Terms of Service – Prime Capital Investment Advisors

Prime Capital Financial Wealth Management Terms of Service

These terms govern the wealth management services for each Prime Capital Financial Wealth Management Client Agreement between Client and Prime (the “Agreement”), and all capitalized terms not defined herein shall have the meaning ascribed to them in the Agreement:

CLIENT INVESTMENT ELIGIBILITY. Client’s eligibility for certain investments may require them to be designated as an Accredited Investor or a Qualified Client as defined by the Securities and Exchange Commission.
1. ACCREDITED INVESTOR. An Accredited Investor is defined as an investor meeting one of the following criteria: (i) any natural person whose individual net worth, or joint net worth with that person’s spouse or spousal equivalent, exceeds $1,000,000; (ii) any natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person’s spouse or spousal equivalent in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or (iii) any organization described in section 501(c)(3) of the Internal Revenue Code, corporation, Massachusetts or similar business trust, partnership, or limited liability company, not formed for the specific purpose of acquiring the securities offered, with total assets in excess of $5,000,000.
2. QUALIFIED CLIENT. A Qualified Client is defined as an investor that is: (i) a natural person who, or a company that, immediately after entering into the contract has at least $1,100,000 under the management of Prime; (ii) a natural person who, or a company that, immediately prior to entering into the contract, either: (1) Is a qualified purchaser as defined in section 2(a)(51)(A) of the Investment Company Act of 1940 (15 U.S.C. 80a-2(a)(51)(A)) at the time the Agreement effective date or (2) has a net worth (together, in the case of a natural person, with assets held jointly with a spouse) of more than $2,200,000. For purposes of calculating a natural person’s net worth: (x) the person’s primary residence must not be included as an asset; (y) indebtedness secured by the person’s primary residence, up to the estimated fair market value of the primary residence at the time the investment advisory contract is entered into may not be included as a liability (except that if the amount of such indebtedness outstanding at the time of calculation exceeds the amount outstanding 60 days before such time, other than as a result of the acquisition of the primary residence, the amount of such excess must be included as a liability); and (z) indebtedness that is secured by the person’s primary residence in excess of the estimated fair market value of the residence must be included as a liability.
  1. QUALIFIED PURCHASER. A Qualified Purchaser” is defined as an investor that is: (i) any natural person (including any person who holds a joint, community property, or other similar shared ownership interest in an issuer that is excepted under section 80a–3(c)(7) of this title with that person’s qualified purchaser spouse) who owns not less than $5,000,000 in investments, as defined by the Commission; (ii) any company that owns not less than $5,000,000 in investments and that is owned directly or indirectly by or for 2 or more natural persons who are related as siblings or spouse (including former spouses), or direct lineal descendants by birth or adoption, spouses of such persons, the estates of such persons, or foundations, charitable organizations, or trusts established by or for the benefit of such persons; (iii) any trust that is not covered by clause (ii) and that was not formed for the specific purpose of acquiring the securities offered, as to which the trustee or other person authorized to make decisions with respect to the trust, and each settlor or other person who has contributed assets to the trust, is a person described in clause (i), (ii), or (iv); or (iv) any person, acting for its own account or the accounts of other qualified purchasers, who in the aggregate owns and invests on a discretionary basis, not less than $25,000,000 in investments. (B) The Commission may adopt such rules and regulations applicable to the persons and trusts specified in clauses (i) through (iv) of subparagraph (A) as it determines are necessary or appropriate in the public interest or for the protection of investors. (C) The term “qualified purchaser” does not include a company that, but for the exceptions provided for in paragraph (1) or (7) of section 80a–3(c) of this title , would be an investment company (hereafter in this paragraph referred to as an “excepted investment company”), unless all beneficial owners of its outstanding securities (other than short-term paper), determined in accordance with section 80a–3(c)(1)(A) of this title , that acquired such securities on or before April 30, 1996 (hereafter in this paragraph referred to as “pre-amendment beneficial owners”), and all pre-amendment beneficial owners of the outstanding securities (other than short-term paper) of any excepted investment company that, directly or indirectly, owns any outstanding securities of such excepted investment company, have consented to its treatment as a qualified purchaser. Unanimous consent of all trustees, directors, or general partners of a company or trust referred to in clause (ii) or (iii) of subparagraph (A) shall constitute consent for purposes of this subparagraph.
