A. Black Diamond Financial, LLC (the “Registrant”) is a limited liability company formed in
March 2021 in the state of New Jersey. The Registrant became registered as an Investment
Adviser Firm in June 2021. The Registrant is solely owned by Black Diamond Financial
Holdings, LLC which in turn is principally owned and controlled by Philip Blancato and
Jaime Desmond.
B.
INVESTMENT ADVISORY SERVICES
The Registrant provides discretionary investment advisory services on a wrap or non-wrap
fee basis. (See discussion below). If a client determines to engage the Registrant on a wrap
fee basis the client will pay a single fee for bundled services (i.e. investment advisory,
brokerage, custody). The services included in a wrap fee agreement will depend upon each
client’s particular need. If the client determines to engage the Registrant on a non-wrap fee
basis the client will select individual services on an unbundled basis, paying for each
service separately (i.e. investment advisory, brokerage, custody).
Registrant's annual investment advisory fee shall include investment advisory services,
and, to the extent specifically requested by the client, financial planning and consulting
services.
NON-WRAP FEE BASIS
The Registrant provides discretionary investment advisory services on a non-wrap fee
basis. The Registrant’s annual investment advisory fee is based upon a percentage (%) of
the market value of the assets placed under the Registrant’s management, generally
between negotiable and 1.75%.
BLACK DIAMOND INVESTMENT PROGRAM
The Registrant sponsors the Black Diamond Investment Program (the “Program”) through
which it offers discretionary investment management services on a wrap fee basis. The
services offered under, and the corresponding terms and conditions pertaining to, the
Program are discussed in the Wrap Fee Program Brochure, a copy of which is presented to
all prospective Program participants.
Under the Program, the Registrant is able to offer participants discretionary investment
management services, for a single specified annual Program fee, inclusive of trade
execution, custody, reporting, account maintenance and investment management fees.
The current annual Program fee ranges from negotiable to 1.75%, depending upon the
complexity of the account, the amount of the client assets in the Program and the
independent/separately managed accounts utilized by the client’s investment portfolio.
The terms and conditions for client participation in the Program are set forth in detail in the
Wrap Fee Program Brochure, which is presented to all prospective Program participants in
accordance with disclosure requirements. All prospective Program participants should read
both the Brochure and the Wrap Fee Program Brochure, and ask any corresponding
questions that they may have, prior to participation in the Program.
As indicated in the Wrap Fee Program Brochure, participation in the Program may cost
more or less than purchasing such services separately. When managing a client’s account
on a wrap fee basis, the Registrant shall receive as payment for its asset management
services, the balance of the wrap fee after all other non-excluded costs (including account
transaction fees) incorporated into the wrap fee have been deducted. As also indicated in
the Wrap Fee Program Brochure, the Program fee charged by the Registrant for
participation in the Program may be higher or lower than those charged by other sponsors
of comparable wrap fee programs.
Wrap Program-Conflict of Interest. Under the Registrant’s wrap program, the client
generally receives investment advisory services, the execution of securities brokerage
transactions, custody and reporting services for a single specified fee. When managing a
client’s account on a wrap fee basis, the Registrant shall receive as payment for its
investment advisory services, the balance of the wrap fee after all other costs incorporated
into the wrap fee have been deducted.
Because wrap program transaction fees and/or commissions are being paid by the
Registrant to the account custodian/broker-dealer, the Registrant has an economic incentive
to maximize its compensation by seeking to minimize the number of trades in the client's
account.
RETIREMENT PLAN SERVICES
The Registrant also provides retirement plan services, pursuant to which it assists sponsors
of self-directed retirement plans with the selection and/or monitoring of investment
alternatives (generally open-end mutual funds or exchange-traded funds) from which plan
participants shall choose in self-directing the investments for their individual plan
retirement accounts. In addition, to the extent requested by the plan sponsor, the Registrant
may also provide participant education designed to assist participants in identifying the
appropriate investment strategy for their retirement plan accounts. The terms and
conditions of the engagement shall generally be set forth in a Retirement Plan Services
Agreement between the Registrant and the plan sponsor.
MISCELLANEOUS
Non-Investment Consulting/Implementation Services. As indicated above, the
Registrant may provide recommendations regarding non-investment related matters, such
as estate planning, tax planning and insurance, the Registrant does not serve as a law firm
or accounting firm and no portion of Registrant’s services should be construed as legal or
accounting services. Accordingly, the Registrant does not prepare estate planning
documents or tax returns.
To the extent requested by a client, Registrant may recommend the services of other
professionals for certain non-investment implementation purpose (i.e. attorneys,
accountants, insurance agents, etc.), including representatives of Registrant in their
separate individual capacities as representatives of Ladenburg, a FINRA member broker-
dealer, and/or as licensed insurance agents. The client is under no obligation to engage the
services of any such recommended professional. The client retains absolute discretion over
all such implementation decisions and is free to accept or reject any recommendation from
Registrant and/or its representatives.
