A. Firm Information
Armstrong Advisory Group Inc. (“AAG” or the “Advisor”) is a registered investment advisor with the U.S. Securities and Exchange
Commission (“SEC”). The Advisor was organized as a Corporation under the laws of the Commonwealth of Massachusetts under the
prior name Armstrong Partners, Inc. AAG became a registered investment advisor in April 2022 and changed its legal name to
Armstrong Advisory Group, Inc. AAG is primarily owned and operated by Michael Armstrong (President), Brendan K. Hayes (Managing
Partner, Financial Advisor), Susan Powers (Managing Partner, Financial Advisor), and Charles A. Zodda (Managing Partner, Chief
Investment Officer).
This Disclosure Brochure provides information regarding the qualifications, business practices, and the advisory services provided by
AAG. For information regarding this Disclosure Brochure, please contact Leonid Berline (Chief Compliance Officer) at (781) 433-0001.
B. Advisory Services Offered
AAG offers wealth management services to individuals, high net worth individuals, trusts, estates, and small businesses (each referred
to as a “Client”).
The Advisor serves as a fiduciary to Clients, as defined under the applicable laws and regulations. As a fiduciary, the Advisor upholds a
duty of loyalty, fairness and good faith towards each Client and seeks to mitigate potential conflicts of interest. AAG's fiduciary
commitment is further described in the Advisor’s Code of Ethics. For more information regarding the Code of Ethics, please see Item 11
– Code of Ethics, Participation or Interest in Client Transactions and Personal Trading.
Investment Management Services
AAG provides customized wealth management solutions for its Clients. This is achieved through regular personal Client contact and
interaction while providing investment management and related advisory services. AAG works closely with each Client to identify their
investment goals and objectives as well as risk tolerance and financial situation in order to create a portfolio strategy. AAG will typically
construct an investment portfolio utilizing exchange-traded funds (“ETFs”) and institutional mutual funds tailored to the needs of the
Client. AAG may also utilize individual stocks, individual bonds, alternative investments, covered options, and/or other types of
investments, as appropriate for a particular Client. The Advisor may retain certain of Client’s legacy investments based on portfolio fit
and/or tax considerations.
AAG’s investment strategies are primarily long-term focused, but the Advisor may buy, sell or re-allocate positions that have been held
for less than one year to meet the objectives of the Client or due to market conditions. If the Client’s account is discretionary, AAG will
construct, implement and monitor the portfolio to ensure it meets the goals, objectives, circumstances, and risk tolerance agreed to by
the Client. In discretionary accounts, AAG does not need to provide any prior notice, or obtain Client consent to, any trades. By
contrast, in a non-discretionary account, AAG makes recommendations in respect of possible transactions, but the Client makes the
decision whether to enter into those transactions.
Each Client will have the opportunity to place reasonable restrictions on the types of investments to be held in their respective portfolio,
subject to acceptance by the Advisor. If a Client already holds an investment that is perceived to be in a restricted category, such
security will be sold and can trigger a taxable event for Client.
AAG evaluates and investments for inclusion in Client portfolios. AAG may recommend, on occasion, redistributing investment
allocations to diversify the portfolio. AAG may recommend specific positions to increase sector or asset class weightings. The Advisor
may recommend employing cash positions as a possible hedge against market movement.
AAG may recommend selling positions for reasons that include, but are not limited to, harvesting capital gains or losses, business or
sector risk exposure to a specific security or class of securities, overvaluation or overweighting of the position[s] in the portfolio, change
in risk tolerance of the Client, generating cash to meet Client needs, or any risk deemed unacceptable for the Client’s risk tolerance.
Unless otherwise defined by the Investment Advisory Agreement and/or by other written account documentation such as written
correspondence, advisor notes of telephone conversations with Customer, Advisor notifications to Customer via permitted
electronic means or regular mail, Firm will attempt to maintain the following level of Cash positions within the Customer account
in relation to the stated investment objective: (i) High Growth Strategy – Under 10%; (ii) Growth Strategy – Under 15%; (iii)
Balanced Strategy Under 20%; (iv) Safety Strategy – Under 25%; (v) Low Risk – Under 30%.
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Stated levels are targets only. For discretionary accounts, stated levels can be changed by decision of the Investment Policy
Committee or individual portfolio manager without advanced notice to Customer.
