Hazlett, Burt & Watson, Inc. is a broker-dealer and an investment adviser registered with the Securities and Exchange Commission (SEC) and is a member of the Financial Industry Regulatory Authority (FINRA®) and the Securities Investor Protection Corporation (SIPC®). Brokerage and investment advisory services and fees differ, and it is important for the retail investor 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.
What investment servicers and advice can you provide me? Hazlett, Burt & Watson, Inc. offers both brokerage and investment advisory services to retail investors.
• Brokerage services include buying and selling securities at your direction and providing you with investment recommendations, research, financial tools, and investor education from time to time or at your request. We offer mutual funds, exchange traded funds (ETFs), domestic and international equities, options, fixed income securities, certificates of deposit (CDs) and structured notes, and variable annuities. We do not require a minimum account size or a minimum investment requirement. Unless we separately agree in writing, we do not monitor your brokerage account and you make the ultimate decision regarding the purchase or sale of investments.
• Advisory services include our investment management services using mutual funds, exchange traded funds (ETFs), domestic and international equities, options, fixed income securities, certificates of deposit (CDs) and structured notes, variable annuities, and managed portfolios from third-party investment managers. Depending on which program you select, our investment management services are either “non- discretionary” or “discretionary”—meaning that either we will recommend investments to you and you will make the ultimate decision regarding the purchase or sale of investments (non-discretionary), or we will make the ultimate investment decisions without your signoff (discretionary). The third-party managers we make available to you will invest your account on a discretionary basis using mutual funds, ETFs, and other securities. All of our advisory services are offered through “wrap fee programs” (as described below) and either we or the third-party manager will monitor your advisory account and investments as part of your standard services on a quarterly and/or annual basis. You must meet certain investment minimums to open an advisory account. Current account minimums for each program are described on our website at www.hazlettburt.com/Regulation BI For additional information, please see Regulation Best Interest Disclosures, and Form ADV Part 2A, located on our website at www.hazlettburt.com/Regulation BI. Please also refer to new account opening documents and related disclosures.
What fees will I pay? The fees you pay depend on whether you choose brokerage services, advisory services, or both.
• Brokerage services, the primary fees and costs are transaction-based fees for recommendations and execution of securities trades. Depending on the investment product you select, these fees can include up-front commissions, as well as fees that are charged on an on-going basis for as long as you hold the investment (“trails”). If we buy a security from you, or sell a security to you for our own account (as “principal”), we may mark the price up or down, which is a benefit to us. Because we are compensated for transactions, we have an incentive to encourage you to trade more frequently and in greater amounts, and to trade with us as principal because we receive more revenue when you do so. You will also pay fees for custodial or administrative services, as well as fees and expenses that are included in the expense ratios of certain types of investments, including in mutual funds, ETFs, and variable annuities. For additional information about the fees and costs for our brokerage services, please see Regulation Best Interest Disclosures and Form ADV Part 2A located on our website at www.hazlettburt.com/Regulation BI.
• Advisory services, the primary fees and costs are the asset-based fees for the program you select (“wrap” fees). Asset-based fees are calculated as a percentage of the assets invested in your advisory account according to the fee schedule in your advisory agreement with us. As such, the more assets you invest in your account, the more you will pay in fees, and therefore we have an incentive to encourage you to increase your advisory account assets. A wrap advisory fee includes most transaction costs and fees paid to a broker-dealer or bank that has custody of your assets, and will be generally more expensive than an asset-based fee that does not include transaction costs and fees. Our clients typically pay the advisory fee each quarter, but please see your advisory agreement for the payment frequency that applies to your account. You may also pay miscellaneous fees that your account’s custodian may charge, including wire fees, transfer fees, bank charges and other fees, as well as fees and expenses that are included in the expense ratios of certain of your investments, including in mutual funds and ETFs. For additional information, please see Regulation Best Interest Disclosures, and Form ADV Part 2A, located on our website at www.hazlettburt.com/Regulation BI. Please also refer to new account opening documents and related disclosures.