CUSTODY. The final decision to custody assets with Custodian is at the discretion of the Advisor’s Clients, including those Accounts under ERISA or IRA rules and regulations, in which case the Client is acting as either the plan sponsor or IRA Account holder. Advisor is independently owned and operated and not affiliated with Custodian. Advisor shall not act as custodian for the assets in the Account and shall not be liable to Client for any act, conduct or omission by the Custodian. Advisor is hereby authorized and empowered to issue instructions to the Custodian and to request information about the Account from the Custodian. Advisor is not authorized to withdraw or transfer any money, securities or property, either in the name of the Client or otherwise, to any third party. Advisor shall not have authority to cause the Custodian to deliver Assets or pay cash to Advisor, other than with respect to Advisor directly billing the Account for the fee payable to Advisor under the Agreement in accordance with the Investment Advisers Act of 1940, as amended (the “Advisers Act”) and Rule 206(4)-2 thereunder or other applicable law. Client is responsible for reviewing all such fee computations. If the Account is subject to the requirements of the Employee Retirement Income Security Act of 1974 (“ERISA”), Client understands that the Custodian shall be responsible for maintaining, and shall at all times maintain, custody of the Account’s Assets in accordance with Section 404(b) of ERISA, and any other applicable regulations and rulings thereunder.
REPORTS TO CLIENT. The Custodian will send a statement at least quarterly indicating all amounts disbursed from the Account, all transactions occurring in the Account during the period covered by the statement, and a summary of the Account positions and portfolio value at the end of the period. Advisor does not assume responsibility for the accuracy of information furnished by the Custodian or any other party.
PONTERA. Advisor may use Pontera Order Management System (“Pontera”) to implement tax-efficient asset allocation and opportunistic rebalancing strategies for Held Away Accounts such as defined contribution plan participant accounts (e.g., 401(k) accounts) and HSAs, with discretion. With the use of Pontera, Advisor does not have direct access to Client log-in credentials to affect trades or withdrawal funds, therefore Advisor is not considered to have custody of Client funds. Prime is not affiliated with Pontera in any way and receives no compensation from Pontera for using the platform. Client agrees to the Pontera End User Terms and Conditions and Privacy Policy and will work with Pontera to link Client Accounts to the platform. Client agrees to keep Advisor apprised of any changes to its usernames and passwords for Held Away Account(s) so that Advisor can promptly update the Client’s credentials using the Pontera system. Client also agrees to promptly address any requests to update its login credentials when requested by the Pontera system. In the event of any delay by the Client to update its login credentials, Client acknowledges that the Advisor will not have access to view or manage the Client’s Held Away Account(s) which may result in investment losses or inadvertently incorrect valuations being used in the billing process under this Agreement. Client acknowledges and agrees that Advisor is not responsible for any losses arising from the Client’s delays in updating its login credentials through the Pontera system and agrees that Advisor is under no obligation to credit any fees for valuations made in good faith during periods when Advisor did not have access to any Held Away Account in calculating its fees under this Agreement.
BROKERAGE. As Advisor does not have the discretionary authority to determine the broker‐dealer to be used or the commission rates to be paid, advisory Clients must direct Advisor as to the broker‐dealer to be used. In any directed brokerage arrangement, it should be understood that Advisor will not have the authority to negotiate commissions or obtain volume discounts, and that best execution may not be achieved; transactions may not always be executed at the lowest available price for each Client transaction, and perceptions of what constitutes best execution in any given instance may vary. With regards to Clients who participate in Advisor’s Wrap Fee management program, said program is only available through certain Custodians and broker-dealers. In addition, a disparity in commission charges may exist between the commissions charged among Clients. Client may pay a commission on transactions in excess of the amount of commission another broker or dealer would have charged.
TRADE ERRORS. Advisor has implemented procedures designed to prevent trade errors; however, trade errors in Client Accounts cannot always be avoided. Consistent with its fiduciary duty, it is the policy of Advisor to correct trade errors in a manner that is in the best interest of the Client. In cases where the Client causes the trade error, the Client is responsible for any loss resulting from the correction. Depending on the specific circumstances of the trade error, the Client may not be able to receive any gains generated as a result of the error correction. In all situations where the Client does not cause the trade error, the Client is made whole and any loss resulting from the trade error is absorbed by Advisor if the error is caused by Advisor. If the error is caused by the broker‐dealer, platform provider, or Custodian, the broker-dealer, platform provider, or Custodian, is responsible for handling the trade error. If an investment gain results from the correcting trade, the gain remains in the Client’s Account unless the same error involved other client account(s) that should also receive the gains. It is not permissible for all Clients to retain the gain. Advisor may also confer with a Client to determine if the Client should forego the gain (e.g., due to tax reasons).