Unless otherwise defined by the Investment Advisory Agreement, the Firm does NOT exclude Cash assets from management
fee calculations. The Firm, in its sole discretion, can exclude such assets from fee calculations.
Client’s accounts are screened for the percentage of the assets held in cash and Firm takes actions pursuant to Firm’s internal
policies and procedures to inform its Clients and make changes if deemed necessary.
AAG will typically use a single cash sweep vehicle offered by the custodian. Consequently, AAG will not, on an ongoing basis,
survey the marketplace for higher yielding sweep vehicles and clients’ cash assets may earn a lower interest rate or yield that is
otherwise available. Please refer to Section 5.G. for additional details.
As a matter of policy and practice, AAG does NOT permit employees or the firm to accept or maintain custody of client assets
without express permission from the Chief Compliance Officer. It is AAG’s policy to not physically accept, hold, directly or
indirectly, client funds or securities. However, AAG does now and/or may in the future enter into arrangements that result in
constructive custody of client assets, including asset disbursement authority and/or direct debiting of advisory fees.
Item 15 – Custody provides additional information with respect to custody matters. All Client assets will be managed within the
designated account[s] at the custodian, pursuant to the terms of the advisory agreement. Please see Item 12 – Brokerage Practices.
Retirement Accounts – When the Advisor provides investment advice to Clients regarding Employee Retirement Income Security Act
(“ERISA”) retirement accounts or individual retirement accounts (“IRAs”), the Advisor is a fiduciary within the meaning of Title I of
ERISA and/or Section 4975 of the Internal Revenue Code (“IRC”), as applicable, which are laws governing retirement accounts. With
respect to any discretionary account that is also subject to Title I of ERISA, Advisor is an “investment manager” as such term is
defined under ERISA. The way Advisor makes money creates some conflicts with Client interests, so Advisor acts under a special rule
that requires the Advisor to act in Client’s best interest and not put the Advisor’s interest ahead of the Client’s. Under this special rule’s
provisions, the Advisor must:
• meet a professional standard of care when making investment recommendations (give prudent advice);
• never put the Advisor’s financial interest ahead of the Client’s when making recommendations (give loyal advice);
• avoid misleading statements about conflicts of interest, fees, and investments;
• follow policies and procedures designed to ensure that the Advisor gives advice that is in the Client’s best interest;
• charge no more than is reasonable for Advisor’s services; and
• give the Client basic information about conflicts of interest.
Held-Away Assets /Pontera Solutions
AAG manages certain accounts that consist of “Held-Away Assets.” Most often, Held-Away Assets are those assets held as part of an
employer-sponsored retirement plan (e.g., 401(k) or 403(b)); however, they also include assets held in other types of investment
accounts and plans (each such plan or account, a “Plan”) with respect to which the Client is a participant, account owner or otherwise
has a beneficial interest.
A discrete list of investment options with respect to a Plan (the “Plan Investment Options”) generally is made available by a Plan
fiduciary or other entity or vendor. There may be investment limitations that apply to the Plan Investment Options (for example,
transactions are only permitted quarterly, or trades among certain investment options are limited by short-term trading windows or so-
called equity wash restrictions) to which AAG must adhere. AAG has no ability to influence the Plan Investment Option menu, which
may change from time to time, and must manage the account within any restrictions imposed by the Plan. The Plan Investment Options
and any investment limitations (collectively, the “Plan Investment Limits”) significantly impair the ability of AAG to provide investment
management services to Client with respect to a Plan.
Client is responsible for disclosing all relevant facts and information reasonably necessary for Advisor to perform its obligations relating
to the Held-Away Assets, including, without limitation, all information related to Plan Investment Limits as is available to Client from time
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to time. Client shall keep Advisor informed of the Client’s personal circumstances, including any changes, which may affect investment
objectives or implementation.
In order to manage Held-Away Assets, AAG has entered into an agreement with Pontera Solutions, Inc. (“Pontera”) under which
Pontera offers AAG access to Pontera’s Order Management System (“OMS”) platform. Using the OMS, AAG can review positions and
place trades with respect to Held-Away Assets. AAG is not affiliated with Pontera and receives no compensation from Pontera for using
its platform. Advisor relies upon the Pontera OMS platform for position and allocation information relating to the securities in the Plan
and Advisor cannot verify the accuracy or completeness of that information.