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.
Examples of Ways We Make Money and Conflicts of Interest.
• Third-Party Payments: We receive payments from third party product sponsors and managers (or their affiliates) when we recommend or sell certain products. As such, we have an incentive to recommend (or to invest your assets in) products of third-parties that pay us additional compensation, over products of third parties that do not pay us, or pay us less.
• Revenue Sharing: Certain managers and sponsors (or their affiliates) share the revenue they earn when you invest in certain of their investment products (primarily mutual funds and variable annuities) with us. As such, we have an incentive to recommend (or to invest your assets in) products of sponsors and managers that share their revenue with us, over other products of sponsors or managers that do not share their revenue, or who share less.
• Principal Transactions: We may buy and sell your investments through our own accounts (referred to as “acting as principal”). When we act as principal, we earn a profit on these trades (such as commission equivalents, mark-ups, mark-downs, and spreads), and can receive other benefits in principal transactions. We have an incentive to trade with you on a principal basis and to recommend securities that we hold in inventory.
For additional information: please see Regulation Best Interest Disclosures, and Form ADV Part 2A, located on our website at www.hazlettburt.com/Regulation BI.
How do your financial professionals make money?
Our financial professionals are compensated in a variety of ways based on the percentage of revenue generated from sales of products and services to clients and/or total assets under advisement, including brokerage account activity. Typically, a financial professional’s payout increases at larger levels of investments managed for clients and larger levels of revenue generated. As a result, financial professionals have an incentive to provide brokerage recommendations that result in selling more investment products and services. Financial professionals also have an incentive to provide brokerage recommendations to gather more assets under management and to increase brokerage trading activity. Additional information on cash and non-cash compensation received by Financial professionals is available at www.hazlettburt.com/Regulation BI. Please refer to Regulation Best Interest Disclosures, and Form ADV Part 2A.
Do you or your financial professionals have legal or disciplinary history? Yes – Visit Investor.gov/CRS for a free and simple search tool to research us and our financial professionals.
If you would like additional information about our brokerage or investment advisory services, to request the most up-to-date information, or to request a copy of our most current Customer Relationship Summary or Regulation BI Disclosure Document, please visit www.hazlettburt.com/Regulation BI, or you may call 304.233.3312.
Client Relationship Summary (Form CRS)
This document provides additional information related to the brokerage services we offer and provides details regarding material conflicts of interest that arise through our delivery of brokerage services to you. We encourage you to review this information carefully, along with your account agreement documents and disclosures you have received from Hazlett, Burt & Watson, Inc. (Hazlett). Hazlett is registered with the Securities and Exchange Commission (SEC) to offer both brokerage and investment advisory services to retail customers. This document primarily provides additional information and disclosures related to our brokerage services. For more information related to our investment advisory services, please refer to our Form CRS Relationship Summary available at www.hazlettburt.com/Regulation BI. Our Form CRS contains important information about the types of services we offer, both brokerage and investment advisory, along with general information related to fees, costs, conflicts of interest, standards of conduct and disciplinary history.
When you establish a brokerage account with us, you have the ability to buy, sell and hold investments within your account. Our primary service provided in this capacity is our trading capability. We execute trade purchases and sales on your behalf, as directed by you. In a brokerage relationship we can trade with you for our own account, for an affiliate, or for another client, and we earn commissions on those trades. The capacity in which we act is disclosed on your trade confirmation. However, we are not required to communicate it in advance, or obtain your consent.
Cash and Margin Accounts
We offer brokerage services on either a cash or margin basis, or both. In a cash brokerage account, you must pay for your purchases in full at the time of purchase whereas in a margin brokerage account, you may borrow a certain limit based on the value of the investment securities maintained in your account. This lending is generally referred to as a “margin loan,” and the amount borrowed is secured by the securities in your account (collateral). You will incur interest charges associated with your borrowing. Not all investment securities are eligible to be used for collateral purposes. Margin lending is made available through our clearing firm, National Financial Services. A margin-enabled brokerage account has specific eligibility requirements, unique costs, and governing regulatory requirements. You must execute a separate margin agreement before engaging in margin brokerage activity. Included with your margin agreement is a copy of the Margin Disclosure Statement. This statement contains important information you should understand and consider before establishing a margin brokerage relationship. For more information on our margin brokerage services, please contact a Hazlett, Burt & Watson, Inc. financial professional or refer to our Margin Disclosure Statement available at www.hazlettburt.com/Regulation BI.
