A Registered Investment Advisor, Member FINRA.
A Registered Investment Advisor, Member FINRA.

All posts by: aciwealth

Will US Economy Sink or Support the Stock Market?

 

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Will the Economy Sink or Support the Stock Market? Investment & Business Conditions Update

October 2015

There has been great concern recently among talking heads whether or not the Fed will raise rates and what the impact on the economy will be if they do. The fact is the US economy is trudging along and is likely to continue to do so whether or not the Fed raises rates incrementally over the next few quarters. The market’s concern, misplaced in my opinion, is that once the Fed starts hiking it won’t stop until rates are normalized. That isn’t going to happen. Any hikes will be small, and the path to normalcy will take several years. Our economy is okay, but it isn’t in a position to support a typical rate hike cycle and the Fed, despite fumbling the message repeatedly, knows it.

So, if we can discount the Fed (at least for now) what are we really seeing? The Recession Probability Indicator improved mildly from last month with a current reading of 12, indicating a stable investment climate and a mildly growing economy with no current risk of recession. That suggests that the economy, as it continues to grow, should ultimately support higher earnings which is a positive for the stock market.

The RPI runs on a 2 month delay due to the Fed’s data release schedule.

If you are new to the RPI, it’s tool to measure the strength of the American economy and the safety of the investing climate. It’s built on data from the Federal Reserve and has demonstrated itself to be historically effective.

CLICK HERE to learn more about the RPI and see an illustration of it’s potential impact on investing. Make sure you take time to scroll down to take a look at the updated tables. Prepare to be impressed.

For those interested, I’ve also included the most recent summary from the American Institute for Economic Research below.

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Warm Regards,

Dak Hartsock
Chief Market Strategist
ACI Wealth Advisors, LLC.
Process Portfolios, LLC.

Monthly Summary of October Business Conditions from the American Institute of Economic Research

…The Economy…

Unusual demographic shifts currently underway and slated to last for many more years may be affecting the overall economic growth rate as well as creating pockets of relative strength and weakness. One example is in housing, where multifamily construction has rebounded more robustly than single-family homebuilding following the housing boom and subsequent bust that helped usher in the Great Recession.

Our Leaders index improved slightly in the latest reading, while cyclical scores changed little. Taken together, the AIER data suggest that the risk of recession in the coming six to 12 months remains low.

…Inflation…

The Consumer Price Index slipped month-to-month for the first time since February 2015. This is consistent with last month’s report that inflationary pressure was easing. The latest AIER inflationary Pressures Scorecard points to further downward pressure on inflation for months to come. Only eight indicators out of 23 show rising inflationary pressure, compared with 12 last month. The easing resulted from a recent slowdown in consumer demand and fast growth in supply. A decline in energy prices was another important contributor.

…Policy…

The Fed kept interest rates unchanged at its September meeting, in line with market expectations. But the central bank’s projections continue to indicate that the first rate hike in more than nine years is likely to occur by the end of December. After holding rates near historic lows for so long, anticipation of the initial step toward normalization in monetary policy may actually stimulate borrowing in the short run as people try to get ahead of future increases.

Demographic change is slowing growth in the labor force and gains in educational attainment. The fastest way to reverse this—skill-based immigration—is unlikely to garner political support in Washington. Alternative but slower solutions include making it easier for American youth to continue their education beyond high school.

…Investing…

Yields on mortgage-backed securities are about in line with their historical relationship to U.S. Treasurys. An improving economy and healthier finances for borrowers would boost overall loan quality and help narrow yield spreads slightly. However, the prospect of Fed interest rate increases is likely to boost pressure on yields across the fixed-income spectrum.

Lumber futures prices have fallen more than other housing-market indicators would suggest.

A bubble in stock prices of U.S. homebuilders from 2000 through 2005 was worse than the better-known tech-stock bubble of the late 1990s. Following the bust in homebuilder shares and the Great Recession, homebuilder stocks since 2011 have slightly outperformed the broader market.

Global equity markets have struggled in recent months, reeling from a worldwide economic slowdown, the effects of potentially higher U.S. interest rates, a strong U.S. dollar, and ongoing military conflicts that have created arefugee crisis. For those with a high tolerance for risk, these times can create opportunity.

CLICK HERE for the full summary.

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Stock Market Ups and Downs. What’s Next? Stock Market Outlook


Stock Market Outlook September 24, 2015

We’ve seen a lot of volatility (up and down, mostly down) in the market recently and headlines have some investors worried. Are there good reasons to be concerned? Maybe, but what’s really happening under the stock market’s hood? Video below.

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Warm Regards,

Dak Hartsock
Chief Market Strategist
ACI Wealth Advisors, LLC
Process Portfolios, LLC

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Is the Potential Fed Rate Raise a Recession Risk? RPI & Business Conditions Update

 

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Is the Fed in Danger of Starting an Accidental Recession? RPI & Business Conditions Update
September 2015

There is a lot of debate about the lack of clarity in the Fed’s communication to market participants over the last several months, and markets generally do not like uncertainty. Some recent headlines are talking about an accidental recession. So, can premature rate raises spark recessions? A Fed rate raise in the 1930’s at about this same point in that recovery arguably provoked a 2nd stock market crash while putting the US into a recession it took a World War to lift us out of.

Institutional buyers are aware of these academic parallels even if the average investor is not.

But is that happening now? As readers of my posts know, I do not expect a rate raise tomorrow (9/17/2015). IF one does come, I expect it to be VERY dovish. But rather than wasting time trying to read the Fed’s tea leaves, let’s have a quick look at what the Recession Probability Indicator and current business conditions are telling us.

The most recent reading (June 2015) is STABLE with an RPI score of 17. (20 and below usually favorable, 20+ usually much less favorable). The RPI runs on about a 2 month delay due to the Fed’s data release schedule.

Quick reminder on the RPI — it’s a tool for measuring the strength of the American economy. It’s derived from data provided by the Federal Reserve and has demonstrated itself to be historically effective.

The RPI reading suggests that the economy can tolerate higher rates without slipping into recession, counter to what many headlines seem to suggest.

To learn more about the RPI and see an illustration of it at work CLICK HERE. Make sure you take the time to scroll down to the updated table if you haven’t seen it. You are in for an eye opener.

I’ve also included the most recent business conditions summary from the American Institute for Economic Research below. Their view largely coincides with mine on several issues including the view that the economy is doing okay with no recession on the horizon (as yet).

My opinion is that the Fed is going to raise very slowly over a multi-year period, with the end of that process around a 3{1b789970f5b587cdad7e2a0d5c032cbf2e438ab9022fea5c2ba3cf7af142fa35} rate several years from now. We’ll see if the future bears out that opinion.

