment objectives. CRA consults with its clients about the options and ramifications of transferring securities as necessary. However, clients are advised that when transferred securities are liquidated, they are subject to transaction fees, fees assessed at the mutual fund level (i.e. contingent deferred sales charge) and/or tax ramifications.
If assets are deposited into or withdrawn from an account after the inception of a quarter, the fee payable with respect to such assets will not be adjusted or prorated based on the number of days remaining in the quarter.
Item 6. Performance-Based Fees and Side-by-Side Management
CRA is not a party to any performance or incentive-related compensation arrangements with its clients.
Item 7. Types of Clients
CRA provides its services to individuals, pension and profit sharing plans, trusts, estates, charitable organizations, corporations and business entities. CRA, in its discretion, may charge a lesser investment advisory fee, charge a flat fee, waive its fee entirely, or charge fee on a different interval, 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, complexity of the engagement, anticipated services to be rendered, grandfathered fee schedules, employees and family members, courtesy accounts, competition, negotiations with client, etc.). Please Note: As result of the above, similarly situated clients could pay different fees. In addition, similar advisory services may be available from other investment advisers for similar or lower fees. ANY QUESTIONS: CRA’s Chief Compliance Officer, Donna Savastani, remains available to address any questions that a client or prospective client may have regarding advisory fees.
Minimum Account Size and Minimum Fee
CRA does not impose a minimum account size or minimum annual fee requirement. However, certain Independent Managers may impose specific account and/or minimum annual fee requirements and conduct billing practices which vary from those of CRA. In such instances, CRA may alter its corresponding billing practices to accommodate those of the Independent Managers.
Item 8. Methods of Analysis, Investment Strategies and Risk of Loss
Methods of Analysis
CRA’s primary method of analysis is based on Modern Portfolio Theory.
Modern Portfolio Theory is a theory on how risk-averse investors can construct portfolios to optimize or maximize expected return based on a given level of market risk, emphasizing that risk is an inherent part of higher reward. Modern Portfolio Theory seeks to construct an optimal portfolio by considering the relationship between risk and return, especially as measured by alpha, beta, and R-squared.
Investment Strategies
CRA attempts to maximize portfolio expected return for a given amount of portfolio risk. To do so, primarily utilizes mutual funds, ETFs, and cash equivalents, but may occasionally incorporate individual equities and fixed income securities. For equities, CRA allocates internationally (including both developed and emerging markets), and domestically (including large, mid, and small cap stocks). For fixed income, CRA allocates to U.S. government and corporate bonds, international bonds, inflation-protected bonds, floating rate and high-yield bonds, municipal bonds, and mortgage-backed securities. When using alternative investments in a portfolio, CRA allocates to commodity and real estate classes of securities, as well as market neutral and long/short funds.
Risks of Loss
Investing involves risk, including the potential loss of principal, and all investors should be guided accordingly.
Market Risks
The profitability of a significant portion of CRA’s recommendations may depend to a great extent upon correctly assessing the future course of price movements of stocks and bonds. There can be no assurance that CRA will be able to predict those price movements accurately.
Volatility Risks
The prices and values of investments can be highly volatile, and are influenced by, among other things, interest rates, general economic conditions, the condition of the financial markets, the financial condition of the issuers of such assets, changing supply and demand relationships, and programs and policies of governments.
Cash Management Risks
The Firm may invest some of a client’s assets temporarily in money market funds or other similar types of investments, during which time an advisory account may be prevented from achieving its investment objective.
Equity-Related Securities and Instruments
The Firm may take long and short positions in common stocks of U.S. and non-U.S. issuers traded on national securities exchanges and over-the-counter markets. The value of equity securities varies in response to many factors. These factors include, without limitation, factors specific to an issuer and factors specific to the industry in which the issuer participates. Individual companies may report poor results or be negatively affected by industry and/or economic trends and developments, and the stock prices of such companies may suffer a decline in response. In addition, equity securities are subject to stock risk, which is the risk that stock prices historically rise and fall in periodic cycles. U.S. and non-U.S. stock markets have experienced periods of substantial price volatility in the past and may do so again in the future. In addition, investments in small-capitalization, mid-capitalization and financially distressed companies may be subject to more abrupt or erratic price movements and may lack sufficient market liquidity, and these issuers often face greater business risks.
