You can find a detailed inventory of Avantax disclosures and forms located in the Avantax Disclosure Catalog (ADC).
Investors can find additional helpful information and resources on the following websites (links will take you to an external website unaffiliated with Avantax Wealth Management®):
U.S. Securities Exchange Commission
Online brokerage accounts: What you can do to safeguard your money and your personal information
Investor bulletin: Ten things you should know about investing
Financial Industry Regulatory Authority (FINRA)
Securities Investor Protection Corporation (SIPC)
Mutual funds are a popular way to invest in securities. Because mutual funds can offer built-in diversification and professional management, they offer certain advantages over purchasing individual stocks and bonds. But, like investing in any security, investing in a mutual fund involves certain risks, including the possibility that you may lose money.
Technically known as an “open-end company,” a mutual fund is an investment company that pools money from many investors and invests it based on specific investment goals. The mutual fund raises money by selling its own shares to investors. The money is used to purchase a portfolio of stocks, bonds, short-term money-market instruments, other securities or assets, or some combination of these investments. Each share represents an ownership slice of the fund and gives the investor a proportional right, based on the number of shares he or she owns, to income and capital gains that the fund generates from its investments.
The particular investments a fund makes are determined by its objectives and, in the case of an actively managed fund, by the investment style and skill of the fund’s professional manager or managers. The holdings of the mutual fund are known as its underlying investments, and the performance of those investments, minus fund fees, determine the fund’s investment return.
You can find all of the details about a mutual fund — including its investment strategy, risk profile, performance history, management and fees — in a document called the prospectus. You should always read the prospectus before investing in a fund.
Avantax Investment ServicesSM (“Avantax”) registered representatives have access to thousands of mutual funds offered through a variety of investment companies. We believe that it is important that our registered representatives evaluate these funds in order to assist investors in selecting those that best meet their needs.
Some of the mutual funds we sell participate in activities that are designed to help facilitate the distribution of investment company products. These marketing activities and educational programs provided by these investment companies include, but are not limited to, attendance by fund representatives at our conferences, cash and non-cash marketing assistance paid to our Financial Professionals, and training and education presentations provided to our Financial Professionals about the fund’s products and services. In return for assistance in facilitating the activities described above, we receive additional compensation, commonly referred to as “revenue sharing,” from these fund companies, which are part of what we call our Premier Partner Program. These revenue sharing payments are in addition to the commissions and distribution fees (known as 12b-1 fees), and other fees and expenses paid to us and your Financial Professional, as disclosed in the respective fund’s prospectus. It is important to note, however, that these revenue sharing payments are paid out of the mutual fund company’s or fund affiliate’s own assets — not from the mutual fund’s assets themselves — and, therefore, would not appear as items in a fund’s expense table. No portion of these revenue sharing payments to us is made by means of brokerage commissions generated by the fund.
In addition to the customary sales charges in connection with sales of mutual funds, Premier Partners make payments to Avantax Wealth ManagementSM to participate in the program. First, Avantax receives a payment based on an investor’s total purchase amount of a mutual fund through an Avantax registered representative (the “Gross Sales Payment”). Second, for as long as the investor holds that fund or another fund within the same fund family into which he or she has exchanged, Avantax will receive an additional payment, paid quarterly, per year of the amount held (the “Assets Under Management Payment”). Third, Avantax Wealth ManagementSM receives flat amount payments (the “Flat Amount Payment”). These payments are made by the mutual fund’s distributor, investment advisor or other related entity. The participants in the Premier Partner Program and/or their affiliates make aggregate payments based on the formula set forth above.
Registered representatives of Avantax do not receive additional selling compensation in connection with sales of mutual funds offered by our Premier Partners, as opposed to other mutual fund families.