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Warm Regards,

Dak Hartsock
Chief Market Strategist
ACI Wealth Advisors, LLC.
Process Portfolios, LLC.

Monthly Summary of September Business Conditions from the American Institute of Economic Research

…The Economy…
Headwinds from China’s slowing growth and a devalued yuan may curb the U.S. expansion, but the risk of a recession remains low. Our Leaders index remained solidly above 50 percent in the latest month, suggesting the probability of a domestic slump is still low.

…Inflation…
The CPI, compared with a year earlier, continued to advance for a second straight month in July, but future inflationary pressure has eased. In the latest AIER inflation scorecard, 12 indicators support rising inflationary pressure, compared with 17 in the last month’s report, and eight point to falling inflationary pressure, compared with just three last month. The pullback mainly came from a stronger U.S. dollar pushing down import prices and from improving business productivity. Going forward, should the Fed tighten credit by raising key interest rates, it would amplify downward pressures on prices.

…Policy…
Fed policy makers have long telegraphed their intention to raise short-term rates from near zero this year, but recent market turmoil may have raised fresh concerns about the timing of the first increase in almost a decade. The focus now turns to the mid-September meeting and whether the Fed will use the occasion to begin the normalization process and what policy makers might reveal about the central bank’s future plans.

The recent sharp fall in oil prices, driven both by China’s slowdown and rising U.S. crude output, is creating pressure to lift the long-standing U.S. crude export ban. Proponents say ending the policy would raise U.S. prices, stimulating investment, spurring domestic production, and cutting gasoline prices. In July, the U.S. Senate Energy Committee passed a bill to lift the export ban. Whether the measure will pass Congress and how the Obama administration may react if it does remains uncertain, but an end to the 40-year-old policy may be closer than ever.

…Investing…
Slowing growth in China coupled with a devalued yuan and improving U.S. consumer demand all suggest a widening trade gap with China. That, in turn, may lead China to buy more U.S. Treasury securities, helping to restrain gains in long-term yields just as Fed tightening approaches.

Commodities are still struggling with no short-term relief in sight. But over the medium term, better global growth and a stable dollar combined with the deep price declines that have already occurred suggest that there may be light for raw materials at the end of a long tunnel.

U.S. equities are still getting fundamental support from profit growth. Risks from rising labor costs and higher interest expense may threaten profit margins, but productivity may be the magic bullet that facilitates profit growth and higher wages that can, in turn, boost future spending.

Global equities have been volatile and U.S. investors gave mixed signals with their new investment dollars ahead of the worst declines in Chinese markets. New cash would help support markets, while additional withdrawals from global market mutual funds and ETFs would hurt. Fed tightening remains on the horizon as a potential new source of volatility, especially for emerging markets.

If you’d like to see the full summary just CLICK HERE.

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ACI Selected for 2015 Wealth & Money Management Awards

 

Wealth and Finance International, a print and online magazine dedicated to providing fund managers and institutional and private investors around the world with the latest industry news across both traditional and alternative investment sectors, has named ACI Wealth Advisors as an award winner for two categories in 2015.

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2015 Wealth & Money Management Awards
From Wealth & Finance International: From asset managers to private bankers, financial planners to family offices, the 2015 Wealth & Finance International Wealth & Money Management Awards are dedicated to uncovering and promoting the work and achievements of the very best the financial services community has to offer.

The awards are all about the individuals, firms and departments whose dedication and commitment in all aspects of the role have seen them achieve stellar results for their clients, whether assisting with managing their wealth, planning for the future of their business or their family or providing more general – but no less vital – advice.

The selection and judging process is rigorous and far reaching and we have welcomed nominations from and on behalf of firms throughout the world, from the smallest niche practices to the largest and most powerful global corporations. It is of great importance to us that, throughout every step of the awards process, we do everything we can to ensure that those who do go on to win one of these highly sought after prizes have been chosen purely on merit and based only upon the votes received, the further evidence supplied and our own in-depth in-house research.

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Stock Market Outlook August 2015 S&P 500 Loses 5% in 2 Days. What’s Happening?

 

Stock Market Outlook August 23, 2015

See the below 7 minute video for my current market outlook. I thought I’d release this a couple days early given the big selloff we saw in the market last week.

Summary: Good news–No evidence of an incipient Bear Market as yet.

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Warm Regards,

Dak Hartsock
Chief Market Strategist
ACI Wealth Advisors, LLC.
Process Portfolios, LLC.

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August RPI & Business Conditions Update – Is Investing Still a Good Idea?

 

A quick update on what the Recession Probability Indicator is telling us moving into the Fall.

The most recent reading (for May 2015) is STABLE with an RPI score of 12 (Below 20 generally favorable, above 20 not so much). The RPI runs on about a 2 month delay due to the Fed’s data release schedule.

To see an illustration of the RPI at work, CLICK HERE and scroll down to the table. If you haven’t seen it, take a look at the table. You will be amazed.

For those interested, I’ve also included an excerpt from the American Institute for Economic Research below which provides their view on the Economy, Inflation, Policy Issues, and Investing. Interesting and detailed perspective on where we are, which at this point largely coincides with my view.

You can find the full paper by CLICKING HERE.

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Warm Regards,

Dak Hartsock
Chief Market Strategist
ACI Wealth Advisors, LLC.
Process Portfolios
 

Monthly summary of August Business Conditions from the American Institute of Economic Research

…THE ECONOMY….

While the latest data confirmed our reading at the start of the year that economic
weakness was temporary, and despite accelerating growth in the second quarter, the
more complete and detailed information released last month show that the recovery
since 2012 has been slower than previously reported. Today’s GDP value is almost one
percentage point lower than earlier estimates led us to believe. This means the current
business-cycle expansion, whether measured by output or employment growth, has
been the slowest in U.S. postwar history.

…INFLATION…

Strong CPI growth in June underlined AIER’s analysis last month pointing to rising
inflationary pressures. The latest scorecard shows that 17 out of 23 indicators support
rising inflationary pressure, compared with 15 in our previous report, indicating a
higher likelihood of future price increases. Anticipated policy firming on interest rates
may moderate rising inflationary pressures.

…POLICY…
Fed policy makers did not provide any new signals on the timing of an increase in
short-term interest rates following their July meeting. and despite the weaknesses
highlighted in the revised report, the Fed continues to indicate that its policy remains
on track for a liftoff this year.

…INVESTING…
With still-modest growth and inflation, bond yields remain very low. However, a slowly
improving U.S. economy and declining unemployment may support the Fed’s first rate
hike in almost a decade. That, in turn, may pressure bond yields higher, but the question
of how high yields may rise remains open.

