A. Clarfeld Financial Advisors, LLC (the “Registrant”) is a firm specializing in
investment advisory services which has been in business since 1981. The firm became
registered as an Investment Adviser Firm in February 1992. The Registrant features
strong, dedicated leadership through its executive management team. With a staff of
over 160, including 30 branch offices the Registrant offers high net worth individuals
and their families, access to a team of skilled professionals. The Registrant may
conduct advisory business under the name Citizens Private Wealth.
B. The Registrant offers to its clients (individuals, pension and profit-sharing plans,
business entities, trusts, estates, and charitable organizations, etc.) investment advisory
services, including discretionary and non-discretionary investment management and to
a limited extent may provide investment consulting services on a fee basis.
The Registrant’s investment advisory platform is predicated on establishing an
appropriate long-term asset allocation given each client’s unique lifestyle goals and
cash flow needs.
The Registrant’s platform is open-architecture, meaning that the Registrant is able to
select any investment manager for its platform, so long as the selection of a particular
investment manager will not result in an undisclosed conflict of interest.
Managers are selected to populate client portfolios based upon their investment merits,
including their management, philosophy, process, and track record.
The Registrant will tactically alter a client’s long-term asset allocation from time
to time when market and macro-economic conditions warrant a more
conservative/aggressive posture relative to the baseline allocation. The Registrant
largely takes a discretionary approach however clients that engage the Registrant on a
non-discretionary basis will have recommendations discussed and require the written
consent of the client prior to implementation.
IMPORTANT INFORMATION ABOUT OUR SERVICES
Wealth Management Services. The Registrant does not generally provide wealth
management services. However, to the extent requested by the client, the Registrant
may recommend the services of Citizens Private Wealth, a brand of Citizens Bank,
N.A., which includes banking, personal financial planning, advanced estate planning,
tax planning and preparation, family office services/bill paying, trust administration,
and asset protection services.
Furthermore, to the extent requested by a client, the Registrant may also recommend
the services of other professionals for certain non-investment implementation purposes
(i.e., attorneys, accountants, insurance, etc.), including certain of Registrant’s
representatives, in their individual capacities as licensed insurance agents of Estate
Preservation Services, LLC (“EPS”), an affiliated New York licensed insurance agency
and certain of Registrant’s representatives, in their separate individual capacities as
registered representatives of Citizens Securities, Inc., an affiliated SEC registered and
FINRA Member broker-dealer (See disclosure at Items 10.C). The client is under no
obligation to engage the services of any recommended professional. The client retains
absolute discretion over all such implementation decisions and is free to accept or reject
any recommendation from the Registrant. Neither the Registrant, nor any of its
representatives, serves as an attorney or accountant and no portion of the Registrant’s
services should be construed as same.
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 professional(s) (i.e.,
attorney, accountant, etc.), and not Registrant, shall be responsible for the quality and
competency of the services provided.
It remains the client’s 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.
Fixed Income Strategies. Registrant offers Fixed Income strategies that focus on
managing fixed income investments held in client portfolios. Typically, the Fixed
Income team selects fixed income investments driven by the effective after-tax returns
available on various bond classes. Portfolio holdings managed by the team primarily
consist of municipal, U.S. Government, U.S. Agency and corporate debt.
To the extent appropriate, the Registrant may allocate, on a discretionary basis, or
recommend on a non-discretionary basis, a portion of your investment portfolio be
managed by the Fixed Income team. Clients will be required to execute a separate Fixed
Income addendum before any portion of their assets can be managed within the Fixed
Income Strategies.
Except for the Taxable and Tax-Exempt Bond strategies listed below, fees associated
with the Fixed Income Strategies shall be in addition to Registrant’s ongoing
investment advisory fee.
Tax-Exempt Bond Strategies
Short Term Municipal. Short Term Municipal is a duration-neutral fixed income strategy
focusing on the preservation of capital, with minimal price volatility associated with
interest rate changes, through the application of a relative value-based approach. Utilizing
tax-exempt municipal bonds, value is added through the capitalization of research-driven
ideas by analyzing metrics such as option-adjusted yield spreads, credit spreads between
bond sectors and issuers, and yield curve attributes while reducing the risks associated with
interest rate predictions. Maturity ranges from 1-5 years with a targeted duration range of
1.50- 2.50 years.