Account Types
We offer various types of brokerage accounts including individual and joint accounts, custodial accounts, Delivery Versus Payment (DVP) accounts, estate and trust accounts, partnership accounts, individual retirement accounts and other types of retirement accounts as outlined in our brokerage account agreements and related disclosures. You should refer to these agreements and disclosures for more information concerning available account types, or you may speak with your Hazlett financial professional.
Incidental Services, Recommendations and Account Monitoring
Within your brokerage account, we may also provide other incidental services such as research reports, and recommendations to buy, sell, or hold assets. When we make a securities recommendation, investment strategy recommendation or recommendation to rollover assets from your Qualified Retirement Plan (QRP) to an Individual Retirement Account (IRA), the recommendation is made in our capacity as a broker-dealer unless otherwise stated at the time of the recommendation. When we act in a brokerage capacity, our fiduciary capacity only extends to the execution of our recommended trades. A brokerage account does not carry an ongoing fiduciary relationship with you. It is important for you to understand that when our financial professionals make a brokerage recommendation to you, we are obligated to ensure the recommendation is in your best interest, considering reasonably available alternatives, and based on your stated investment objective, risk tolerance, liquidity needs, time horizon, financial needs, tax status, and other financial information you provide us. You may accept or reject any recommendation. It is also your responsibility to monitor the investments in your brokerage account, and we encourage you to do so regularly. We do not commit to provide on-going monitoring of your brokerage account. If you prefer on-going monitoring of your account or investments, you should speak to your Hazlett financial professional about whether an investment advisory relationship is more appropriate for you. Please also consider that from time to time we may provide you with additional information and resources to assist you with managing your brokerage account. This may include but is not limited to educational resources, sales and marketing materials, performance reports, asset allocation guidance, and/or periodic brokerage account reviews. When we offer these services and information, we do so as a courtesy to you. These activities are not designed to monitor specific investment holdings in your brokerage account; they do not contain specific investment recommendations about investment holdings, and you should not consider them a recommendation to buy, sell, or hold any particular securities for your brokerage account. Upon your request, we will review such information and reports with you and may provide you with investment recommendations, but we are not under a specific obligation to do so.
Clearing and Custody
We have entered into a clearing and custody agreement with National Financial Services (“NFS”) to carry your account and provide certain back office functions. We and NFS share responsibilities with respect to your account as set forth in the Brokerage Account Customer Agreement that was delivered to you upon the opening of your account. Please refer to this document for more information on how such responsibilities have been allocated between us.
Understanding Risk
It is important for you to understand that all investment recommendations and activities involve risk, including the risk that you may lose your entire principal. Further, some investments involve more risk than other investments. Higher-risk investments may have the potential for higher returns but also for greater losses. The higher your “risk tolerance,” meaning the amount of risk or loss you are willing and able to accept in order to achieve your investment goals, the more you may decide to invest in higher-risk investments offering the potential for greater returns. We attempt to align risk tolerances with investment needs to offer you different investment objectives from which to choose (see five common investment objectives below). You should select the investment objective and risk tolerance best aligned with your brokerage account goals and needs.
Investment goals typically have different time horizons and different income and growth objectives. Generally, investment goals are scaled within a range, with “Income” investors typically holding the smallest percentage of higher-risk investments, followed by “Growth and Income” investors holding some higher-risk investments, and finally “Growth” investors holding a larger portion of their portfolio in higher-risk investments. Risk tolerance also varies and are generally measured in a manner that increases from “Conservative” to “Moderate” to “Aggressive,” and finally “Trading and Speculation.” Please refer to the preceding chart for details. Our investment recommendations are based in part on your risk tolerance and investment objective as outlined above. You should carefully consider your investment objective and risk tolerance before accepting any investment recommendations we may provide. It is also important that you promptly notify us if your life circumstances, goals, investment objectives, or risk tolerance change so we may customize our recommendations to your current investment profile.