Once the Client Plan(s) is(are) connected to the Pontera OMS, Adviser will review the current asset allocations and analyze them
considering, among other things, the Client’s investment goals, financial profile, risk tolerance, the Client’s other investments and
assets and the Plan Investment Limits. Advisor will
adjust the asset allocation considering those factors. Such adjustments may require
rebalancing and other changes. Held-Away Assets will be reviewed at least quarterly and allocation changes will be made as deemed
necessary.
Because the Held-Away Assets are maintained by a custodian not chosen by AAG, AAG cannot control the pricing, timing, or other
substantive factors associated with the execution of trades in the Plan. Accordingly, directing brokerage activities within a Plan may
result in the loss of best execution of orders at the most favorable prices reasonably obtainable. The Advisor shall not be liable to the
Client for any act, conduct or omission in connection with the execution of a trade by the custodian of Held-Away Assets including,
without limitation, any delays caused by the custodian. The Advisor shall not be responsible for ensuring the custodian’s compliance
with the terms of the Plan or payment of brokerage or custodian charges and fees.
Advisor’s Limitations: Advisor discloses the following additional limitations with respect to Held-Away Assets:
• Advisor has no control over Plan Investment Limits, including the choice (if any) of share classes for mutual funds and
collective investment trusts available under the Plan.
• Advisor has no control over the expenses, recordkeeping functions, operational and servicing functions within the Plan.
• Advisor has no control over and is not responsible for any acts or omissions of the custodian of Held-Away Assets or Plan
fiduciaries or service providers.
• Advisor has no control over best execution of Plan transactions;
• Advisor has no control over Client’s eligibility, Plan design, options and other features of the Plan;
• Advisor has no control or responsibility for any actions or omissions of the Plan sponsor, Plan Administrator, Plan
custodian, Plan Third Party Administrator or any other Plan vendors.
Financial Planning Services
AAG will typically provide a variety of financial planning and consulting services to Clients, pursuant to a written financial planning
agreement. Services are offered in several areas of a Client’s financial situation, depending on their goals and objectives. Generally,
such financial planning services involve preparing a formal financial plan or rendering a specific financial consultation based on the
Client’s financial goals and objectives. This planning or consulting may encompass one or more areas of need, including but not limited
to, investment planning, retirement planning, personal savings, education savings, insurance needs, and/or other areas of a Client’s
financial situation.
A financial plan developed for, or financial consultation rendered to, the Client will usually include general recommendations for a
course of activity or specific actions to be taken by the Client. For example, recommendations may be made that the Client start or
revise their investment programs, commence or alter retirement savings, establish education savings and/or charitable giving programs.
For certain financial planning engagements, the Advisor will provide a written summary of the Client’s financial situation, observations,
and recommendations. For consulting or ad-hoc engagements, the Advisor may not provide a written summary. Plans or consultations
are typically completed within six (6) months of contract date, assuming all information and documents requested are provided
promptly.
Financial planning and consulting recommendations pose a conflict between the interests of the Advisor and the interests of the Client.
For example, the Advisor has an incentive to recommend that Clients engage the Advisor for investment management services or to
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increase the level of investment assets with the Advisor, as it would increase the amount of advisory fees paid to the Advisor. Clients
are not obligated to implement any recommendations made by the Advisor or maintain an ongoing relationship with the Advisor. If the
Client elects to act on any of the recommendations made by the Advisor, the Client is under no obligation to implement the transaction
through the Advisor.
AAG may also refer Clients to an accountant, attorney or other specialists, as appropriate for their unique situation. AAG is not
compensated, directly or indirectly, for any such referrals.
Please note that neither AAG nor its Supervised Persons provide legal or tax advice. AAG reminds Clients to consult with their tax and
legal professionals as applicable.
Limited Services Agreement
In certain circumstances, AAG offers clients services under a separate Limited Services Agreement. Those services are limited to
entering trades at the client’s direction, disbursing funds, and assisting with form completion. AAG does not provide any ongoing
investment advice and does not charge a fee for the services provided to accounts that are subject to the Limited Services Agreement.
A Client who has a limited services account may have other accounts that are managed by AAG on an ongoing basis. Those accounts
are subject to the terms and conditions of the relevant investment advisory account agreement entered into with AAG.
