Spreng Capital Management, Inc. (hereafter referred to in this form as (SCM) has been a
Registered Investment Advisory Firm since September of 1999. Previously, the Firm was known
as Spreng & Pigman Financial Advisory Group, Inc. but underwent an ownership and official
name change in February of 2010. James A. Spreng is the principal owner and investment
advisor representative. Thomas R. Brown is also an owner and an investment advisor
representative working with the firm. SCM offers Investment Supervisory Services to clients
which are tailored to their individual circumstances. The firm reviews client’s assets (sometimes
in conjunction with other services offered by the firm) and makes recommendations based upon
client’s individual needs and objectives. Clients are not required to utilize any other services of
the firm.
As a registered investment advisor subject to Section 206 of the Advisers Act, SCM acts as a
Fiduciary related to the conduct of its investment advisory services. As such SCM has an
obligation to act in the best interest of its clients guided by the core fiduciary duties of loyalty
and care.
Client, in consultation with SCM, chooses the investment strategy (ies) the firm is to employ.
Most strategies primarily invest in equities, exchange traded funds (ETFs) and mutual funds.
Strategies seek either portfolio growth, portfolio income or a combination of portfolio growth
and income. Within the context of these objectives (growth, income or a combination thereof),
client may select an asset allocation strategy that focuses on the issue of market risk. It is
expected that the great majority of the firm’s clients will employ this strategy which will from
time to time seek to reduce the market risk associated with equity and fixed income investments
by reducing or eliminating certain investment positions. Alternatively, client may select a “buy
and hold” strategy that does not seek to reallocate portfolio assets in response to market risk.
SCM has investment discretion over the accounts it supervises. Therefore, the firm issues
investment instructions to the custodian of its clients’ accounts without prior consultation with
client. Investment instructions given by SCM are consistent with the general goals and
objectives of the investment strategy (ies) that is selected by client. However, SCM will try to
accommodate a client’s individual instructions with regard to the firm’s supervision of client’s
account. SCM has discretion to select the amount and nature of securities which are purchased
and sold in relation to those investment strategies selected by the client for SCM which provides
a continuous and regular service. No options will be purchased nor will any securities be
purchased on margin without first obtaining the consent of the client. In some instances, margin
balances may be initiated by the client either through securities purchases or by writing a check
for an amount which is greater than the cash available in the account.
Client selects a custodian broker from those recommended by SCM as being compatible with
the investment strategy(ies) selected by the client.
SCM assists or advises clients or individuals who request more detailed financial planning. We
have found that most clients or individuals do not really need expensive, comprehensive
financial planning. Their needs generally revolve around segments of their lives such as
retirement planning, college funding, life insurance questions, debt restructuring or any
combination of these issues. We work with these clients and individuals and are compensated
on an hourly basis to derive the appropriate solutions for these issues.
Client must enter into a contract for this type of service which can be terminated by either party
at any time by sending written notice to the other party indicating a desire to terminate the
contract. No assignment of any agreement shall be made without the written consent of client.
IRA Rollover Considerations
SCM provides, as part of its investment advisory services, recommendations for client to
withdraw the assets from an employer's retirement plan and roll the assets over to an individual
retirement account ("IRA") that SCM manages on the client’s behalf. If a client elects to roll the
assets to an IRA that is subject to SCM’s management, SCM charges an asset-based fee as set
forth in the agreement between the client and SCM. This practice presents a conflict of interest
because persons providing investment advice on SCM’s behalf have an incentive to recommend
a rollover to a client for the purpose of generating fee-based compensation rather than solely
based on the client’s needs. Clients are under no obligation, contractually or otherwise, to
complete the rollover. Moreover, if the client decides to complete the rollover, that client is
under no obligation to have the assets in an IRA managed by SCM.
Many employers permit former
employees to keep their retirement assets in their company plan.
Also, current employees can sometimes move assets out of their company plan before they retire
or change jobs. In determining whether to complete the rollover to an IRA, and to the extent the
following options are available, clients should consider the costs and benefits of each option:
An employee will typically have four options:
1. Leaving the funds in the employer's (former employer's) plan.
2. Moving the funds to a new employer's retirement plan.
3. Cashing out and taking a taxable distribution from the plan.
4. Rolling the funds into an IRA rollover account.
Each of these options has advantages and disadvantages and before making a change SCM
encourages clients to speak with their CPA and/or tax attorney.
Clients who are considering rolling over retirement funds to an IRA for SCM to manage, here
are a few points to consider beforehand:
1. Determine whether the investment options in the employer's retirement plan address your
needs or whether you might want to consider other types of investments.
a. Employer retirement plans generally have a more limited investment menu than IRAs.
b. Employer retirement plans may have unique investment options not available to the public
such as employer securities, or previously closed funds.
2. Your current plan may have lower fees than SCM’s fees.
a. If you are interested in investing only in mutual funds, you should understand the cost
structure of the share classes available in your employer's retirement plan and how the
costs of those share classes compare with those available in an IRA.
b. You should understand the various products and services you might take advantage of at
an IRA provider and the potential costs of those products and services.
3. SCM’s strategy may have higher risk than the option(s) provided to you in your plan.
4. Consider whether your current plan also offers financial advice.
5. If you keep your assets titled in a 401k or retirement account, you could potentially delay
your required minimum distribution beyond age 73.1
6. Your 401k may offer more liability protection than a rollover IRA; each state may vary.
Generally, federal law protects assets in qualified plans from creditors. Since 2005, IRA
assets have been generally protected from creditors in bankruptcies. However, there can be
some exceptions to the general rules so you should consult with an attorney if you are
concerned about protecting your retirement plan assets from creditors.
7. You may be able to take out a loan on your 401k, but not from an IRA.
8. IRA assets can be accessed any time; however, distributions are subject to ordinary income
tax and may also be subject to a 10% early distribution penalty unless they qualify for an
exception such as disability, higher education expenses or the purchase of a home.
9. If you own company stock in your plan, you may be able to liquidate those shares at a lower
capital gains tax rate.
10. Your plan may allow you to hire us as the manager and keep the assets titled in the plan
name.
It is important that you understand the differences between these types of accounts and to decide
whether a rollover is best for you. Prior to proceeding, if you have questions contact your
investment adviser representative, or call our main number as listed on the cover page of this
brochure.
IRA Rollover Recommendations
Effective December 20, 2021 (or such later date as the US Department of Labor (“DOL”) Field
Assistance Bulletin 2018-02 ceases to be in effect), for purposes of complying with the DOL’s
Prohibited Transaction Exemption 2020-02 (“PTE 2020-02”) where applicable, we are
providing the following acknowledgment to you.
When we provide investment advice to you regarding your retirement plan account or individual
retirement account, we are fiduciaries within the meaning of Title I of the Employee Retirement
Income Security Act and/or the Internal Revenue Code, as applicable, which are laws governing
retirement accounts. The way we make money creates some conflicts with your interests, so we
operate under a special rule that requires us to act in your best interest and not put our interest
ahead of yours. Under this special rule’s provisions, we must:
• Meet a professional standard of care when making investment recommendations (give
prudent advice);
• Never put our financial interests ahead of yours when making recommendations (give loyal
1 70 ½ if you reach 70 ½ before January 1, 2020. 73 if you reach the age of 73 after December 31, 2022
advice);
• Avoid misleading statements about conflicts of interest, fees, and investments;
• Follow policies and procedures designed to ensure that we give advice that is in your best
interest;
• Charge no more than is reasonable for our services; and
• Give you basic information about conflicts of interest.
As of December 31, 2023, SCM managed $219,695,484 of discretionary assets.