Core Account
Your account includes a core account that is used for settling transactions and holding credit balances. Amounts credited to your core account will be invested in the core account investment vehicle you indicate on your account application. Different core account investment vehicles may have different rates of return and different terms and conditions, such as FDIC insurance or SIPC protection. This account enables you to earn a return on uninvested cash balances in your brokerage account. You will receive additional information regarding your core account in your account agreement(s). Please review these disclosures carefully.
Account Minimums
There is no minimum initial account balance required to open a brokerage account with Hazlett. However, annual account maintenance/custody fees will be charged in accordance with Hazlett’s Client Account Service Fee schedule. Our financial professionals may establish their own minimum account balance requirements for the brokerage accounts they service. For example, a dedicated financial professional may choose to service only those brokerage account clients who satisfy account-specific or total household asset limits. Such minimums, if any, will be disclosed to you by your Hazlett financial professional.
Hazlett offers broker-dealer services individually customized to meet the specific needs of each client, taking into consideration your personal circumstances.
It is important to consider that while a brokerage relationship can be a cost-effective way of investing your assets, it is not for everyone given the fees and costs involved.
Transaction-Based Fees
You will pay transaction-based fees for trades you decide to enter into, such as buying and selling stocks, bonds, Exchange Traded Products (ETPs), mutual funds, annuity contracts, exercising options and other investment purchases and sales. These transaction-based fees are generally referred to as a “commission,” “mark up,” “sales load,” or a “sales charge.” Transaction-based fees are based on a several factors, including, but not limited to:
• Underlying product selection
• Your brokerage service model and account type
• Size of your transaction and/or overall value of your account
• Frequency of your trade activity
• Available discounts and/or fee waivers
Please note that you will also pay an Activity Assessment Fee based on the volume and price of shares traded, as well as a Service Fee in the amount of $9.95 per trade.
Account and Service Fees
You will pay fees for various operational services provided to you through your brokerage account. These fees are set at least annually and communicated to you through information included in your account statement and other notifications. These fees do not apply to all account types and may be waived under certain conditions. You should understand that based on the brokerage service model appropriate for you, the same or similar products, accounts and services may vary in fees and costs. For more information concerning our administrative and service fees, please contact your Hazlett financial professional.
How We Are Compensated
We receive direct and indirect compensation in connection with your accounts. Direct compensation is taken directly from the relative account. Indirect compensation is compensation paid in ways other than directly from the account and may impact the value of the associated investments in your account. The sections below describe the compensation that we receive in connection with various investments that may be available to you. In many cases, the descriptions that follow refer to a prospectus or offering documents.
Financial Professional Schedules
The attached schedule details the commissions charged to you and received by us and your Hazlett financial professional for trades of securities, rights, and warrants.
Debt Securities
For debt securities, including preferred securities and CDs, we may apply a variable and negotiable charge (i.e., markup or markdown) to your secondary market transaction. Please ask your Hazlett financial professional for more information. Additionally, we may incur gains (or losses) on positions we hold in inventory in response to market movements or other events that impact the value of the securities we own.
Mutual Funds
We currently offer a wide array of mutual funds varying in share class structure and investment style. If you invest in mutual funds, we may receive direct and indirect compensation in connection with such mutual fund investments, as described below.
Buying Direct Many mutual funds may be purchased directly from the issuer without using the clearing firm. Depending upon the issuer, fees may vary between buying direct and buying through the clearing firm. Please ask your Hazlett financial professional which purchasing method is best for you.