AGGREGATION AND ALLOCATION. Advisor may elect to purchase or sell the same securities for several clients at approximately the same time. This process is referred to as aggregating orders, batch trading or block trading and is used by Prime and such action may prove advantageous to Clients. When Prime aggregates client orders, allocating securities among client accounts is done on a fair and equitable basis. Advisor is under no obligation to so aggregate orders. Client recognizes that transactions in a specific security may not be accomplished for all clients at the same time at the same price. Client further acknowledges that circumstances may arise under which Advisor determines that, while it would be both desirable and suitable to aggregate client orders for a particular security or other investment, there is a limited supply or demand for the security or other investment. Under such circumstances, Client acknowledges that, while Advisor will seek to allocate such investment opportunities equitably over time, Advisor will not be required to assure equality of treatment among all of its clients with respect to any particular opportunity transacted nor to assure that each such opportunity will be proportionally allocated among participating clients. Where, because of prevailing market conditions, it is not possible to obtain the same price or time of execution for all of the securities or other investments purchased or sold for the Account, Advisor may average the various prices obtained in an aggregated order and charge or credit all of the participating accounts with the average price at which the orders were filled for all such participating client accounts on each applicable day. When Prime determines to aggregate Client orders for the purchase or sale of securities, including securities in which Prime or associated persons may invest, Prime will do so in accordance with the parameters set forth in the SEC No-Action Letter, SMC Capital, Inc.
PROXY VOTING. Advisor shall have no obligation or authority to take any action or render any advice with respect to the voting of proxies solicited by or with respect to issuers of securities held by an Account. Client (or the plan fiduciary in the case of an Account subject to the provisions of ERISA), expressly retains the authority and responsibility for, and Advisor is expressly precluded from rendering any advice or taking any action with respect to, the voting of any such proxies. The Custodian, and not Advisor, is responsible for timely transmission of any proxy materials to Client.
LAWSUITS INVOLVING ACCOUNT ASSETS/ISSUERS. Except as otherwise required by ERISA, if applicable, Advisor shall have no responsibility to render legal advice or take any legal action on Client’s behalf with respect to securities then or previously held in the Account, or the issuers thereof, that become the subject of legal proceedings, including bankruptcy proceedings or class actions. The Custodian, and not Advisor, is responsible for timely transmission of any relevant material to Client.
FEES. Fees charged to Account(s) are subject to the terms of this section.
1. PAYMENT. For Account(s) billed in arrears, with the exception of Advisor’s Covered Calls Strategy and the Core Portfolios – Elements Series, fees for Asset Management Services are charged based on either a flat percentage of AUM (“AUM”) [OR] a tiered percentage of AUM “percentage tiered”, billed in arrears (at the end of the billing period) on a quarterly calendar basis and calculated based on the fair market value of the Account as of the last business day of the current billing period. No fee will be charged on Accounts until the assets are under Advisor’s management. Fees are prorated (based on the number of days service is provided during the initial billing period) for the Account opened at any time other than the beginning of the billing period. If Asset Management Services commence in the middle of the billing period, then the prorated fee for that billing period will be billed in arrears at the end of that billing period. For Account(s) billed in advance, with the exception of Advisor’s Covered Calls Strategy and the Core Portfolios – Elements Series, fees for Asset Management Services are charged based on either a flat percentage of AUM [OR] a tiered percentage of AUM “percentage tiered”, billed in advance on a quarterly calendar basis, and calculated based on the fair market value of the account as of the last business day of the prior billing period. No fee will be charged on Accounts until the assets are under Advisor’s management. If Asset Management Services commenced in the middle of a billing period, the prorated fee for the initial billing period is billed in arrears at the same time as the next full billing period’s fee is billed. Fees (whether billed in arrears or advance) are assessed on all AUM. Margin debit balances do not reduce the value of the AUM.
  1. Fees for Limited Scope Advisory Services for Non-Discretionary Assets. Such services are only available through Advisor’s Wrap Fee management program. The annual Wrap Fee rate (%) for these services is 0.06% (6 Bps) or $24 USD, whichever is greater, billed on a quarterly calendar basis. Asset-based fees for these services will not be assessed on non-traded alternative investments such as Real Estate Investment Trusts (“REIT”), Business Development Companies (“BDC”), and private equity. Non-traded alternative investments are still subject to the minimum flat dollar fee of $24 billed on a quarterly calendar basis.