If the client engages any recommended unaffiliated professional, 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 licensed professional[s]
(i.e. attorney, accountant, insurance agent, etc.), and not the Registrant, shall be responsible
for the quality and competency of the services provided.
Cash Positions. Registrant continues to treat cash as an asset class. As such, unless
determined to the contrary by Registrant, all cash positions (money markets, etc.) shall
continue to be included as part of assets under management for purposes of calculating
Registrant’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), Registrant 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, Registrant’s advisory fee
could exceed the interest paid by the client’s money market fund.
When the account is holding cash positions, those cash positions will be subject to the same
fee schedule as set forth below.
Retirement Plan Rollovers–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 Registrant recommends that a client roll over their retirement
plan assets into an account to be managed by Registrant, such a recommendation creates a
conflict of interest if Registrant will earn new (or increase its current) compensation as a
result of the rollover. If Registrant provides a recommendation as to whether a client should
engage in a rollover or not, Registrant 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 Registrant.
Use of Mutual Funds and Exchange Traded Funds: While the Registrant may
recommend allocating investment assets to mutual funds or exchange traded funds
(“ETFs”) that are not available directly to the public, the Registrant may also recommend
that clients allocate investment assets to publicly-available mutual funds and ETFs that the
client could obtain without engaging Registrant as an investment adviser. However, if a
client or prospective client determines to allocate investment assets to publicly available
mutual funds or ETFs without engaging Registrant as an investment adviser, the client or
prospective client would not receive the benefit of Registrant’s initial and ongoing
investment advisory services.
Interval Funds. When consistent with a client’s investment objectives, Registrant may
allocate investment assets to “interval funds.” Investment companies structured as “interval
funds” are generally designed for long-term investors that do not require daily liquidity.
Shares in interval funds typically do not trade on the secondary market. Instead, their shares
are subject to periodic redemption offers by the fund at a price based on net asset value.
Accordingly, interval funds are subject to liquidity constraints. Interval funds investing in
securities of companies with smaller market capitalizations, derivatives, or securities with
substantial market and/or credit risk tend to have the greatest exposure to liquidity risk.
Generally, the interval funds recommended by Registrant offer a two to three-week period,
on a quarterly basis, during which the client may seek the redemption of previously
purchased interval funds.
Independent Managers. Registrant may recommend that the client allocate a portion of a
client’s investment assets among unaffiliated independent investment managers
(“Independent Manager(s)”) in accordance with the client’s designated investment
objective(s). In such situations, the Independent Manager(s) will have day-to-day
responsibility for the active discretionary management of the allocated assets. Registrant
will 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. The Registrant generally considers the following factors when recommending
Independent Manager(s): the client’s designated investment objective(s), management
style, performance, reputation, financial strength, reporting, pricing, and research. The
investment management fees charged by the designated Independent Manager(s) are borne
by the Registrant.
Portfolio Activity. Registrant has a fiduciary duty to provide services consistent with the
client’s best interest. As part of its investment advisory services, Registrant will review
client portfolios on an ongoing basis to determine if any changes are necessary based upon
various factors, including, but not limited to, investment performance, 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 Registrant
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.
Client Obligations. In performing its services, Registrant shall not be required to verify
any information received from the client or from the client’s other professionals and is
expressly authorized to rely thereon. Moreover, each client is advised that it remains their
responsibility to promptly notify the Registrant if there is ever any change in their financial
situation or investment objectives for the purpose of reviewing, evaluating or revising
Registrant’s previous recommendations and/or services.
Disclosure Statement. A copy of the Registrant’s written Brochure as set forth on Part 2
of Form ADV and Client Relationship Summary as set forth in Form CRS shall be provided
to each client prior to, or contemporaneously with, the execution of the Investment Advisory
Agreement.
C. The Registrant shall provide investment advisory services specific to the needs of each
client. Prior to providing investment advisory services, an investment adviser
representative will ascertain each client’s investment objective(s). Thereafter, the
Registrant shall allocate and/or recommend that the client allocate investment assets
consistent with the designated investment objective(s). The client may, at any time, impose
reasonable restrictions, in writing, on the Registrant’s services.
D. There is no significant difference between how the Registrant manages wrap fee accounts
and non-wrap fee accounts. However, as stated above, if a client determines to engage the
Registrant on a wrap fee basis the client will pay a single fee for bundled services (i.e.
investment advisory, brokerage, custody) (See Item 4.B). The services included in a wrap
fee agreement will depend upon each client’s particular need. If the client determines to
engage the Registrant on a non-wrap fee basis the client will select individual services on
an unbundled basis, paying for each service separately (i.e. investment advisory, brokerage,
custody).
When managing a client’s account on a wrap fee basis, the Registrant shall receive as
payment for its investment advisory services, the balance of the wrap fee after all other
costs incorporated into the wrap fee have been deducted.
E. As of December 31, 2023, the Registrant had $199,602,425 in assets under management
on a discretionary basis.