12b-1/Shareholder Service Fees
Annual 12b-1 fees, also known as trails, are paid by the fund and paid to us out of fund assets under a distribution and servicing arrangement to cover distribution expenses and sometimes shareholder service expenses that we may provide on the fund’s behalf. Shareholder servicing fees are paid to respond to investor inquiries and provide investors with information about their investments. These fees are asset-based fees charged by the fund family. These fees range from 0.00% to 1.00%. These fees may be passed on to us and your financial professional as a service fee.
Front-end Sales Charge Fees/Contingent Deferred Sales Charges (CDSC)
Front-end sales charge fees may be charged and paid to us, including your financial professional, when you purchase a fund. The front-end sales charge is deducted from the initial investment on certain share classes. This charge normally ranges from 0.00% to 5.75%. Some purchases may qualify for a reduced front-end sales charge due to breakpoint discounts based on the amount of transaction and rights of accumulation. In addition, some purchases may qualify for a sales charge waiver based on the type of account, and/or certain qualifications within the account. You should contact your Hazlett financial professional to discuss your eligibility for sales charge waivers. CDSC is a charge you pay upon withdrawal of money from a fund prior to the end of the fund’s CDSC period. CDSC charges can range from 0.00% to 5.50%. CDSC periods can range from zero to seven years. This charge typically exists only on share classes that do not have a front-end sales charge. It is sometimes referred to as the back-end load. CDSCs are not charged when you purchase a fund. The fee charged will depend on the share class purchased by the investor. A CDSC is not passed on to your financial professional. You can find a description of the amount and payment frequency of all fees and expenses charged and paid by the fund in the fund’s prospectus. Fees and expenses disclosed in the fund’s prospectus are charged against the investment values of the fund.
Annuities
Annuities consist of fixed, index, and variable annuities. Under arrangements with insurance companies, we, including your financial professional, receive direct compensation in the form of commissions from the insurance companies for the sale of annuities, as well as indirect compensation in the form of trail commissions. Commissions and trails paid to us vary by product type and may vary by insurance carrier.
For additional information regarding Annuities, please reference the annuity prospectus.
Alternative Investments Information
From time to time, Hazlett may offer alternative investments. If you are interested in such products and the costs and fees thereby associated, please contact your Hazlett financial professional. For more information about such products, please consult the offering memorandum.
Unit Investment Trusts (UITs)
UITs consist of Equity and Fixed-Income UITs. We, along with your financial professionals, are compensated in ways that vary depending on the type and terms of the UIT portfolio selected. The types of fees received by us are described below and are disclosed via the prospectus issued by the UIT provider. Your financial professional can provide you a copy of the most recent prospectus. The UIT provider deducts fees as compensation from the proceeds available for investments for marketing and distribution expenses, which may include compensating us as described in each UIT prospectus.
Training and Education
We work closely with a variety of product and service providers who provide training and education compensation to offset or reimburse us for costs incurred in conducting comprehensive training and educational meetings for our financial professionals. These meetings or events are held to educate financial professionals on product characteristics, business building ideas, successful sales techniques, suitability as well as various other topics. In addition, certain vendors provide free or discounted research or other vendor products and services, which can assist our financial professionals with providing services. Additionally, financial professionals may receive promotional items, meals or entertainment or other de-minimis compensation from product providers. Training and education compensation are not related to individual transactions or assets held in client accounts; however, these educational meetings may lead to professional relationships that could lead to sales of that particular company’s products.
Compensation for Termination of Services
Other than any contingent deferred sales charge for a fund (as described under the Mutual Funds section above, if applicable), IRA termination fees (when applicable), and account transfer fees, the firm would not receive any additional compensation in connection with the termination of its brokerage services. If you have questions or need additional information, please contact your Hazlett financial professional.
