Client Relationship Summary
We are Catalyst Wealth Management, an investment adviser registered with the Securities and Exchange Commission. Investment advisory and brokerage services and fees differ, and it is important for you to understand the differences. Free and simple tools are available to research firms and financial professionals at Investor.gov/CRS, which also provides educational materials about broker-dealers, investment advisers, and investing. Our firm and financial professionals’ registration information are also publicly available on this website.
Relationships & Services
Q: What investment services and advice can you provide me?
A: We offer customized investment advisory and financial planning services to retail investors. We offer advice on a full suite of securities described in Item 8 of our Form ADV Part 2A (“Disclosure Brochure,” available at Investor.gov/CRS), including equities, fixed income, mutual funds, ETFs, variable annuities, private investments, and similar investments. Our services are generally provided on a discretionary basis, which means that we have the power to buy and sell securities for your account without your prior consent. This authority is usually unlimited and remains in effect until you revoke it. For financial planning services, we do not exercise discretionary authority or require you to use certain advisors. We may provide non-discretionary investment advice, where we make investment recommendations to you and you decide whether to implement the recommendation.
We do give advice on proprietary investment products. We usually review portfolios at least annually. However, we do monitor accounts on a continuous basis and conduct ad hoc reviews if you change your objectives or risk tolerance, upon significant market and economic events, or if we change our investment strategy.
We require a minimum of $5,000,000 of client assets under management for estate planning projects, and $1,000,000 of investable assets for Advisory Services.
Q: Given my financial situation, should I choose an investment advisory service? Why or why not?
A: Advisory services are usually appropriate when you have a portfolio of securities for which you require ongoing advice. Investors who maintain few securities holdings and are not inclined to make changes to their portfolio are likely best suited for a traditional brokerage account with a FINRA-registered firm.
Q: How will you choose investments to recommend to me?
A: We recommend investments based upon your individual circumstances, financial situation, expectation of current and future cash needs, investment objective, and risk tolerance. In addition, we attempt to identify those investments in which we expect to yield an acceptable level of return given the amount of risk you’re willing to assume, taking into account the level of diversification and how different securities and asset classes may complement one another.
Q: What is your relevant experience, including your licenses, education, and other qualifications?
A: Our financial advisors have been in the financial services industry for several years and maintain the Series 65 exam qualification or a professional designation accepted by the applicable state regulator. You can find information on any professional designations of your financial advisor in the Form ADV Part 2B (“Brochure Supplement”) we provide you at the onset of the advisory relationship.
Q: What do these qualifications mean?
A: These qualifications assure that our professionals have met specific regulatory exam requirements required to conduct investment activities (e.g., Series 65). In addition, professional certifications such as the CFP® require successful passing of the certification exam as well as rigorous continuing education requirements.
Fees, Costs, Conflicts & Standard of Conduct
Q: What fees will I pay?
A: Our monthly or quarterly fees are calculated as a percentage of the assets under our management, so our fees will rise and fall with the value of the assets we manage for you. While our fees may reduce the amount of your assets available for investment, we believe they are justified by our services and attention to your needs. Nonetheless, we are economically incented to recommend that you place more assets in your account in order to increase the value of your portfolio, because as the value increases, so do our fees. We may also charge performance-based fees to qualified clients. Because performance-based fees involve a sharing of any portfolio gains between the client and the investment manager, they create an economic incentive for us to take additional risks in the management of a client portfolio. You can find more information about performance-based fees under Item 6 of our Disclosure Brochure. Some securities, such as mutual funds and ETFs, carry additional costs.
In addition to advisory and transaction fees, there are additional fees such as postage and handling, transfer taxes, SEC fees for sales of securities, and similar fees. These additional fees are not material, but like advisory fees and
custodian fees, they do have an adverse impact on the value of your portfolio over time. Financial planning fees will be charged at an hourly or fixed rate as agreed upon by you and the firm. You can find more information about our fees and costs under Item 5 of our Disclosure Brochure.
Q: Help me understand how these fees and costs might affect my investments. If I give you $10,000 to invest, how much will go to fees and costs, and how much will be invested for me?
A: We charge asset-based fees, so our fees are calculated as a percentage of the value of your portfolio we manage. For example, a $10,000 investment at a 1% annual fee results in an annual deduction of $100 from your portfolio (meaning only $9,900 ends up invested). This means that it will take longer for you to realize positive returns than if no fees were charged. In this example, if you generated a 3% return, your net return would be 2%.
You will pay fees and costs whether you make or lose money on your investments. Fees and costs will reduce any amount of money you make on your investments over time. Please make sure you understand what fees and costs you are paying.
Q: What are your legal obligations to me when acting as my investment adviser? How else does your firm make money and what conflicts of interest do you have?
A: When we act as your investment adviser, we have to act in your best interest and not put our interests ahead of yours. At the same time, the way we make money creates some conflicts of interest. You should understand and ask us about these conflicts because they can affect the investment advice we provide you. Here are some examples to help you understand what this means:
- We are the investment manager for a proprietary private fund and may solicit our clients to invest in the private fund. A conflict of interest arises in that we have an economic incentive to solicit clients to invest directly in the private fund versus a separately managed account. We receive a performance fee allocation based upon the private fund’s cumulative investment performance, which may create an incentive for us to recommend this product versus other products, as well as incur trading and strategy risks that may conflict with an investor’s risk tolerance and investment objectives, allocate more favorable investment opportunities to the private fund, and allocate more time to the affairs of the private fund.
Q: How might your conflicts of interest affect me, and how will you address them?
A: Conflicts of interest can incentivize us to put our interests ahead of yours. We manage these conflicts through disclosures and employing supervision procedures to ensure our financial advisors are acting in your best interest. If a financial advisor has outside business activities, it will be disclosed in their Brochure Supplement. Conflicts of interest are broadly defined, and you should consult with your financial advisor, as conflicts can impact our advice to you. Please see Items 10, 11, and 14 of our Disclosure Brochure as well as your financial advisor’s Brochure Supplement for additional information about conflicts of interest.
Q: How do your financial professionals make money?
A: Our financial advisors are paid either a percentage of the fees we collect from you or a salary and bonus. In either scenario, we are incentivized to recommend that you add additional assets to your advisory account.
Q: Do you or your financial professionals have legal or disciplinary history?
A: No. You can visit Investor.gov/CRS for a free and simple search tool to research our firm and our financial professionals.
Q: Who is my primary contact person?
A: Your Catalyst Wealth Management financial advisor will be your primary point of contact. However, administrative requests may be handled by an administrative assistant or client service professional.
Q: Is he or she a representative of an investment adviser or a broker-dealer?
A: Certain professionals are registered with The Leaders Group, a FINRA broker-dealer. All professionals are licensed with Catalyst Wealth Management as investment adviser representatives.
Q: Who can I talk to if I have concerns about how this person is treating me?
A: In the event you have issues to be addressed, you may contact Sanford Schmidt at 847-897-7405.
You can find additional information about our investment advisory services at Investor.gov/CRS. You may also request a printed copy of this Client Relationship Summary by contacting Sanford Schmidt at 847-897-7405 or via email to email@example.com