Moderate Term Municipal. Moderate Term Municipal is a duration-neutral fixed income
strategy focusing on the preservation of capital, with moderate price volatility associated
with interest rate changes, through the application of a relative value-based approach.
Utilizing tax-exempt municipal bonds, value is added through the capitalization of
research-driven ideas by analyzing metrics such as option-adjusted yield spreads, credit
spreads between bond sectors and issuers, and yield curve attributes while reducing the
risks associated with interest rate predictions. Maturity ranges from 1-10 years with a
targeted duration range of 2.50- 3.50 years.
Moderate Plus Municipal. Moderate Plus Municipal is a duration-neutral fixed income
strategy focusing on the preservation of capital balanced with the desire to maximize
portfolio income through the application of a relative value-based approach. Utilizing tax-
exempt municipal bonds, value is added through the capitalization of research-driven ideas
by analyzing metrics such as option-adjusted yield spreads, credit spreads between bond
sectors and issuers, and yield curve attributes while reducing the risks associated with
interest rate predictions. Maturity ranges from 1-15 years with a targeted duration range of
3.50- 4.50 years.
Taxable Bond Strategies
Short Term Taxable. Short Term Taxable is a duration-neutral fixed income strategy
focusing on the preservation of capital, with minimal price volatility associated with
interest rate changes, through the application of a relative value-based approach. Utilizing
diversified investment grade securities, the portfolio objective is to generate relative excess
returns through a risk efficient approach that utilizes robust credit research availing under
or overvalued securities, opportunities thru yield curve analysis and positioning and
seeking market inefficiencies due to technical or fundamental variables. Maturity ranges
from 1-5 years with a targeted duration range of 1.50- 2.50 years.
Moderate Term Taxable. Moderate Term Taxable is a duration-neutral fixed income
strategy focusing on the preservation of capital, with minimal price volatility associated
with interest rate changes, through the application of a relative value-based approach.
Utilizing diversified investment grade securities, the portfolio objective is to generate
relative excess returns through a risk efficient approach that utilizes robust credit research
availing under or overvalued securities, opportunities thru yield curve analysis and
positioning and seeking market inefficiencies due to technical or fundamental variables.
Maturity ranges from 1-10 years with a targeted duration range of 2.50- 3.50 years.
Assets allocated to the Taxable and Tax-Exempt bond strategies directly above are
excluded from Registrant’s standard investment fee schedule and are instead subject to a
separate fee schedule listed below in Item 5.
The Large Cap Strategy (the “LCS”). The LCS focuses on managing US large cap
equity investments held in client portfolios. The LCS utilizes a factor-based screening
process to score and rank securities in the S&P 500 Index, focused on high quality
companies with reasonable valuation exhibiting improvement. Further analysis is
conducted to determine the issuer's competitive position, financial strength, industry
attractiveness, and outlook. The LCS portfolio is constructed utilizing highly ranked
securities from the quantitative screen as well as qualitative research conducted by the
LCS’s team to balance risk and return over the long-term.
To the extent appropriate, the Registrant may allocate, on a discretionary basis, or
recommend on a non-discretionary basis, a portion of a client’s investment portfolio be
managed within the LCS. Clients will be required to execute a separate addendum
before any portion of their assets can be managed within the LCS.
Fees associated (20 bps per annum) with the LCS management shall be in addition to
the Registrant’s ongoing investment advisory fee.
Short-Term Asset Management (“STAM”). STAM focuses on providing a custom
managed portfolio constructed with diversified investment grade fixed income securities
through a flexible active mandate. The portfolio objective is to generate relative excess
returns through a risk efficient approach that utilizes robust credit research availing under
or overvalued securities, opportunities thru yield curve analysis and seeking market
inefficiencies due to technical or fundamental variables. The typical duration ranges from
one (1) to three (3) years, subject to an obligation maturity limit of five (5) years, using
Baa2, BBB or better ratings by one of more of the three major rating agencies. STAM is
generally intended for institutional clients with at least $10MM to allocate to the portfolio.