Fixed Income Securities
Fixed income securities are subject to the risk of the issuer’s or a guarantor’s inability to meet principal and interest payments on its obligations and to price volatility.
Mutual Funds and ETFs
An investment in a mutual fund or ETF involves risk, including the loss of principal. Mutual fund and ETF shareholders are necessarily subject to the risks stemming from the individual issuers of the fund’s underlying portfolio securities. Such shareholders are also liable for taxes on any fund-level capital gains, as mutual funds and ETFs are required by law to distribute capital gains in the event they sell securities for a profit that cannot be offset by a corresponding loss.
Shares of mutual funds are generally distributed and redeemed on an ongoing basis by the fund itself or a broker acting on its behalf. The trading price at which a share is transacted is equal to a fund’s stated daily per share net asset value (“NAV”), plus any shareholders fees (e.g., sales loads, purchase fees, redemption fees). The per share NAV of a mutual fund is calculated at the end of each business day, although the actual NAV fluctuates with intraday changes to the market value of the fund’s holdings. The trading prices of a mutual fund’s shares may differ significantly from the NAV during periods of market volatility, which may, among other factors, lead to the mutual fund’s shares trading at a premium or discount to NAV.
Shares of ETFs are listed on securities exchanges and transacted at negotiated prices in the secondary market. Generally, ETF shares trade at or near their most recent NAV, which is generally calculated at least once daily for indexed-based ETFs and more frequently for actively managed ETFs. However, certain inefficiencies may cause the shares to trade at a premium or discount to their pro rata NAV. There is also no guarantee that an active secondary market for such shares will develop or continue to exist. Generally, an ETF only redeems shares when aggregated as creation units (usually 50,000 shares or more). Therefore, if a liquid secondary market ceases to exist for shares of a particular ETF, a shareholder may have no way to dispose of such shares.
CRA does not establish new investment positions in mutual funds issued by Dimensional Fund Advisors (“DFA”), but certain clients maintain existing investment positions in DFA funds. DFA funds are generally only available through approved registered investment advisers. Thus, if the client was to terminate CRA’s services, and not transition to another adviser who is approved to transact in DFA funds, restrictions regarding additional purchases of, or reallocation among other, DFA funds will generally apply.
REIT Risks
CRA recommends an investment in, or allocate assets among, various REITs, the shares of which exist in the form of either publicly traded or privately placed securities. REITs are collective investment vehicles with portfolios comprised primarily of real estate and mortgage related holdings. Many REITs hold heavy concentrations of investments tied to commercial and/or residential developments, which inherently subject REIT investors to the risks associated with a downturn in the real estate market. Investments linked to certain regions that experience greater volatility in the local real estate market may give rise to large fluctuations in the value of the vehicle’s shares. Mortgage related holdings may give rise to additional concerns pertaining to interest rates, inflation, liquidity and counterparty risk.
Use of Independent Managers
CRA may recommend the use of Independent Managers for certain clients. CRA will continue to do ongoing due diligence of such managers, but such recommendations rely, to a great extent, on the Independent Managers ability to successfully implement their investment strategy. In addition, CRA does not have the ability to supervise the Independent Managers on a day-to-day basis other than as previously described in response to Item 4, above.
Use of Margin
While the use of margin borrowing for investments can substantially improve returns, it may also increase overall portfolio risk. Margin transactions are generally effected using capital borrowed from a Financial Institution, which is secured by a client’s holdings. Under certain circumstances, a lending Financial Institution may demand an increase in the underlying collateral. If the client is unable to provide the additional collateral, the Financial Institution may liquidate account assets to satisfy the client’s outstanding obligations, which could have extremely adverse consequences. In addition, fluctuations in the amount of a client’s borrowings and the corresponding interest rates may have a significant effect on the profitability and stability of a client’s portfolio.