Variable Annuity Products
A variable annuity is a hybrid investment and insurance product issued by an insurance company. Variable annuities are sold by a
registered representative of a FINRA registered broker dealer firm, which is often also the insurance company that issued the product.
The broker and representative have certain obligations to the Client in terms of recommendations relating to the sale of such products.
Depending on the kind of annuity, the owner of the annuity pays commissions to the broker dealer firm (usually, the insurance carrier
that issued the product) and that firm’s registered representative (“Commissioned VAs”). There are additional charges and fees
associated with variable annuities such as administrative, mortality, investment platform, portfolio manager, and insurance benefit fees.
Some of AAG's advisory clients have legacy variable annuity positions, obtained prior to AAG becoming an SEC registered investment
advisor. To the extent that those positions are Commissioned VAs, neither AAG nor any of its investment advisor representatives
(IARs) serve as investment advisor or broker on those products. AAG’s involvement is limited to receiving account statements,
receiving contract values from the carrier’s representative, and providing clerical support (e.g., transmitting information to the carrier at
the client’s request). Neither AAG nor its IARs receive any commissions, fees, or other compensation on those positions. If you have
any questions about your Commissioned VA, please contact your FINRA registered representative.
There is a different kind of variable annuity product offered by AAG on which AAG does act as investment advisor. These kinds of
variable annuity products, known as Advised Variable Annuities (“Advised VAs”), are different from traditional Commissioned VAs in
several respects. First, AAG, as investment advisor, reviews, oversees, and manages the investments underlying the Advised VA
product. Second, in providing investment advice, AAG and your AAG professionals have a fiduciary duty to always put your best
interests first. Finally, instead of paying commissions to a brokerage firm for the sale of the product, a Client who purchases an Advised
VA pays an ongoing advisory fee to AAG on the value of the Advised VA product. AAG does not act as insurance agent or broker on
any variable annuity product.
Advised VAs have additional costs and charges on top of the advisory fee. The total cost to you of an Advised VA versus a
Commissioned VA may be more or less, depending on the fees, charges, and other terms of the specific product at issue. Please
consult the relevant prospectus and contact your AAG professional with any questions.
C. Client Account Management
Prior to engaging AAG to provide investment management services, each Client is required to enter into one or more written
agreements with the Advisor that define the terms, conditions, authority and responsibilities of the Advisor and the Client. AAG’s
services generally include portfolio review, analysis and construction; asset allocation and security selection; investment research; and
account monitoring. AAG’s services may also include financial planning services, pursuant to a separate financial planning agreement.
In addition, in certain instances, AAG offers a limited services relationship whereby AAG is authorized to enter trades at the Client’s
direction, disburse funds, and assist with form completion. Please see your investment AAG agreement(s) for the specific services
provided to you.
Funding – Cash to fund an account will be placed in the sweep option provided by AAG’s unaffiliated custodian, Charles Schwab & Co.
Clients funding accounts with securities direct AAG to liquidate the securities on behalf of the Client and allocate the proceeds in
accordance with the applicable investment strategy. AAG, on a best-efforts basis, will sell a portion or all of any securities that are not
consistent with the applicable investment strategy. AAG will not advise Client regarding the liquidation of these securities. Depending
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on the type of security involved, liquidation may result in redemption charges and taxable gains or losses. Clients should review the
potential tax consequences of these liquidations with their tax advisor before funding their account with securities. AAG does not
provide tax advice. Liquidations will be effected promptly after acceptance of the Client account at the then prevailing market prices.
D. Wrap Fee Programs
AAG includes securities transaction fees together with its wealth management fees. Including these fees into a single asset-based fee
is considered a “Wrap Fee Program”. The Wrap Fee Program is not a separate advisory program from those disclosed in this Part 2A
Disclosure Brochure. It is a cost structure overlay on top of the underlying investment portfolio managed by your AAG IAR. Depending
on the level of trading required for the Client’s account[s] in a particular year, the Client may pay more or less in total fees than if the
Client paid its own transaction fees. Please see Appendix 1 – Wrap Fee Program Brochure, which is included as a supplement to this
Disclosure Brochure, for more information.
E. Assets Under Management
As of December 31, 2023, AAG’s total assets under management amounted to $1,221,314,451.
AAG managed $1,219,039,087 on a discretionary basis for 3,681 accounts and $2,275,064 on a non-discretionary basis for 3 accounts.