Conflicts of interest may exist when we provide brokerage services to you. A conflict of interest is a situation in which we engage in a transaction or activity where our interest is materially adverse to your interest. The mere presence of a conflict of interest does not imply that harm to your interests will occur, but it is important that we acknowledge the presence of conflicts. Moreover, our regulatory obligations require that we establish, maintain, and enforce written policies and procedures reasonably designed to address conflicts of interest associated with our recommendations to you. Our conflicts of interest are typically the result of compensation structures and other financial arrangements between us, our financial professionals, our clients and third parties. We offer a broad range of investment services and products and we receive various forms of compensation from our clients, affiliated and non-affiliated providers and money managers, and other third parties as described above. Securities rules allow for us, our financial professionals, and our affiliates to earn compensation when we provide brokerage services to you. However, the compensation that we and our financial professionals receive from you varies based upon the product or service you purchase, which may create a financial incentive to recommend investment products and services that generate greater compensation to us. We are committed to taking appropriate steps to identify, mitigate and avoid conflicts of interest to ensure we act in your best interest when providing brokerage recommendations to you. Below you will find additional information related to our conflicts of interest. This information is not intended to be an all-inclusive list of our conflicts, but generally describes those conflicts that are material to your brokerage relationship. In addition to this disclosure, conflicts of interest are disclosed to you in your account agreement(s) and disclosure documents, our product guides and other information we make available to you.
Compensation We Receive From Clients
• Transaction-based conflicts – In your brokerage account you pay certain fees (commissions and sales charges) in connection with the buying and selling of each investment product, including mutual funds, variable annuities, alternative investments, exchange traded funds, equity securities, and bonds. Where these fees apply, the more transactions you enter into, the more compensation that we and your financial professional receive. This compensation creates an incentive for us to recommend that you buy and sell, rather than hold, these investments. We also have an incentive to recommend that you purchase investment products that carry higher fees, instead of products that carry lower fees or no fees at all.
• Markups and markdowns for principal transactions – When you buy or sell securities in a brokerage account, and in accordance with industry regulations, we may charge a markup (increase) or markdown (decrease) in the price of transactions we execute on a principal basis. We are compensated based upon the difference (markup) between the price you pay for securities purchased from us and the price we sell such securities to you over the prevailing market price, or the difference (markdown) between the price you sell securities to us and the price we purchase such securities from you over the prevailing market price. We maintain policies and procedures reasonably designed to help ensure compliance with the markup and markdown industry rules.
• Account maintenance and other administrative fees – For the services we provide or make available to you with respect to your brokerage account, we charge certain account maintenance and other administrative fees, including transfer, wire, or other miscellaneous fees, as described in the fee schedule we’ve provided to you. The more fees we charge, the more we are compensated.
Compensation We Receive from Third Parties
Third-party payments we receive may be based on new sales of investment products, creating an incentive for us to recommend you buy and sell, rather than hold, investments. In other cases, these payments are made on an ongoing basis as a percentage of invested assets, creating an incentive for us to recommend that you buy and hold investments. The total amount of payments we receive varies from product to product and varies with respect to the third-party investment management products we recommend. It also varies from the compensation we receive in connection with other products and services we may make available to you. We have an incentive to recommend investment products and services that generate greater payments to us. This compensation generally represents an expense embedded in the investment products and services that is borne by investors, even where it is not paid by the Product Sponsor and not directly from the investment product or other fees you pay.
• Trail Compensation – Ongoing compensation from Product Sponsors may be received by us and shared with our financial professionals. This compensation (commonly known as trails, service fees or Rule 12b-1 fees in the case of mutual funds) is typically paid from the assets of the investment product under a distribution or servicing arrangement and is calculated as an annual percentage of invested assets. The amount of this compensation varies from product to product. We have an incentive to recommend that you purchase and hold interests in products that pay us higher trails.
• Additional Compensation from Product Sponsors and Other Third Parties – We and our financial professionals, associates, employees, and agents receive additional compensation from Product Sponsors and other third parties including:
◦ Financial professionals may receive promotional items, meals, entertainment, and other noncash compensation from product providers up to $100 per year.
◦ Payment or reimbursement for the costs associated with education or training events that are attended by our employees, agents, and financial professionals, and for conferences and events that we sponsor.