Use of Options
CRA may engage in options transactions for the purpose of hedging risk and/or generating portfolio income. The use of options transactions as an investment strategy can involve a high level of inherent risk. Option transactions establish a contract between two parties concerning the buying or selling of an asset at a predetermined price during a specific period of time. During the term of the option contract, the buyer of the option gains the right to demand fulfillment by the seller. Fulfillment may take the form of either selling or purchasing a security, depending upon the nature of the option contract. Generally, the purchase or the recommendation to purchase an option contract shall be with the intent of “hedging” a potential market risk in a client’s portfolio and/or generating income for a client’s portfolio. Please Note: Certain options-related strategies (i.e. straddles, short positions, etc.), may, in and of themselves, produce principal volatility and/or risk. Thus, a client must be willing to accept these enhanced volatility and principal risks associated with such strategies. In light of these enhanced risks, client may direct CRA, in writing, not to employ any or all such strategies for his/her/their/its accounts.
Covered Call Writing
Covered call writing is the sale of in-, at-, or out-of-the-money call options against a long security position held in a client portfolio. This type of transaction is intended to generate income. It also serves to create downside protection in the event the security position declines in value. Income is received from the proceeds of the option sale. Such income may be reduced to the extent it is necessary to buy back the option position before its expiration. There can be no assurance that the security will not be called away by the option buyer, which will result in the client (option writer) to lose ownership in the security and incur potential unintended tax consequences. Covered call strategies are generally better suited for positions with little price volatility.
Long Put Option Purchases
Long put option purchases allow the option holder to sell or “put” the underlying security at the contract strike price at a future date. If the price of the underlying security declines in value, the value of the long put option can increase in value depending upon the strike price and expiration. Long puts are often used to hedge a long stock position to protect against downside risk. The security/portfolio could still experience losses depending on the quantity of the puts bought, strike price and expiration. In the event that the security is put to the option holder, it will result in the client (option seller) to lose ownership in the security and to incur potential unintended tax consequences. Options are wasting assets and expire (usually within months of issuance). Please Note: There can be no guarantee that an options strategy will achieve its objective or prove successful. No client is under any obligation to enter into any option transactions. However, if the client does so, he/she must be prepared to accept the potential for unintended or undesired consequences (i.e., losing ownership of the security, incurring capital gains taxes).
Item 9. Disciplinary Information
CRA is required to disclose the facts of any legal or disciplinary events that are material to a client’s evaluation of its advisory business or the integrity of management. CRA does not have any required disclosures to this Item.
Item 10. Other Financial Industry Activities and Affiliations
CRA is required to disclose any relationship or arrangement that is material to its advisory business or to its clients with certain related persons. CRA has described such relationships and arrangements below.
Referral to Insurance Agency
Certain of CRA’s Supervised Persons, in their individual capacities, are licensed insurance agents with various insurance companies, and in such capacity, may recommend the purchase of certain insurance products and may refer clients to other, unaffiliated insurance agents or agencies for implementation purposes. Neither CRA nor or its Supervised Persons that recommend the purchase of insurance products receive insurance commissions or other additional compensation.
Referrals to Related Certified Public Accountants
CRA does not render accounting advice or tax preparation services to its clients. Rather, to the extent that a client requires accounting advice and/or tax preparation services, CRA, if requested, will recommend the services of a Certified Public Accountant, all of which services are rendered independent of CRA pursuant to a separate agreement between the client and the Certified Public Accountant. CRA does not receive any of the fees charged by any recommended Certified Public Accountant, referral or otherwise. Specifically, one member of CRA is also a principal of Capaldi, Reynolds & Pelosi, P.A. (“CRP”), a Certified Public Accounting firm. To the extent that CRP provides accounting and/or tax preparation services to any of CRA’s clients, all such services are performed by CRP, in its separate capacity, independent of CRA, for which services CRA does not receive any portion of the fees charged by CRP, referral or otherwise.