Weak global growth and a strong dollar have sent most commodity prices tumbling to
multi-year lows. Add to that a price war in crude oil and the decline in demand for gold
as a haven and the environment for commodities remains unfavorable.

Equities around the world have done reasonably well this year—valuations are rising in
many markets. Critical to continued price gains will be better economic growth helping
drive future earnings

If you’d like to read the full summary just CLICK HERE.

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Buffett Buying Out ACI’s Largest Holding

 

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 Buffett Buying Out ACI’s Largest Holding

Precision Castparts announced this morning that it has agreed to be acquired by Warren Buffett’s Berkshire Hathaway for $235 a share, subject to shareholder approval. ACI views this as a validation of the research process for ACI’s Durable Opportunities Portfolio.

Precision Castparts is the largest holding in the Durable Opportunities Portfolio. ACI began buying Precision Castparts in September 2014 and three additional add-on buys were made prior to June 2015. Each ACI buy was below the Berkshire offer price.

Mr. Buffet’s planned acquisition validates the ACI research process for Durable Opportunities and ACI’s view of Precision Castparts as a strong company with superior management and predictable growth prospects that will last for decades, providing investors with desirable long term rates of return.

ACI’s Durable Opportunities Portfolio focuses on buying companies that are going to be around for decades, at or below fair value, which feature ever growing equity for shareholders and target expected returns in the low double digit range – reasonable risk for reasonable return.

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Warm Regards,

Dak Hartsock
Chief Market Strategist
ACI Wealth Advisors, LLC
Process Portfolios

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Portfolios Update July 2015

 

July 2015 performance update on 3 of our Portfolios: Core Equity, Full Cycle, and Market Income. Market Income in particular continues to lead with year-to-date results about 50% higher than the S&P 500.

If you’d prefer not to view the video in entirety, you can scroll ahead to whatever segment you are most interested in.

Core Equity Portfolio: 1:01
Full Cycle Portfolio: 4:36
Market Income Portfolio: 6:48
Summary & Current Forecast: 8:49

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Kind Regards,

Dak Hartsock
Chief Market Strategist
ACI Wealth Advisors, LLC.
Process Portfolios

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Core Equity Portfolio Update June 2015

 
 

Here is the most recent update on the Core Equity Portfolio. Core Equity is ACI’s largest portfolio by assets and usually accounts for 40{1b789970f5b587cdad7e2a0d5c032cbf2e438ab9022fea5c2ba3cf7af142fa35} – 70{1b789970f5b587cdad7e2a0d5c032cbf2e438ab9022fea5c2ba3cf7af142fa35} of any given client account.
 

Kindest Regards,

Dak Hartsock
Chief Market Strategist
ACI Wealth Advisors,LLC
Process Portfolios

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Economy Showing Signs of Wear? Recession Probability Update April 2015

 

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RPI Score Moves to 27 from 12
One of the major components of the RPI has recorded it’s 3rd negative month in a row. This has occurred three times in the last 15 years. Two of those occasions marked the beginning of market declines that ultimately became crashes.

The move above 20 creates a “Reduce Risk” signal for money Process Portfolios manages on behalf of clients.

Our perspective is that this component will flip positive next month and that the other components of the RPI will not confirm the warning, sending the RPI back below 20.

The RPI is a tool for measuring the strength of the American economy. It is derived from data provided by the Federal Reserve – things like CPI, GDP, productivity, employment, manufacturing activity, retail sales, etc.

Using a simple algorythm, the RPI scores the investment environment from 3 to 75. A score of 20 or above signals a rising likelihood of recession (usually bad for stocks). A move back below 20 after a recession signals a rising likelihood of favorable investment conditions. Most of the time it putters along between 3 and 17.

For a more detailed description of the RPI, take a look at the Recession Probability Indicator page.

Disclosure: Please see Privacy Policy and Disclosure at the bottom of the page to review the terms and conditions of using this site.

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Investment Management

For ACI, investment management begins with understanding and actively managing risk for our clients and partners.  We do this through smarter investments built on low cost, highly liquid and diversified investments rather than expensive financial products. CLICK HERE to learn more.

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RETIREMENT INCOME PLANNING

Understanding the needs of investors seeking stable results for portfolios greater than $500,000 is a core strength of ACI.  One of the most important things we do is help your investments to create stable income while generating sufficient growth to meet your future demands and the needs of those you care for. 

ACI uses customized planning software to create retirement income plans to meet the specific needs of each of clients while providing confidence, flexibility, and cost efficiency.

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FINANCIAL PLANNING

Success in any endeavor comes from hard work, vision, and planning. We can help you create a more confident future by working with you, your CPA, your tax and estate counsel to make sure that when the tomorrow becomes today, you are where you want to be.

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Market Income

This portfolio invests in a basket of highly liquid Index or Sector securities and sells off atypical returns in exchange for a premium on a rolling basis. That’s a fancy way of saying we take the bird in hand and let someone else have the two in the bush.  We buy sectors that are undervalued relative to the rest of the market or vs. their historical value ranges which reduces downside risk vs. the broad market.  Typically out-performs in bear markets, neutral markets and mild bull markets while under-performing strong bull markets.

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Core Equity

Invests in diversified components of the financial markets and broad economy by targeting sectors which demonstrate the greatest potential for a consistent range of multi-year returns, while seeking a risk adjusted investment profile equal to or lower than the broad markets.  Our research tells us which sectors demonstrate the greatest potential for consistent multi-year returns while offering risk efficiency comparable or greater than the broad markets.  We invest on an “Outcome Oriented” basis – meaning we believe we have a good idea what the returns over time will be at a given purchase price.

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Durable Opportunities

This portfolio invests in companies possessing a Durable Competitive Advantage.  Such companies are likely to be around for decades, easing the concern of principal return.  DCA companies often suffer less in bear markets and usually lead recoveries.  These investments may allow ACI to build portfolios with minimum expected returns that may be in the mid-single digit range over any 3-5 year period which can provide long term stability partnered with long term growth in equity.

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Full Cycle

This portfolio is derived from the ground breaking work in ‘risk parity’ by Ray Dalio, arguably one of the top 10 money managers in history and founder of Bridgewater Associates.  The Full Cycle portfolio is built on the allocation models Ray designed to provide the highest potential risk adjusted returns possible through all phases of the economic cycle.  Bridgewater’s “All Weather” fund was designed for pension funds and other large institutional investors that needed to earn stable returns with stable risk, and has been closed to new investors for years.  At the time the fund closed, the All Weather Portfolio had a minimum required investment of $100 million.