  2. FEES FOR COVERED CALLS STRATEGY ACCOUNTS. Accounts participating in Covered Calls Strategy are only charged based on a flat percentage of AUM. The annual fees for Covered Calls Strategy Accounts range between 1.50% and 2.20% of Account AUM billed on a quarterly calendar basis.
  3. FEES FOR CUSTOM STRATEGIES ACCOUNTS. Custom Strategy Accounts, which may go by the name of Custom IPS, Custom IPS PLUS, or Rep-Managed Accounts, may exceed fees for standard service Accounts, but will not exceed 2.0%.
  4. FEES FOR CORE PORTFOLIOS – ELEMENTS SERIES ACCOUNTS. Accounts participating in the Core Portfolios – Elements Series have a minimum annual asset management fee of $50, that will be in the form of a flat dollar amount billed on a quarterly calendar basis.
  5. Fees for Financial Planning Services. Fees for financial planning services pursuant to this Agreement may be charged based either (1) on a flat dollar basis, (2) on a flat percentage basis as described above, or (3) on a percentage tiered basis as described above. Fees for financial planning services will be outlined in a written financial planning engagement document agreed to by the Client. When a fee for financial planning services is charged based on a flat dollar basis, such fee will be in addition to the Advisory Fee that is charged exclusively for Asset Management Services. When a fee for financial planning services is charged based on a flat percentage basis or percentage tiered basis, such fee will be incorporated into the Advisory Fee. This “combined” fee will generally be higher than a fee that is charged exclusively for Asset Management Services. Fees for financial planning services are charged as described above on a quarterly calendar basis. Advisor does not require or solicit prepayment of more than $1,200 in fees per Client, six months or more in advance. Termination of financial planning services require thirty (30) day advanced written notice.
  6. Fees associated with Alternative Investments. Clients will be subject to both the alternative investment’s management fees and/or performance-based fees and Advisor’s own Advisory Fees. The fees, expenses, and investment minimums of each alternative investment are fully described in the offering materials. Investors in such alternative investments must meet specific suitability and investor eligibility requirements to invest and specific opportunities may require higher levels of investment. Advisor’s Advisory Fee for alternative investment that are recommended as a “stand-alone” sleeve or Account will not exceed 1.0% annually. Advisor’s Advisory Fee, including prorated fee(s), with respect to alternative investments will be billed either in arrears [OR] in advance as stated above in this Section 10.a. The fair market value of the alternative investment is determined by the general partner, firm, or company that created or sponsored the offering, not Advisor. Clients are also expected to maintain a sufficient level of cash or money market funds within their Accounts holding alternative investments to cover Advisor’s Advisory Fees. In cases where the alternative investment is intended as a “stand alone” sleeve or Account, the Client, or Account owner, is required to maintain a cash or cash-equivalent balance equal to the annual Advisory Fee charged by Advisor.
  7. Fees associated with Private Offerings. Clients will be subject to both the private offering’s management fees and/or performance-based fees and Advisor’s own Advisory Fees. The fees, expenses, and investment minimums of each private offering are fully described in the offering materials. Investors in such private offerings must meet specific suitability and investor eligibility requirements to invest and specific opportunities may require higher levels of investment. For an Account(s) wherein Advisor DOES manage uncalled capital, Advisor’s Advisory Fee, including prorated fees, with respect to private offerings will be billed either in arrears [OR] in advance as stated above in this Section 10.a. For an Account(s) wherein Advisor DOES NOT manage uncalled capital, Advisor’s Advisory Fee with respect to private offerings will be billed in arrears (or in advance) on a quarterly calendar basis and is calculated based on the fair market value of “called capital” (a/k/a “drawn capital”, “paid-in capital”) as of the last business day of the current billing period for those Account(s) billed in arrears [OR] as of the last business day of the prior billing period for those Account(s) billed in advance. The fair market value of the private offering and its underlying called capital and uncalled capital amounts are determined by the general partner, firm, or company that created or sponsored the offering, not Advisor. Clients are also expected to maintain a sufficient level of cash or money market funds within their Accounts holding private offerings to cover Advisor’s Advisory Fees. In cases where the private offering is intended as a “stand alone” sleeve or Account, the Client, or Account owner, is required to maintain a cash or cash-equivalent balance equal to (i) 1% of the committed capital amount or (ii) the annual Advisory Fee charged by Advisor, whichever is less.