Although CRA does not receive referral fees from CRP, one individual associated with CRA is entitled to receive compensation relative to his ownership interest in CRP. As a result of this compensation, a conflict of interest exists if CRA or any of its Supervised Persons recommends CRP’s services to CRA’s clients.
Item 11. Code of Ethics
CRA has adopted a code of ethics in compliance with applicable securities laws (“Code of Ethics”) that sets forth the standards of conduct expected of certain persons associated with the Firm (“associated persons”). The Firm’s Code of Ethics contains written policies reasonably designed to prevent the unlawful use of material non-public information by CRA or any of its associated persons. The Code of Ethics also requires that certain of CRA’s personnel (called “Access Persons”) report their personal securities holdings and transactions and obtain pre-approval of certain investments such as initial public offerings and limited offerings.
CRA and its associated persons are permitted to buy or sell securities that it also recommends to clients consistent with CRA’s policies and procedures. Unless specifically permitted in CRA’s Code of Ethics, none of CRA’s Access Persons may effect for themselves or for their immediate family (i.e., spouse, minor children, and adults living in the same household as the Access Person) any transactions in a security which is being actively purchased or sold, or is being considered for purchase or sale, on behalf of any of CRA’s clients.
When CRA is purchasing or considering for purchase any security on behalf of a client, no Access Person may effect a transaction in that security prior to the completion of the purchase or until a decision has been made not to purchase such security. Similarly, when CRA is selling or considering the sale of any security on behalf of a client, no Access Person may effect a transaction in that security prior to the completion of the sale or until a decision has been made not to sell such security. These requirements are not applicable to: (i) direct obligations of the Government of the United States; (ii) money market instruments, bankers’ acceptances, bank certificates of deposit, commercial paper, repurchase agreements and other high quality short-term debt instruments; (iii) shares issued by open-end mutual funds or money market funds; and (iv) shares issued by unit investment trusts that are invested exclusively in one or more open-end mutual funds.
Clients and prospective clients may contact CRA to request a copy of its Code of Ethics.
Item 12. Brokerage Practices
As discussed above in Item 5, CRA recommends that clients utilize the brokerage and clearing services of Fidelity and/or Schwab.
Factors which CRA considers in recommending Fidelity, Schwab, or any other broker-dealer to clients include their respective financial strength, reputation, execution, pricing, research and service. Fidelity and Schwab enable CRA to obtain many mutual funds without transaction charges and other securities at nominal transaction charges. The commissions and/or transaction fees charged by Fidelity and/or Schwab may be higher or lower than those charged by other Financial Institutions.
The commissions paid by CRA’s clients comply with CRA’s duty to obtain “best execution.” Clients may pay commissions that are higher than another qualified Financial Institution might charge to effect the same transaction where CRA determines that the commissions are reasonable in relation to the value of the brokerage and research services received. In seeking best execution, the determinative factor is not the lowest possible cost, but whether the transaction represents the best qualitative execution, taking into consideration the full range of a Financial Institution’s services, including among others, the value of research provided, execution capability, commission rates, and responsiveness. CRA seeks competitive rates but may not necessarily obtain the lowest possible commission rates for client transactions.
CRA periodically and systematically reviews its policies and procedures regarding its recommendation of Financial Institutions in light of its duty to obtain best execution.
Consistent with obtaining best execution, brokerage transactions may be directed to certain brokerdealers in return for investment research products and/or services which assist CRA in its investment decision-making process. Such research generally will be used to service all of CRA’s clients, but brokerage commissions paid by one client may be used to pay for research that is not used in managing that client’s portfolio. The receipt of investment research products and/or services as well as the allocation of the benefit of such investment research products and/or services poses a conflict of interest because CRA does not have to produce or pay for the products or services.