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Equity Builder

This is a risk management overlay which helps build and protect accounts by collecting small premiums against held positions on an opportunistic basis during correcting markets.  EQB seeks to collect an extra 2% – 5% per year against the cost of underlying investments.  While primarily targeted at increasing account equity, EQB gives an extra layer of protection to capital during periods of higher volatility.

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Fixed Income

Diversified, broad exposure to fixed income ETFs and best of breed no load funds including core fixed income components such as Government, Corporate or MBS, municipals, and unconstrained “Go Anywhere” funds.

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ACI Investment Team

 

Dak Hartsock; Investment manager with over 15 years of experience with securities & securities options. Dak has worked full time in the financial markets since 2007. He has more than a decade of operating experience as a business owner & developer, with substantially all personal net worth invested in ACI. He is a graduate of the University of Virginia.

Robert Hartsock; MBA. Bob has over 30 years of senior management experience in diverse markets, products and businesses. He brings an exceptional record that includes management roles in two Fortune 500 companies and leadership of 7,500+ employees. Bob’s career features a specialization in identifying and fixing management and operational problems for multiple companies including leading over a dozen acquisitions, private placements and a public offering. He is uniquely positioned to provide ACI with highly relevant C-Level management perspective. Bob provides operational & macro perspective on investments ACI undertakes for client portfolios. Bob holds degrees from University of Illinois and University of Washington.

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Privacy Policy & Disclosures

 

Email info@aciwealth.com, call 888-407-4472, fax 888-407-0161 or write to ACI Wealth Advisors 999 Vanderbilt Beach Road, Suite 200 Naples, FL 34018 to receive a complete copy of our privacy policy and disclosures.

ACI HAS A STRINGENT PRIVACY POLICY.

Our Commitment to You

ACI does not share your email address or contact information with third party marketers under any circumstances, except as required by law.

ACI protects the security and confidentiality of the personal information we have and make efforts to ensure that such information is used for proper business purposes in connection with the management or servicing of your account. Our relationship with our clients and partners are our most important assets. We understand that you have entrusted us with your private information, and we do everything we can to maintain that trust. This is not a contract, rather it is a statement of our intent.

ACI works to provide access to products and services that benefit our customers. We may share non-public personal information with non-affiliated third parties (such as brokers and custodians) as necessary for us to provide agreed services and products to you consistent with applicable law. We may also disclose non-public personal information to other financial institutions with whom we have joint business arrangements for proper business purposes in connection with the management or servicing of your account, as approved by you. In addition, your non-public personal information may also be disclosed to you, persons we believe to be your authorized agent or representative, regulators in order to satisfy ACI’s regulatory obligations, and as otherwise required or permitted by law. Lastly, we may disclose your non-public personal information to companies which help administrate our business. Companies we hire to provide services of this kind are not allowed to use your personal information for their own purposes and are contractually obligated to maintain strict confidentiality. We limit their use of your personal information to the performance of the specific service associated with servicing your account. To repeat, we do not sell your non-public personal information to anyone.

This web site is intended to provide general information about ACI Wealth Advisors (“ACI”). It is not intended to offer personalized investment advice, nor a solicitation to buy or sell securities. Information regarding investment products, strategies, and services is provided solely for educational and informational purposes to enable visitors to learn about our investment philosophy and strategies, and to be able to contact us for further information. Other information provided on the site, including updates on the Recession Probability Indicator (“RPI”) are presented for educational purposes and are not recommendations to buy or sell securities or solicitation for investment services. ACI does not provide personalized investment advice over the internet, nor should any information or materials presented here be construed as personalized investment or financial advice to any viewer. ACI is not a tax advisor and investors should obtain independent tax advice regarding investments.

ACI Wealth Advisors, LLC (“ACI”) is a Registered Investment Advisor (“RIA”), registered in the State of Florida and the State of California. ACI provides asset management and related services for clients in states where it is registered, or where it is exempt from registration through statute, exception, or exclusion from registration requirements. ACI will file and maintain all applicable licenses as required by the state securities boards and/or the Securities and Exchange Commission (“SEC”), as applicable. ACI renders individualized responses to persons in a particular state only after complying with the state’s regulatory requirements, or pursuant to an applicable state exemption or exclusion.

Market data, articles, blogs and other content on this web site are based on generally-available information and are believed to be reliable. ACI does not guarantee the accuracy of the information contained in this web site, nor is ACI under any obligation to update any information on the site. Information presented may not be current. Any information presented on this site should not be construed as investment advice or a solicitation to buy and sell securities under any circumstances.

ACI will provide all prospective clients with a copy of our current FORM ADV, PART II (“BROCHURE”) prior to commencing an Advisory relationship. Existing clients receive a copy on an annual basis. If you have any questions regarding Compliance and Regulatory information, or would like to receive a copy of Form Adv, Part II, please email info@aciwealth.com or call 888.407.4472.

Past performance is no guarantee of future results. Investing involves risk, including reduction or loss of principal. Returns and principal value will move up and down and investments can be worth more or less than original cost when sold. Nothing on this site should be construed as a guarantee of future performance.

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Model & Performance Disclosures