Assets allocated to STAM shall be excluded from the Registrant’s standard investment
advisory fee calculation and instead subject to the fee schedule noted in Item 5.
Retirement Plan Consulting Services. The Registrant may also provide retirement plan
consulting/management services, pursuant to which it assists sponsors of self-directed
retirement plans organized under the Employee Retirement Security Act of 1974
(“ERISA”). The terms and conditions of the engagement shall be set forth in a Retirement
Plan Services Agreement between the Registrant and the plan sponsor.
If the plan sponsor engages the Registrant in an ERISA Section 3(21) capacity, the
Registrant will assist with the selection and/or monitoring of investment options (generally
open-end mutual funds and exchange traded funds) from which plan participants shall
choose in self-directing the investments for their individual plan retirement accounts. If the
plan sponsor chooses to engage the Registrant in an ERISA Section 3(38) capacity,
Registrant may provide the same services as described above, but may also: create specific
asset allocation models that Registrant manages on a discretionary basis, which plan
participants may choose in managing their individual retirement account; and/or modify
the investment options made available to plan participants on a discretionary basis.
Sub-Advisory Engagement. The Registrant serves as a sub-advisor to Aquila Investment
Management LLC, an unaffiliated registered investment advisor. According to the terms
and conditions of a written Sub-Advisory Agreement the Registrant has accepted
responsibility for providing services to the Aquila Narragansett Tax-Free Income Fund (the
“Income Fund”). Because the Registrant earns compensation from serving in a sub-
advisory capacity to the Income Fund, the recommendation that a client become an investor
in the Income Fund presents a conflict of interest. No client is under any obligation to
become an investor in the Income Fund.
Use of Mutual Funds. Most mutual funds are available directly to the public.
Therefore, a prospective client may obtain many of the mutual funds that we utilize
independent of engaging our services as an investment advisor. However, if a
prospective client determines to do so, he/she will not receive our initial and ongoing
investment advisory services.
Use of DFA Mutual Funds. The Registrant utilizes mutual funds issued by Dimensional
Fund Advisors (“DFA”). DFA funds are generally only available through registered
investment advisers approved by DFA. Therefore, if the client was to terminate the
Registrant’s services, and transition to another adviser who has not been approved by DFA
to
utilize DFA funds, restrictions regarding additional purchases of, or reallocation among
other DFA funds, will generally apply.
Separate Fees. Mutual funds and exchange traded funds (“ETFs”) impose fees at the
fund level (e.g., management fees and other fund expenses). All such fees are separate
from, and in addition to, our investment advisory fee as described at Item 5.
Non-Discretionary Service Limitations. Clients that determine to engage the
Registrant on a non-discretionary investment advisory basis must be willing to accept
that the Registrant cannot affect any account transactions without obtaining prior
consent to any such transaction(s) from the client. Therefore, in the event that the
Registrant would like to make a transaction for a client's account (including in the event
of an individual holding or general market correction), and the client is unavailable,
the Registrant will be unable to affect the account transaction(s) (as it would for its
discretionary clients) without first obtaining the client’s consent.
Independent Managers. The Registrant may also allocate (or recommend that the
client allocate) a portion of a 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. The
Registrant shall continue to render investment advisory services to the client relative
to the ongoing monitoring and review of account performance, asset allocation and
client investment objectives. Factors which the Registrant 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.
The annual investment management fee charged by the Independent Manager(s)
(which can range from 0.06% to 1.50% of the assets allocated to the Independent
Manager(s); fees for equity managers are generally higher than those for fixed income
managers) is separate from, and in addition to, the Registrant’s advisory fee as set forth
in the fee schedule at Item 5.
Retirement 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 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 (whether it is from an employer’s plan or an existing IRA),
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, whether it is from an
employer’s plan or an existing IRA.
Portfolio Activity. The Registrant has a fiduciary duty to provide services consistent
with the client’s best interest. As part of its investment advisory services, the 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 the 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.