Software and Support Provided by Financial Institutions
CRA receives from Fidelity and Schwab, without cost to CRA, computer software and related systems support, which allow CRA to better monitor client accounts maintained at Fidelity and Schwab. CRA receives the software and related support without cost because CRA renders investment management services to clients that maintain assets at Fidelity and Schwab. The software and related systems support may benefit CRA, but not its clients directly. In fulfilling its duties to its clients, CRA endeavors at all times to put the interests of its clients first. Clients should be aware, however, that CRA’s receipt of economic benefits from a broker-dealer creates a conflict of interest since these benefits may influence CRA’s choice of broker-dealer over another broker-dealer that does not furnish similar software, systems support, or services.
Additionally, CRA may receive the following benefits from Fidelity and Schwab: receipt of duplicate client confirmations and bundled duplicate statements; access to a trading desk that exclusively services its institutional traders; access to block trading which provides the ability to aggregate securities transactions and then allocate the appropriate shares to client accounts; and access to an electronic communication network for client order entry and account information.
The client may direct CRA in writing to use a particular Financial Institution to execute some or all transactions for the client. In that case, the client will negotiate terms and arrangements for the account with that Financial Institution, and CRA will not seek better execution services or prices from other Financial Institutions or be able to “batch” client transactions for execution through other Financial Institutions with orders for other accounts managed by CRA (as described below). As a result, the client may pay higher commissions or other transaction costs or greater spreads, or receive less favorable net prices, on transactions for the account than would otherwise be the case. Subject to its duty of best execution, CRA may decline a client’s request to direct brokerage if, in CRA’s sole discretion, such directed brokerage arrangements would result in additional operational difficulties.
Transactions for each client generally will be effected independently, unless CRA decides to purchase or sell the same securities for several clients at approximately the same time. CRA may (but is not obligated to) combine or “batch” such orders to obtain best execution, to negotiate more favorable commission rates, or to allocate equitably among CRA’s clients differences in prices and commissions or other transaction costs that might not have been obtained had such orders been placed independently. Under this procedure, transactions will generally be averaged as to price and allocated among CRA’s clients pro rata to the purchase and sale orders placed for each client on any given day. To the extent that CRA determines to aggregate client orders for the purchase or sale of securities, including securities in which CRA’s Supervised Persons may invest, CRA does so in accordance with applicable rules promulgated under the Advisers Act and no-action guidance provided by the staff of the U.S. Securities and Exchang e Commission. CRA does not receive any additional compensation or remuneration as a result of the aggregation. In the event that CRA determines that a prorated allocation is not appropriate under the particular circumstances, the allocation will be made based upon other relevant factors, which may include: (i) when only a small percentage of the order is executed, shares will be allocated to the account with the smallest order or the smallest position or to an account that is out of line with respect to security or sector weightings relative to other portfolios, with similar mandates; (ii) allocations may be given to one account when such account has limitations in its investment guidelines which prohibit it from purchasing other securities which are expected to produce similar investment results and can be purchased by other accounts; (iii) if an account reaches an investment guideline limit and cannot participate in an allocation, shares will be reallocated to other accounts (this may be due to unforeseen changes in an account’s assets after an order is placed); (iv) with respect to sale allocations, allocations will be given to accounts low in cash; (v) in cases when a pro rata allocation of a potential execution would result in a de minimis allocation in one or more accounts, CRA will exclude the account(s) from the allocation; the transactions will be executed on a pro rata basis among the remaining accounts; or (vi) in cases where a small proportion of an order is executed in all accounts, shares will be allocated to one or more accounts on a random basis.
CRA does not consider, in selecting or recommending broker-dealers, whether the Firm receives client referrals from the Financial Institutions or other third party.
ANY QUESTIONS: CRA’s Chief Compliance Officer, Donna Savastani, remains available to address any questions that a client or prospective client may have regarding the above arrangements and the corresponding conflicts of interest presented by such arrangements.