Disclosures Regarding Investment Performance Reporting in compliance with Rule 206(4)-1(a)(5). Market Income Portfolio 1. The performance of the broad market over the same time periods is included for both model and live portfolio to help investors understand market conditions present during the period examined by the model and during live investment. 2. Listed Index models and graphs do NOT include transaction, fund or Advisor Management fees as the index model is not available for investment. Live portfolio results include all fees, including Advisor Management fees. 3. Model results do NOT reflect reinvestment of dividends or other earnings. Actual results reflect limited reinvestment of dividends and other earnings, but do not reflect the impact of any applicable taxes which vary by investor and account type (deferred account vs. taxable, etc.). 4. Investing involves risk, including risk of loss and/or principle. While the Index model has historically shown reasonable performance versus the S&P 500 on a risk adjusted basis, there is no guarantee that will continue into the future. Market Income is designed to provide reasonable returns for less risk than the broad market on a risk adjusted basis, and while the firm believes model portfolios are capable of continued outperformance on this basis, there is no guarantee they will do so. Comparisons with the S&P 500 are included to help the average investor understand how an investment in Market Income may differ from investment in an index fund such as an S&P 500 index fund. 5. The model for Market Income is the Chicago Board of Exchange S&P 500 Buy/Write Index or “BXM.” BXM has historically displayed less volatility than the S&P 500 and Market Income. BXM cannot be directly invested in. Market Income does not exactly follow the BXM index model – the mechanics of closing and opening positions differ – BXM opens, closes or rolls positions on the same day every month regardless of the profit or loss in a position – Market Income generally, but not always, waits until after expiration before transacting. Market Income will also close or roll ahead of expiration if the position has a high percentage of profit present in order to capture that gain. Options are generally sold again within a week of the closure of the prior position, but not always, and often new position may be opened the same day the prior position is closed. Benchmark and index comparisons are made on a best available basis – meaning that both the index model and live performance are believed to be compared with market and the closest possible benchmark for simplicity of comparison. However, there is no guarantee future volatility will be either less than, equal to, or greater than the volatility experienced in the model or the S&P 500 although the firm invests with an eye on reduced volatility vs. the S&P 500. 6. The model portfolio (BXM) utilizes the S&P 500 as its basis. Market Income differs from BXM in that the underlying securities are primarily selected on the basis of “relative” value. This simply means that sectors are compared with one another and Market Income generally invests in the sector or sector(s) trading at the greatest discount or the smallest premium relative to its historical average valuation. Other factors are also considered including sector earnings growth and expected return versus other available sector instruments. Advisor believes this gives Market Income a higher margin of safety than repeatedly investing in the S&P 500 on a rolling basis without regard to value or prevailing economic conditions, while preserving liquidity. 7. The BXM model on which Market Income is based is a non-traded index. As such, results do not represent actual trading or investment and do not reflect any impact that material economic or market factors may have had on the advisors decision making if advisor had been managing live money during the period the model covers, including transaction, fund, or management fees. 8. Market Income also differs from the BXM model in that Market Income seeks to reduce investment during recessionary economic periods while BXM stays invested regardless of economic or market conditions. Advisor believes this will better protect capital vs. BXM model but is materially different than staying invested in all market conditions. This action may cause Market Income to have reduced participation in markets that continue to move up despite Advisors reduction in investment. 9. Advisor clients have experienced results that exceed the performance of the model to date. There is no guarantee Market Income will continue to outperform BXM in the future regardless of Advisor efforts to do so. Core Equity Portfolio 1. The performance of the broad market over the same time periods is included for both model and live portfolio to help investors understand market conditions present during the period examined by the model and during live investment. 2. Model is a historical back test and includes brokerage and fund fees but does NOT include Advisor Management fees which vary by account size, but in general reduce annual performance by approximately 1.5%. Live portfolio results include all fees, including Advisor Management fees. Historical back-test means the model portfolio has been tracked on a backwards looking basis prior to the beginning of live investments in order to establish historical risks and results for investment in this portfolio. Back testing has certain inherent limitations as detailed in item #7 below. 3. Model results reflect regular investment of dividends or other earnings. Actual results reflect limited reinvestment of dividends and other earnings. 4. Investing involves risk, including risk of loss and/or principle. While the back tested Core Equity model has historically shown desirable performance versus the S&P 500 on a risk adjusted basis, there is no guarantee that will continue into the future. Core Equity is designed to provide reasonable returns for the same or less risk than the broad market on a risk adjusted basis, and while the firm believes model portfolios are capable of continued outperformance on this basis, there is no guarantee they will do so. Comparisons with the S&P 500 are included to help the average investor understand how an investment in Core Equity may differ from investment in an index fund such as an S&P 500 index fund. 5. The model for Core Equity is built of highly diversified, highly liquid sector and index securities, most frequently low cost ETFs. Core Equity live portfolios do not exactly follow the Core Equity model – variances in investor contributions, withdrawals, and risk tolerances result in measurable drift from the model. Over time, client accounts come closer in line with the Core Equity model. Core Equity live portfolios may differ from the Core Equity model in an additional material way; when valuations on certain sectors become overly stretched versus their historical average valuations, the Advisor may reduce exposure to those sectors in favor of a sector position which is priced in a more reasonable range in comparison to it’s typical historical valuation. Periodically, Core Equity may allocate a small but measurable percent of assets (up to 5%) in volatility linked instruments in an effort to better manage the portfolio. These factors may result in greater or less than model performance over time. Benchmark and index comparisons are made on a best available basis – meaning that both the index model and live performance are compared with market and other benchmarks the Advisors believe to be suitable for simplicity of comparison. However, there is no guarantee future volatility or performance will be either less than, equal to, or greater than the volatility or performance experienced in the model or the S&P 500 although the firm invests with an eye on reduced volatility vs. the S&P 500. 6. Core Equity invests in diversified components of the financial markets and broad economy by targeting sectors or indices which demonstrate potential for a consistent range of multi-year returns, while seeking a risk adjusted investment profile equal to or lower than the broad markets. These sectors contain a range of equity stocks with an equally broad range of characteristics – some sectors are present in the Core Equity portfolio due to their historically defensive nature, some are present due to their historical growth characteristics, some are a blend of the spectrum between. The intent is to provide a balanced equity portfolio suitable for most investors as an S&P 500 index fund replacement but which seeks lower risk while experiencing, on average, a greater return than an S&P 500 index investment. 7. The Core Equity model results do not represent actual trading or investment and do not reflect any impact that material economic or market factors may have had on the advisors decision making if advisor had been managing live money during the period the model covers, including transaction, fund, or management fees as detailed above in item #2. 8. Core Equity live portfolios also differ from the Core Equity model in that Core Equity seeks to reduce investment during recessionary economic periods while the Core Equity historical model stays invested regardless of economic or market conditions. Advisor believes this will better protect capital vs. model but is materially different than staying invested in all market conditions. This action may cause Core Equity live portfolios to have reduced participation in markets that continue to move up despite Advisors reduction in investment. 9. Advisor clients have experienced results that slightly lag the performance of the model to date. This lag is due to a number of factors, primarily the fact that different clients allocate different dollar amounts to Core Equity at different times. In general, the longer a client has been fully allocated to the Core Equity portfolio, the closer it is to model performance. The benchmark for Core Equity (The S&P 500) has historically displayed greater volatility (risk) than the Core Equity model or live Core Equity portfolios. This may or may not be the case in the future. Market Momentum Portfolio 1. The performance of the broad market over the same time periods is included to help investors understand market conditions present during the period covered by live investment. 2. Listed comparison Index graphs and statistics do NOT include transaction, fund or Advisor Management fees. Live portfolio results include all fees, including Advisor Management fees. 3. Actual results reflect limited reinvestment of dividends and other earnings, but do not reflect the impact of any applicable taxes which vary by investor and account type (deferred account vs. taxable, etc.). 4. Investing involves risk, including risk of loss and/or principle. While the closest benchmark for Market Momentum has historically shown reasonable performance versus the S&P 500 on a risk adjusted basis, there is no guarantee that Market Momentum that will continue such performance into the future. Market Momentum is designed to provide reasonable returns for less risk than the broad market on a risk adjusted basis, and while the firm believes the portfolio is capable of outperformance on this basis, there is no guarantee it will do so. Comparisons with the S&P 500 are included to help the average investor understand how an investment in Market Momentum may differ from investment in an index fund such as an S&P 500 index fund. 5. The closest benchmark for Market Momentum is the Chicago Board of Exchange S&P 500 Buy/Write Index or “BXM.” BXM has historically displayed less volatility than the S&P 500 and Market Income. BXM cannot be directly invested in. Market Momentum differs in key ways from BXM – the mechanics of closing and opening positions differ – BXM opens, closes or rolls positions on the same day every month regardless of the profit or loss in a position – Market Momentum targets closing or rolling positions based on technical factors including trend support and resistance. Market Momemtum will also close or roll ahead of expiration if the position has a high percentage of profit present in order to capture that gain. Options are generally not sold again until the underlying investment has moved into an area of resistance but not always; new position may be opened the same day the prior position is closed. Benchmark comparisons are made on a best available basis – meaning that live performance is believed to be compared with the closest possible benchmark for simplicity of comparison. However, there is no guarantee future volatility will be either less than, equal to, or greater than the volatility experienced in the model or the S&P 500 although the firm invests with an eye on reduced volatility vs. the S&P 500. Market Momentum , like BXM, is an options writing strategy seeking to reduce investment volatility and improve risk adjusted returns for investors. 