Private Investment Funds. The Registrant does not recommend private investment
funds. However, from time-to-time, clients may have questions regarding a prospective
investment in a private investment fund which they are considering independent of the
Registrant.
Private investment funds generally involve various risk factors, including, but not
limited to, potential for complete loss of principal, liquidity constraints and lack of
transparency, a complete discussion of which is set forth in each fund’s offering
documents, which will be provided to each client for review and consideration. Unlike
liquid investments that a client may own, private investment funds do not provide daily
liquidity or pricing. Each prospective client investor will be required to complete a
Subscription Agreement, pursuant to which the client shall establish that he/she is
qualified for investment in the fund, and acknowledges and accepts the various risk
factors that are associated with such an investment.
Valuation. If the Registrant bills an investment advisory fee based upon the value of
private investment funds or otherwise references private investment funds owned by
the client on any supplemental account reports prepared by the Registrant, the value
for all private investment funds owned by the client will reflect the most recent
valuation provided by the fund sponsor. The current value of any private investment
fund could be significantly more or less than the original purchase price or the price
reflected in any supplemental account report.
Client Obligations. In performing its services, the 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 the Registrant’s previous recommendations and/or services.
Client Retirement Plan Assets. If requested to do so, Registrant shall provide
investment advisory services relative to 401(k) plan assets maintained by the client in
conjunction with the retirement plan established by the client’s employer. In such
event, Registrant shall allocate (or recommend that the client allocate) the retirement
account assets among the investment options available on the 401(k) platform.
Registrant’s ability shall be limited to the allocation of the assets among the investment
alternatives available through the plan. Registrant will not receive any communications
from the plan sponsor or custodian, and it shall remain the client’s exclusive obligation
to notify Registrant of any changes in investment alternatives, restrictions, etc.
pertaining to the retirement account.
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. Correspondingly, the number of
ESG mutual funds and exchange-traded funds are limited when compared to those that do
not maintain such a mandate. As with any type of investment (including any investment
and/or investment strategies recommended and/or undertaken by Registrant), there can be
no assurance that investment in ESG securities or funds will be profitable or prove
successful. Registrant 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, Registrant shall rely
upon the assessments undertaken by the unaffiliated mutual fund, exchange traded fund or
separate account portfolio manager to determine that the fund’s or portfolio’s underlying
company securities meet a socially responsible mandate.
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 the Registrant. Generally, with potential exceptions, the
Registrant 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.
If/when liquidated, it should not be assumed that the replacement securities purchased
by the Registrant 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
the Registrant) 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
the Registrant does not maintain custodian access and/or trading authority; and,
• hold other securities and/or own accounts for which the Registrant does not maintain
custodian access and/or trading authority.
Corresponding Services/Fees: When agreed to by the Registrant, the Registrant 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 the Registrant; and, (5) include the market
value of all such securities for purposes of calculating advisory fee.
Cybersecurity Risk. The information technology systems and networks that
Registrant and its third-party service providers use to provide services to Registrant’s
clients employ various controls, which are designed to prevent cybersecurity incidents
stemming from intentional or unintentional actions that could cause significant
interruptions in Registrant’s operations and result in the unauthorized acquisition or
use of clients’ confidential or non-public personal information. Clients and Registrant
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 Registrant has
established procedures to reduce the risk of cybersecurity incidents, there is no
guarantee that these efforts will always be successful, especially considering that
Registrant 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.
Disclosure Brochure. A copy of the Registrant’s written Brochure and Client
Relationship Summary, as set forth on Part 2A of Form ADV and Form CRS
respectively, shall be provided to each client prior to, or contemporaneously with, the
execution of the Investment Advisory Agreement.
A. 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.
B. The Registrant does not participate in a wrap fee program.
C. As of December 31, 2023, the Registrant had $2,279,954,000 in assets under
management on a non-discretionary basis and $7,235,935,000 in assets under
management on a discretionary basis.
The Registrant has total regulatory assets under management of $9,515,889,000 and an
additional $4,402,961,000 of assets under advisement (assets for which the Registrant
provides services but does not maintain trading authority).