Item 13. Review of Accounts
For those clients to whom CRA provides investment management services, CRA monitors those portfolios as part of an ongoing process while regular account reviews are conducted on at least a semiannual basis. For those clients to whom CRA provides financial planning and/or consulting services, reviews are conducted on an “as needed” basis. Such reviews are conducted by either the Principals of CRA, Thomas E. Reynolds, Matthew J. Reynolds, and Robert T. Martin, or one of the other advisors, Gordon Shearer, Jr., Jeff Hilliard, or Joe McCaffrey. All investment advisory clients are encouraged to discuss their needs, goals, and objectives with CRA and to keep CRA informed of any changes thereto. CRA contacts ongoing investment advisory clients periodically to review its previous services and/or recommendations and to discuss the impact resulting from any changes in the client’s financial situation and/or investment objectives.
Unless otherwise agreed upon, clients are provided with transaction confirmation notices and regular summary account statements directly from the broker-dealer or custodian for the client accounts. Those clients to whom CRA provides investment advisory services will also receive a semi-annual report from CRA that may include such relevant account and/or market-related information such as an inventory of account holdings and account performance. Clients should compare the account statements they receive from their custodian with those they receive from CRA.
Those clients to whom CRA provides financial planning and/or consulting services will receive reports from CRA summarizing its analysis and conclusions as requested by the client or as otherwise agreed to in writing by CRA.
Item 14. Client Referrals and Other Compensation
CRA is required to disclose any relationship or arrangement where it receives an economic benefit from a third party (non-client) for providing advisory services. In addition, CRA is required to disclose any direct or indirect compensation that it provides for client referrals.
CRA may engage promoters to introduce new prospective clients to CRA consistent with the Investment Advisers Act of 1940, its corresponding. Rules, and applicable state regulatory requirements. If the prospect subsequently engages CRA, the promoter shall generally be compensated by CRA for the introduction. Because the promoter has an economic incentive to introduce the prospect to CRA, a conflict of interest is presented. The promoter’s introduction shall not result in the prospect’s payment of a higher investment advisory fee to CRA (i.e., if the prospect was to engage CRA independent of the promoter’s introduction).
Lead-Generator
CRA may receive referrals from SmartAsset, a lead generation service that provides investors with a list of one or more financial advisers based on criteria provided by both the investor (via a questionnaire) and CRA. CRA pays SmartAsset a flat fee depending on the level of assets reported by the investor. CRA’s clients who are referred by SmartAsset do not pay an increased fee as a result of this service.
Item 15. Custody
CRA’s Agreement and/or the separate agreement with any Financial Institution may authorize CRA through such Financial Institution to debit the client’s account for the amount of CRA’s fee and to directly remit that management fee to CRA in accordance with applicable custody rules.
The Financial Institutions that serve as qualified custodians on behalf of CRA’s clients have agreed to send a statement to the client, at least quarterly, indicating all amounts disbursed from the account including the amount of management fees paid directly to CRA. In addition, as discussed in Item 13, CRA also sends periodic supplemental reports to clients. Clients should carefully review the statements sent directly by the Financial Institutions and compare them to those received from CRA.
Surprise Independent Examination
Because CRA and/or certain related persons of CRA provide services and/or act as trustees for clients in connection with advisory services those related persons provide to clients of CRA, CRA and/or those related persons are deemed to have custody over clients’ cash, bank accounts or securities. Since those CRA and/or related persons are deemed to have custody over the trust assets, CRA is required to engage an independent accounting firm to perform a surprise annual examination of the assets and accounts over which CRA and/or those related persons of CRA maintain custody. Any related opinions issued by an independent accounting firm are filed with the SEC and are publicly available on the SEC’s Investment Adviser Public Disclosure website. The assets of the trusts are held with qualified custodians.
Standing Letters of Authorization
CRA provides other services on behalf of its clients that require disclosure at ADV Part 1, Item 9. In particular, certain clients have signed asset transfer authorizations that permit the qualified custodian to rely upon instructions from CRA to transfer client funds to “third parties.” In accordance with the guidance provided in the SEC Staff’s February 21, 2017 Investment Adviser Association No-Action Letter, the affected accounts are not subjected to an annual surprise CPA examination.