6. The model portfolio (BXM) utilizes the S&P 500 as its basis. Market Momentum differs from BXM in that the underlying securities are primarily selected on the basis of “relative” value. This simply means that sectors are compared with one another and Market Momentum generally invests in the sector or sector(s) trading at the greatest discount or the smallest premium relative to its historical average valuation. Other factors are also considered including sector earnings growth and expected return versus other available sector instruments. Advisor believes this gives Market Momentum a higher margin of safety than repeatedly investing in the S&P 500 on a rolling basis without regard to value or prevailing economic conditions, while preserving liquidity. 7. The BXM model on which Market Momentum is compared is a non-traded index. As such, results do not represent actual trading or investment and do not reflect any impact that material economic or market factors may have had on the advisors decision making if advisor had been managing live money during the period the model covers, including transaction, fund, or management fees. 8. Market Momentum also differs from the BXM model in that Market Momentum seeks to reduce investment during corrective or recessionary economic periods while BXM stays invested regardless of economic or market conditions. Advisor believes this will better protect capital in comparison to BXM but such action is materially different than staying invested in all market conditions. This action may cause Market Momentum to have reduced participation in markets that continue to move up despite Advisors reduction in investment. 9. Advisor clients have experienced results that exceed the performance of the benchmark to date. There is no guarantee Market Momentum will continue to outperform BXM in the future regardless of Advisor efforts to do so. Durable Opportunities Portfolio 1. The performance of the broad market in the form of the Dow Jones Industrial Index over the same time periods is included for live portfolio comparison to help investors understand market conditions present during the period covered by live investment. 2. The Index results do not include brokerage, transaction, or Advisor fees. Live portfolio results include all fees, including Advisor Management fees. 3. Actual results reflect limited reinvestment of dividends and other earnings. 4. Investing involves risk, including risk of loss and/or principle. Portfolios compromised of companies matching the profile of those selected for including in Durable Opportunities have historically displayed superior risk adjusted performance to the Index, but there is no guarantee that will continue into the future. Durable Opportunities is designed to provide investment in companies that firm believes meet a stringent set of criteria firm believes reduces the likelihood of permanent capital impairment while allowing investors to participate in investment in companies firm believes will stand the test of time and provide superior long term returns. While the firm believes the portfolio is capable of outperformance on this basis, there is no guarantee it will do so. Comparisons with the Dow Jones are included to help the average investor understand how an investment in Durable Opportunities may differ from investment in a concentrated index fund such as a Dow Jones Industrials index fund. Durable Opportunities is not restricted to investment in industrial companies or in companies with a specific level of capitalization, unlike the Dow Jones. 5. Durable Opportunities is primarily a value driven strategy; when valuations in holdings become overly stretched versus their historical average valuations, the Advisor may reduce exposure to those holdings by either liquidation or hedging, and may re-allocate funds into a holding which is priced in a more reasonable range in comparison to it’s typical historical valuation. Periodically, Durable Opportunities may allocate a small but measurable percent of assets (up to 5%) in volatility linked instruments in an effort to better manage the portfolio. Benchmark comparisons are made on a best available basis – meaning that live performance is compared with the benchmarks the firm believe to be suitable for simplicity of comparison. However, there is no guarantee future volatility or performance will be either less than, equal to, or greater than the volatility or performance experienced in the Dow Jones Industrials although the firm invests with an eye on reduced volatility vs. the Dow Jones Industrials Index. 6. Durable Opportunties invests in companies firm believes to possess a Durable Competitive Advantage. Such companies are likely to be around for decades, easing the concern of principal return. DCA companies often suffer less in bear markets and usually lead recoveries. These companies allow ACI to build portfolios with minimum expected returns that may be in the mid-single digit range over any 3-5 year period which may provide long term stability partnered with long term growth in equity. There are no guarantees the strategy will be successful in this endeavor. 6. The Durable Opportunities portfolios also differ from the benchmark comparison in that Durable Opportunities reduce investment by hedging or raising cash during recessionary economic periods while Dow Jones Industrial Index reflects 100% investment at all times regardless of economic or market conditions. Firm believes this will better protect capital vs. model but is materially different than staying invested in all market conditions. This action may cause the Durable Opportunities portfolio to experience reduced participation in markets that continue to move up despite Advisors reduction in investment. 7. Advisor clients have experienced results that have lagged the performance of the benchmark to date. This lag is due to a number of factors, primarily the fact that the current high valuation investing environment has made it difficult to identify companies that fit the parameters of Durable Opportunities at a desirable valuation level. Different clients allocate different dollar amounts to Durable Opportunities at different times, which has also impacted the performance of the overall portfolio. Full Cycle Portfolio 1. The performance of the broad market over the same time periods is included for both model and live portfolio to help investors understand market conditions present during the period examined by the model and during live investment. 2. Model is a historical back test and includes brokerage and fund fees but does NOT include Advisor Management fees which vary by account size, but in general reduce annual performance by approximately 1.5%. Live portfolio results include all fees, including Advisor Management fees. Historical back-test means the model portfolio has been tracked on a backwards looking basis prior to the beginning of live investments in order to establish historical risks and results for investment in this portfolio. Back testing has certain inherent limitations as detailed in item #7 below. 3. Model results reflect regular investment of dividends or other earnings. Actual results reflect limited reinvestment of dividends and other earnings. 4. Investing involves risk, including risk of loss and/or principle. While the back tested Full Cycle Portfolio model has historically shown desirable performance versus the S&P 500 on a risk adjusted basis, there is no guarantee that will continue into the future. Full Cycle Portfolio is designed to provide reasonable returns for the same or less risk than the broad market on a risk adjusted basis in all phases of the economic cycle by holding risk weighted non-correlated assets, and while the firm believes model portfolios are capable of continued outperformance on this basis, there is no guarantee they will do so in the future. Comparisons with the S&P 500 are included to help the average investor understand how an investment in the Full Cycle Portfolio may differ from investment in an index fund such as an S&P 500 index fund. 5. The model for the Full Cycle Portfolio is built of diversified, liquid sector and index securities, most frequently low cost ETFs and low cost funds. The live Full Cycle portfolio does not follow the Full Cycle model exactly – variances in investor contributions & withdrawals result in measurable drift from the model. Over time, client accounts come closer in line with the Full Cycle model. Full Cycle live portfolios may differ from the Full Cycle model in an additional material way; when valuations on certain sectors become overly stretched versus their historical average valuations, the Advisor may reduce exposure to those sectors in favor of a comparable position which is priced in a more reasonable range in comparison to it’s typical historical valuation. These factors may result in greater or less than model performance over time. Benchmark and index comparisons are made on a best available basis – meaning that both the index model and live performance are compared with market and other benchmarks the firm believes to be suitable for simplicity of comparison. However, there is no guarantee future volatility or performance will be either less than, equal to, or greater than the volatility or performance experienced in the model or the S&P 500 although the firm invests with an eye on reduced volatility vs. the S&P 500. 6. Full Cycle invests in diversified components of the global financial markets and broad economy by balancing risks with non-correlating or reduced correlation assets in opposition to one another each of which is designed to prosper in some phase of the economic cycle and intended to offset reduced or poor performance in other portfolio holdings. 7. The Full Cycle model results do not represent actual trading or investment and do not reflect any impact that material economic or market factors may have had on the advisors decision making if advisor had been managing live money during the period the model covers, including transaction, fund, or management fees as detailed above in item #2. 8. Full Cycle live portfolios also differ from the Full Cycle model in that the live portfolio may be rebalanced more or less frequently depending on prevailing market conditions. While firm believes this difference positions portfolio for improved risk adjusted performance, it is not clear that this difference results in clear over or under performance versus the Full Cycle model. 9. Advisor clients have experienced results that slightly outperform the performance of the model to date. This outperformance may or may not persist. In general, the longer a client has been fully allocated to the Full Cycle portfolio, the closer it is to model performance. Fixed Income Portfolio 1. The performance of the broad bond markets over the same time periods is included to help investors understand market conditions present during the period covered by live investment. 2. Listed comparison Index graphs and statistics do NOT include transaction, fund or Advisor Management fees. Live portfolio results include all fees, including Advisor Management fees. 3. Actual results reflect limited reinvestment of dividends and other earnings, but do not reflect the impact of any applicable taxes which vary by investor and account type (deferred account vs. taxable, etc.). 4. Investing involves risk, including risk of loss and/or principle. While the closest benchmark for Fixed Income has historically shown reduced volatility and reasonable performance versus many classes of fixed income investments, there is no guarantee that Fixed Income that will continue such performance into the future. Market Momentum is designed to provide reasonable returns for less risk than the broad market on a risk adjusted basis, and while the firm believes the portfolio is capable of outperformance on this basis, there is no guarantee it will do so. Comparisons with US Aggregate Bond Market and PIMCO Total Return are included to help the average investor understand how an investment in Fixed Income may differ from investment in an alternative index or fixed income fund. 5. The closest benchmark for Fixed Income is the Pimco Total Return Fund. Fixed Income differs in key ways from BOND – including selection of underlying investments and reduced diversification. Benchmark comparisons are made on a best available basis – meaning that live performance is believed to be compared with the closest possible benchmark for simplicity of comparison. However, there is no guarantee future volatility and performance will be either less than, equal to, or greater than the volatility and performance experienced by the benchmark although the firm invests with an eye on out performance. 6. The benchmark may include securities not contained in Fixed Income, and vice versa. Fixed Income currently holds significantly more cash than PIMCO Total Return Fund, a situation likely to continue in the near future. This action may cause Fixed Income to have reduced participation in markets that move up despite Advisors reduction in investment. 7. Advisor clients have experienced results that lag the performance of the benchmarks to date. There is no guarantee Fixed Income will continue to outperform benchmarks in the future regardless of Advisor efforts to do so. If you would like to receive an email or hard copy of these disclosures, please email info@aciwealth.com or call 888.407.4472