Exchange Traded Funds (ETFs) have become an increasingly popular method for passive investing in the markets, as opposed to the active management style most often associated with mutual funds. The general structure of an ETF is comprised of a basket of equities or bonds that seeks to mirror an index, such as the S&P 500 or the Bloomberg Barclays U.S. Aggregate Bond. Since it is not possible to invest directly in an index, ETFs were created as an alternative means for investors to purchase the underlying basket of equities or bonds that comprise a specific index without having to buy each stock or bond individually. ETFs trade on an exchange just like a stock and can be purchased and sold at any time in which the market is open, unlike a mutual fund, which can only be bought or sold at the end of a trading day based on the underlying value of the fund’s net asset value. A variety of ETFs are offered through Financial Professionals of Avantax Wealth Management Services® on either a commission basis or as part of our Investment Management Solutions (IMS) advisory platform. Investment Management Solutions are offered through Avantax Advisory ServicesSM and the registered investment advisor (RIA), Avantax Planning PartnersSM.
The sponsor or manager of an ETF typically charges a lower expense ratio than that of a mutual fund for the ongoing management of the fund since the administrative burden of an ETF is passively limited to buying and selling positions as the composition of the index changes. This is in direct opposition to a mutual fund where the manager actively trades positions in an attempt to outperform the market. ETFs allow investors to diversify their portfolios in a cost-effective manner, but like all investments, neither asset allocation nor diversification assures a profit or protects against a loss in declining markets. For more information about the specific index that an ETF tracks and the methodology used to construct the fund, please consult the prospectus offered by the ETF prior to purchasing.
The Avantax affiliated tax-centric CPA firms that offer wealth management have access to a broad variety of complex and sophisticated investment vehicles, including alternative investments. These types of investment vehicles provide qualified investors with exposure to markets and strategies that cannot be accessed through traditional fixed income and equity markets.
Separately managed accounts
Real estate investment trusts (REITs)
Other direct participation programs (DPPs)
Please note that there are special risks associated with investing in limited partnerships, business development companies and REITs. For this reason, there are minimum suitability standards that must be met. Investors should read the prospectus carefully before investing.
Hedge funds are speculative investments and are not suitable for all investors. The funds are only open to qualified investors who are comfortable with the substantial risks associated with investing in hedge funds. Structured products are not guaranteed investments, and the nature of construction is complex and involves risks. You need to speak with your financial professional prior to purchasing any investment products.
An annuity is a contract between you and an insurance company in which the company promises to make periodic payments to you, starting immediately or at some future time. You buy an annuity either with a single payment or a series of payments called premiums.
Some annuity contracts provide a way to save for retirement. Others can turn your savings into a stream of retirement income. Still others do both. If you use an annuity as a savings vehicle and the insurance company delays your pay-out to the future, you have a deferred annuity. If you use the annuity to create a source of retirement income and your payments start right away, you have an immediate annuity.
As its name implies, a variable annuity’s rate of return changes with the stock, bond and money market funds that you choose as investment options. Variable annuities are sometimes compared to mutual funds because they offer similar investment features, including investment choices—called “separate accounts”—that resemble mutual funds. However, they are different products.
While a variable annuity has the benefit of tax-deferred growth, its annual expenses are likely to be much higher than the expenses on a typical mutual fund. And, unlike a fixed annuity, variable annuities do not provide any guarantee that you will earn a return on your investment. Instead, there is a risk that you could actually lose money.
Our registered representatives have access to insurance carriers that distribute products designed to meet any client need. Some of the variable annuities we sell participate in activities that are designed to help facilitate the distribution of annuity products. These marketing activities and educational programs provided by these insurance carriers include, but are not limited to, attendance by insurance representatives at our conferences, cash and non-cash marketing assistance paid to our financial professionals , and training and education presentations provided to our financial professionals about the insurance company’s products and services. In return for assistance in facilitating the activities described above, we receive additional compensation, commonly referred to as “revenue sharing,” from these insurance companies, which are part of what we call our Premier Partner Program.
In addition to the customary sales charges in connection with sales of variable annuities, Premier Partners make payments to Avantax Wealth Management® to participate in the program. Avantax receives a payment based on an investor’s total deposit into a variable contract (the “Gross Sales Payment”). In addition, Avantax receives flat amount payments (the “Flat Amount Payment”).
Avantax representatives do not receive greater or lesser commissions in connection with sales of variable annuities contracts by Premier Partners, as distinct from other annuity companies.
FINRA: Purchasing on Margin, Risks Involved with Trading in a Margin Account
FINRA: Understanding Margin Accounts, Why Brokers Do What They Do
SEC: Investment Advisers: What You Need to Know Before Choosing One