Note: The amount of these payments is not dependent or related to the level of assets you or any other of our clients invest in or with our Product Sponsors.
• Product Share Classes – Some Product Sponsors offer multiple structures of the same product (e.g., mutual fund share classes) with each option having a unique expense structure, and some having lower costs to you as compared to others. We have an incentivize to make available those share classes or other product structures that could generate higher compensation to us.
Compensation Received by Financial Professionals
Financial professionals are compensated in a variety of ways based on revenue generated from the sale of products and services, as well as total assets under advisement. In addition to upfront-transaction based compensation, some products feature on-going residual or “trail” payments. In this regard, financial professionals are incentivized to recommend products that have higher fees as well as those with on- going payments. Typically, a financial professional’s payout schedule (periodically adjusted by us at our discretion) increases with production and asset levels. As a result, financial professionals have an incentive to provide brokerage recommendations that result in selling more investment products and services. Financial professionals also have an incentive to provide brokerage recommendations, to gather more assets under management, and to increase brokerage trading activity. Financial professionals have an incentive to recommend you rollover assets from a Qualified Retirement Plan (QRP) to a brokerage Individual Retirement Account (IRA) because of the compensation they will receive. We maintain policies and procedures designed to ensure that such recommendations are in your best interest. Brokerage accounts, unlike advisory accounts, do not feature an on-going fee based on assets under management. In those instances where your brokerage account has minimal activity and generates few commissions, financial professionals may be incentivized to recommend you transition your brokerage account to an advisory account to generate on-going revenue. Further, financial professionals may be incentivized to recommend that you transition your brokerage account to an advisory account after you have already placed purchases resulting in commissions and/or other transaction-based brokerage fees. Additionally, where an advisory account has a high level of trades, a financial professional may be incentivized to recommend the account convert to a brokerage relationship to generate commissions. We have controls established to identify and mitigate these risks. A Financial advisory relationship generally provides a higher level of regular and ongoing service than the level of service and relationship monitoring provided in a brokerage relationship; however, an ongoing fee is required to obtain financial advisory services. Financial professionals may have an incentive to provide higher levels of service to those clients who generate the most fees. Recruitment compensation is provided to financial professionals who join our firm from another financial firm. This compensation, which may vary by financial professional, often includes either an upfront or backend award based upon new client assets brought to our firm and/or revenue generated from such client assets. This creates an incentive for the financial professional to recommend the transfer of assets to Hazlett, including brokerage assets, in order to earn this compensation. Financial professionals are also compensated in the form of education meetings and recognition trips. Financial professionals conduct such meetings and trips to obtain education about the products offered for sale, to conduct due diligence on the issuer offering the product, and to build relationships with the product issuer. Portions of these programs may be subsidized by external vendors and affiliates, such as mutual fund companies, insurance carriers, or money managers. Consequently, product providers that sponsor and/or participate in education meetings and recognition trips gain opportunities to build relations with financial professionals, which could lead to sales of such product provider’s products. Financial professionals also receive promotional items, meals, entertainment, and other noncash compensation from product providers up to $100 per year.
Other Financial Professional Activities
Financial professionals may be motivated to place trades ahead of clients in order to receive more favorable prices than their clients. Financial professionals who are transitioning through a succession plan may be motivated to make brokerage recommendations designed to increase the value of their book of business through asset accumulation or brokerage trades that are not in your best interests. Financial professionals who receive clients from a retiring financial professional are incentivized to retain client assets and expand the book of business.
Standard Calculation for all stocks, rights, and warrants:
Minimum commission is $50.00 per trade.
Options Trading Under $1.00
Option Price
IRA Fees (Traditional, Roth, SEP, Simple)
Regulation BI Disclosures
adv-part-2a-wrap-program-4-25-2022.pdf
Form ADV-Part 2A (WRAP Program)
adv-part-2a-mas-program-05-2022.pdf
Form ADV-Part 2A (MAS Program)
brokerage-account-customer-agreement-dtd-0622.pdf
Brokerage Account Customer Agreement