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Smart Select

Invests in diversified components of the financial markets and broad economy by targeting specific risk levels through a range of Smart Select Portfolios. For example, Smart Select 100 is a 100% equities portfolio, while Smart Select 50 is a 50% fixed income and 50% equities portfolio. These portfolios allow ACI to place our Partners in portfolios built specifically to match their risk tolerance while still serving their personal investment goals. Like most ACI Portfolios, Smart Select portfolios are diversified and low cost.

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Customer Relationship Summary & Reg Best Interest

FORM CRS – Customer Relationship Summary

revision 6/30/2022

Introduction: ACI Wealth Advisors, LLC is a state registered investment advisor (Florida, California, Texas) and is a member of the Financial Industry Regulatory Authority (FINRA). ACI is subject to both state administrators and SEC oversight. ACI provides investment advisory services and planning services under a variety of fee structures. As a single registration advisor, ACI is considered a fiduciary under the law and is one of very few advisors to have selected the single registration path. As part of our learning process, clients/prospects provide answers to questions on an intake form regarding their investment goals, financial situation, financial needs, assets, and risk tolerance. ACI uses this information to provide investment or planning services customized to each person ACI works with.

What investment services and advice can ACI provide? Investment advisory services can include discretionary management of client assets, investment planning, income planning, retirement planning, financial planning, general financial advice and consulting. For the most part, planning services are provided on a flat fee basis of $699. For more complex planning, the fee may be negotiated, or services can be provided at the hourly rate of $250 per hour.

Ask your financial professional: How will you choose investments to recommend to me? What is your relevant experience including licenses, education and any other qualifications? What do these licenses and qualifications mean?

What fees will I pay? Unlike most financial companies, ACI does not accept commissions from 3rd parties for the recommendation of securities funds, mutual funds or securities products. Nor is ACI compensated to buy or sell securities in your account. ACI compensation is a flat fee based on the value of your account on a sliding scale from 1% – 2% annually. Fees may be adjusted at the discretion of the Independent Advisor Representative (“IAR”) you are working with.