  8. FEES FOR HELD AWAY ACCOUNTS. Prime cannot debit Advisory Fees directly from Held Away Accounts that receive Asset Management Services. Client is hereby authorizing Advisor to debit these Advisory Fees directly from one or more of the Client’s taxable Accounts, on a pro‐rata basis as directed by the Client. If there are insufficient funds available in another Client Account or the Advisor believes that deducting the Advisory Fee from another Client Account would be prohibited by applicable law, it will invoice the Client. Invoices must be paid within thirty (30) days of receipt and will bear interest after it becomes due and payable and shall continue to accrue interest until payment is made at a rate equal to the lesser of either (a) two percent (2%) above the prime rate as reported by the Federal Reserve Bank of New York, located in New York, New York, as of the date such payment was due and payable, or (b) the maximum rate permitted by Applicable Law.
2. Computing Market Value. Advisor will use the Fair Market Value (“FMV”) provided by the Custodian (or by the applicable general partner, firm, or company, as stated above in this Section 10.a.). Client acknowledges that FMV for Held Away Accounts is dependent on the Client, provided directly or through a third party. Advisor shall not impose start‐up, closing, or penalty fees in connection with the Account.
3. Additions and Withdrawals. Client may make additions to the Account at any time. Client may withdraw Account assets upon notice to Advisor, subject to the usual and customary securities settlement procedures and subject to Advisor’s right to terminate an Account that falls below the minimum account size, in effect from time to time.
4. Payment Method. As reflected in this Agreement, Advisor is authorized to invoice the Custodian directly for its fees. Client shall be responsible for verifying the accuracy of the fee calculation. The Custodian shall not determine whether the fee is calculated properly.
5. Negotiability of Fees. Fees are subject to negotiation. Fees charged for Asset Management Services and financial planning services are negotiable based on the Advisor providing the services, the type of client, the complexity of the client’s situation, the composition of the client’s Account (i.e., equities versus mutual funds), the potential for additional account deposits, the relationship of the client with the Advisor, the number and type(s) of financial planning services chosen, and the total amount of AUM for the client. Thus, Advisor’s fees may vary among clients for the services provided due to such differing client needs, circumstances, objectives, services, and other factors that are deemed at the time to be relevant. Any fee schedules provided in this Agreement are Prime’s basic fee schedules generally charged to clients, absent negotiable circumstances.
6. Changes to Fee. Fees stated in the Agreement may change. These changes will take effect as soon as practicable, but not longer than sixty (60) days, after notification to Client.
7. Other Fees and Charges.
  1. Wrap Fee Accounts. Except as otherwise provided below, Client will incur no charges other than the Advisor’s fee pursuant to this Agreement in connection with the maintenance of and activity in Client’s Account. The fees not included in the Advisory Fee for wrap services are charges imposed directly by a mutual fund, index fund, or exchange traded fund, mark-ups and mark-downs, spreads paid to market makers, fees for trades executed away from Custodian, wire transfer fees and other fees and taxes on brokerage Accounts and securities transactions. Advisor’s wrap fee does not include embedded ETF fees, regulatory surcharges, Custodian fees such as Account termination, IRA annual and maintenance fees, trade away fees and other non-commission / transaction based administrative fees. To the extent that securities transactions are executed away from Custodian then there may be commission mark-up and mark-downs that the Client will pay in addition to Advisor’s wrap fee. Client shall be solely responsible for the additional expenses referenced above.
  2. Non-Wrap Fee Accounts. Client shall be solely responsible for all commissions and other transaction charges, and any charge relating to the custody of securities in the Account. Advisor’s fee covers only the services provided by Advisor and does not include brokerage commissions, mark‐ups and markdowns, dealer spreads or other costs associated with the purchase and sale of securities, Custodian fees, interest, taxes, or other Account expenses; Client shall be solely responsible for such additional expenses.
  3. BOTH WRAP FEE AND NON-WRAP FEE ACCOUNTS. Client may also incur certain charges imposed by third parties other than Advisor in connection with investments made through an Account including, but not limited to, mutual fund sales loads, 12(b)‐1 fees and surrender charges, variable annuity fees and surrender charges, qualified retirement plan fees, and other charges imposed by the Custodian(s) of the Account. Management fees charged by Advisor are separate and distinct from the fees and expenses charged by investment company securities that may be recommended to you. A description of these fees and expenses are available in each investment company security’s prospectus. Sales charges and 12b‐1 fees are not to be paid to Advisor as Prime does not accept any sales charges or 12b‐1 fees. Should such charges or fees be paid to Advisor, Advisor will direct the applicable Custodian or platform to remit such charges or fees back to the Client. Client further understands that the mutual funds and/or ETFs recommended or purchased through this Agreement may be available directly from the funds pursuant to the terms of their prospectuses and without paying the Fee.