ANY QUESTIONS: CRA’s Chief Compliance Officer, Donna Savastani, remains available to address any questions that a client or prospective client may have regarding custody-related issues.
Item 16. Investment Discretion
In limited circumstances. CRA, may be given the authority to exercise discretion on behalf of clients. CRA is considered to exercise investment discretion over a client’s account if it can effect transactions of the client without first having to seek the client’s consent. CRA is given this authority through a power-of-attorney included in the agreement between CRA and the client. Clients may requires a limitation on authority (such a certain securities not to be bough or sold). CRA takes discretion over the following activities:
• The securities to be purchased or sold;
• The amount of securities to be purchased or sold; and
• When transactions are made
Item 17. Voting Client Securities
Unless a client directs otherwise in writing, CRA, in conjunction with the proxy voting and due diligence services provided by ProxyEdge®, or its successors or assigns, shall be responsible for directing the manner in which proxies solicited by issuers of securities beneficially owned by the client shall be voted. However, the client shall maintain exclusive responsibility for all legal proceedings or other type events pertaining to the assets, including, but not limited to, class action lawsuits. CRA and/or the client shall correspondingly instruct each custodian of the assets to forward to CRA copies of all proxies and shareholder communications relating to the assets. CRA, in conjunction with the services provided by ProxyEdge®, shall monitor corporate actions of individual issuers and investment companies consistent with CRA’s fiduciary duty to vote proxies in the best interests of its clients. With respect to individual issuers, CRA may be solicited to vote on matters including corporate governance, adoption or amendments to compensation plans (including stock options), and matters involving social issues and corporate responsibility. With respect to investment companies (e.g., mutual funds), CRA may be solicited to vote on matters including the approval of advisory contracts, distribution plans, and mergers. CRA, in conjunction with the services provided by ProxyEdge®, shall maintain records pertaining to proxy voting as required under the Advisers Act. Information pertaining to how CRA voted on any specific proxy issue is also available upon written request.
Alternatively, clients may, at their written election, choose to receive proxies related to their own accounts. With respect to ERISA accounts, CRA will vote proxies unless the plan documents specifically reserve the plan sponsor’s right to vote proxies.
CRA has arranged for Broadridge Investor Communications Solutions, Inc. (“Broadridge”) to process and administrate our client’s participation in class action litigation. Unless a client determines to opt-out (see below), Broadridge will automatically file securities class action settlement claims on behalf of our clients for cases in which clients are eligible to participate. Settlement claims are fully tracked and monitored.
This service enables our clients:
• To participate in both U.S. and Global securities class action settlements; and
• To recover entitled amounts for which they are eligible.
Broadridge shall be entitled to a contingency fee of 25% of the total reimbursement of Securities Class Action settlements it collects for our clients. Please Note: Clients may determine to opt-out of the Broadridge service, in which event, the client shall remain exclusively responsible for class action matters.
Broadridge. Fair Fund Process. In the event that Broadridge is required to process a Fair Fund payment (i.e., a fund established by the SEC to distribute money to defrauded investors), Broadridge shall deposit the gross settlement into the client’s account. However, Broadridge, unlike it does for class action settlements, will not deduct its percentage fee from the client‘s gross settlement. Rather, the Adviser, subsequent to the Broadridge deposit, shall debit each client’s account for Broadridge’s fee, and submit the fee to Broadridge.
Item 18. Financial Information
CRA does not require or solicit the prepayment of more than $1,200 in fees six months or more in advance. In addition, CRA is required to disclose any financial condition that is reasonably likely to impair its ability to meet contractual commitments to clients. At this time, CRA does not reasonably believe it is unable to meet its contractual commitments.
ANY QUESTIONS: CRA’s Chief Compliance Officer, Donna Savastani, remains available to address any questions regarding this Part 2A.