Trade costs are determined by the custodian and ACI does not benefit.

Funds, including mutual funds, ETFs, ETNs, etc. have their own management fees which clients must pay to invest in a given fund or strategy. Generally, ACI prefers to use low cost, highly liquid funds in client portfolios. Management and/or administration fees for such funds range from 0.05% up as high as 1.5% for a specialized fund. On average, an ACI constructed portfolio has about 0.3% in fund management or fund administration fees, or about $3 per $1000 invested.

ACI receives no compensation from fund managers or administrators for investing client dollars in them.

You will pay fees and costs whether you make money or lose money on your investments. Fees and costs will reduce any amount of money you make on your investments over time. Make sure you understand what fees and costs you are paying. You will see transaction costs disclosed by the trade confirmations sent to you by the custodian.

Ask your financial professional: If I give you $100,000 to invest, how much will go to fees and costs and how much will be invested for me?

What are your legal obligations to me when providing recommendations as my investment advisor? In the course of making recommendations as your investment advisor, including any planning services, ACI and affiliated Independent Advisor Representatives (“IAR”) are required to act in your best interest and put your best interest ahead of ours. This is known as the fiduciary duty.

We are also required to disclose any potential conflicts of interest to clients both verbally and in writing.

One such potential conflict of interest is that ACI Independent Advisor Representatives (“IAR”) may be insurance licensed. Where appropriate and in a client/prospects best interest, fixed index annuities and life insurance products may be offered to clients/prospects through an agent’s affiliated insurance organization. Insurance agents are paid a commission on the sale of insurance products. ACI requires IARs to disclose the potential conflict of interest to clients/prospects in writing, including disclosing the commissions, and requires IARs to make clear that clients/prospects are under no obligation to transact through them.

How do your financial professionals make money? IARs make money from fees based on assets under management, as disclosed above, base salary, and may also earn money from the sale of insurance products through the IAR’s affiliated insurance organization.

Do you or your financial professionals have legal or disciplinary history? No, at the time of this update, no affiliated financial professionals have a legal or disciplinary history. You may visit investor.gov/CRS for a free and simple search tool to research ACI and any affiliated financial professional.

Additional Information: Please see additional Regulation Best Interest Disclosures below.  If you would like to discuss this form or have questions, please call 888-407-4472.

 

ACI Rollover Recommendations Under Regulation Best Interest (Reg Bl)

revision 6/30/2022

The purpose of this document is to help you in understanding how ACI works with clients like you. 

You can use this material to decide whether to proceed with a rollover without a recommendation from ACI.  If you do want a recommendation, your ACI financial professional will discuss the advantage of doing a rollover vs. leaving your assets in your retirement plan and will make a recommendation based on your best interest. 

Conflict of Interest in IRA Rollover Recommendation:  There is an inherent conflict of interest in the recommendation to rollover retirement plan assets into an IRA managed by ACI.  ACI will make money on your assets in the form of a management and/or performance fee if you choose to roll your retirement plan into an ACI managed IRA.  If you do not rollover your retirement plan, ACI will not make any money for managing your assets. 

ACI Independent Advisor Representatives (“IAR”) have the same conflict. 

To help determine whether a rollover recommendation is in your best interest, please consider the following:

Roll over your 401k into an IRA:

Advantages
• Your investments will remain tax-deferred until you withdraw them
• You will have access to a wide range of investments, including mutual funds, ETFs, stocks, bonds, options and more
• You will have access to a wide range of tools, resources, and services
• You may have the flexibility to convert to a Roth IRA
• You may benefit from the advice of your investment advisor, including risk management, income & retirement strategies
• Potential for custom investment portfolios built around you.
Disadvantages
• You will not be able to take a loan against your account
• Any loan balances would need to be repaid prior to rolling over or you may incur income taxes and potentially a 10% tax penalty
• Your investments may incur trading-related costs.
• You are unlikely to have access to the exact same investments in an IRA that you had in your plan.
• The level of protection from creditors for assets in an IRA is lower than in a company retirement plan
• If you hold appreciated employer stock in your former employer’s plan account, there may be tax consequences. You should consult a tax advisor

Leave your assets in your old employer’s plan:
Advantages
• Your investment plan choices may include low-cost, institutional-class products
• Your total costs may be lower than other alternatives
• Your investments will remain tax-deferred until you withdraw them
• You may be able to take loans against your account
• You may not have to take any action or complete additional paperwork
• You may be able to take penalty-free withdrawals if you left your old employer between age 55 and 59
• Your retirement plan balances may be better protected from creditors and legal judgements under federal law
• You may still be able to roll over to a future employer’s plan later
• You would still have access to any investor education, guidance and planning provided to plan participants
• The investment choices on your plan menu were selected by a plan fiduciary

Disadvantages
• Your investment choices could be limited what is available in the plan
• Your former employer may pass certain plan administration or recordkeeping fees through to you
• You would not be able to contribute any new funds
• Managing your investments among multiple accounts can be a lot of work
• You may not be able to access professional advice specific to your situation
• You may need to manage your risk directly

Roll your assets into a new employer’s plan
Advantages
• Your costs may be lower than other alternatives
• Your investments will remain tax-deferred until you withdraw them
• You may be able to take loans against your account
• You may be able to take penalty-free withdrawals if you leave your new employer between age 55 and 59
• Your retirement plan balances may be better protected from creditors and legal judgements under federal law
• Your plan investment choices may include low-cost, institutional-class products
• You may have access to investor education, guidance and planning that your new employer provides to plan participants
• The investment choices on your plan menu were selected by a plan fiduciary
• If you roll over to a new employer’s plan you may not have to take required minimum distributions (RMDs) if you decide to keep working

Disadvantages
• Your investment choices would be limited to those in the plan
• Your new employer may pass certain plan administration or recordkeeping fees through to you
• If you hold appreciated employer stock in your former employer’s plan account, there may be tax consequences. You should consult with a tax advisor.

Take a cash distribution from your retirement plan:
Advantages
• Your money (after any taxes and applicable penalties) will be immediately available to you

Disadvantages
• Your retirement savings will be depleted
• The amount that you cash out will be subject to mandatory 20% withholding for federal taxes if under age 59½
• Your distribution will be subject to applicable federal, state and local taxes
• You may be subject to a 10% penalty if you under the age 59½
• You may lose the compounding advantages of tax deferred investments

If you would like to receive an email or hard copy of these disclosures, please email info@aciwealth.com or call 888.407.4472

 

 

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