Axia Advisory Corporation [“Axia” or “we”, “us”, “our”] offers investment-advisory services.
4.A About Axia Advisory
We supervise investment portfolios for institutional and private clients. We oversee portfolios as
investment counsel. We supervise client portfolios individually, according to the particular requirements
of each client’s circumstances, objectives, and preferences for investment risks. Because we supervise
portfolios individually, clients may impose restrictions on investing in certain securities or kinds of
securities.
The foundation of all of Axia’s work is Modern Portfolio Theory and the Prudent Investor Rule.
Modern Portfolio Theory
Modern portfolio theory refers to a mathematics framework (sometimes called mean-variance analysis)
for assembling a portfolio of assets so that the portfolio’s expected return is maximized for a given level
of risk. The theory’s insight is that an asset’s risk and return should not be assessed by itself, but by how it
contributes to a portfolio’s overall risk and return. Investment managers’ and investors’ acceptance of
Modern Portfolio Theory is the underlying presumption for the Prudent Investor Rule.
Harry Max Markowitz (1927-) initiated this theory with his article “Portfolio Selection” in the March 1952
issue of
The Journal of Finance. A Markowitz-efficient portfolio is one for which one assumes no added
diversification would lower the portfolio’s risk for a given return expectation or for which one assumes no
more expected return can be gained without increasing the portfolio’s expected risk. A Markowitz-efficient
frontier is the set of portfolios assumed to result in the highest expected return for each given degree of
risk.
Prudent Investor Rule
The
prudent investor rule refers to fiduciary law that recognizes that an investment isn’t prudent or
imprudent in isolation but rather is considered in the context of a whole portfolio of investments. This law
follows Modern Portfolio Theory.
In 1992 (the same year Axia began our services), the American Law Institute published the Prudent
Investor Rule to describe how courts applying common law should evaluate a Fiduciary’s decisions in light
of Modern Portfolio Theory. Later, the National Conference of Commissioners on Uniform State Laws
recommended to States’ legislatures the
Uniform Prudent Investor Act and
Uniform Trust Code. Almost
every State has law based on, or similar to, these versions of the Prudent Investor Rule.
Although the
Employee Retirement Income Security Act of 1974 [“ERISA”] preempts States’ laws relating
to ERISA-governed Retirement Plans, ERISA § 404(a)(1)(C) sets up diversification as the presumed norm of
prudence. Courts have interpreted ERISA § 404(a)(1)(B)’s prudence standard and § 404(a)(1)(C)’s
diversification norm as standards that include Modern Portfolio Theory and the Prudent Investor Rule.
We explain how we use this body of knowledge under
“Our analysis and investment strategies” at page
8.
This Brochure uses “you” and “your” to refer to a client, whether he or she is a natural person, or it is a
non-natural person or entity. However, some parts of the text use “you” and “your” to refer to a
March 13, 2024 Disclosure Brochure page 5 of 24
prospective client who or that considers whether to engage our services. Likewise, the cover page’s use of
“you” includes any reader of our Brochure.
Usually, we offer our advice in one of three kinds of services; these are described under
“Services we
offer”, which begins at page
5.
Our service is governed by a written Agreement or agreements with our client. An Agreement may impose
restrictions and conditions beyond those described in our Brochure. Only we and our client (or his, her, or
its duly authorized representative) may negotiate or enforce our Agreement.
Incorporated in 1991, Axia has been in business since 1992.
We serve as a Fiduciary to our
clients. Our first duty is to our clients over and above the interests of the
firm and our employees. We work in the best interest of our clients. We’ve purposely structured our firm
to avoid any real or perceived conflicts of interest. We avoid conflicts of interest by rejecting relationships
with any organization, financial or otherwise, that would oblige us to do business with them on behalf of
our clients, other than because of the quality of their investments and services.
We’re a fee-only Investment Adviser. We work, or can work, with many kinds of clients, including
individuals, trusts, estates, charitable organizations (including endowments and foundations), and
Retirement Plans. We’re independent; we have no common ownership with any broker-dealer, insurance
agency or company, or any accounting or law firm.
Who owns Axia Advisory?
Keith L. Shadrick is Axia’s Owner.
4.B Services we offer
Our three primary service offerings are:
• Retirement-Plan consulting,
• investment-management consulting,
• private wealth management.
We use separate Brochures for different services. This Brochure describes our wealth-management
services. Also, we use this Brochure with all clients and prospective clients beyond Retirement Plans’
Fiduciaries.
We offer investment and financial-planning advice. Our advice might include investment management—
that is, discretionary investment advice where we make investment decisions for you. Our advice might
include non-discretionary investment advice, in which we present recommendations about what
investments you should buy, hold, or sell but you make your decisions and may instruct us to implement
those decisions. Our advice might include financial planning in a range of areas including retirement and
estate planning, insurance, charitable giving or gifting, risk management and budgeting.
Our advice might include suggestions influenced by our understanding of accounting, tax law, or other
legal issues, but we don’t give accounting, tax, or legal advice.
March 13, 2024 Disclosure Brochure page 6 of 24
Investment management or advice
We offer investment advice on a discretionary basis (we make and implement the investment decisions),
or a non-discretionary basis (we make recommendations and you decide whether to follow them).
Financial planning
We offer advice and guidance on a range of financial issues like retirement planning, college savings,
insurance, estate planning. These services may be included for a client who uses us for investment advice.
We may also offer financial planning as a stand-alone service. When we offer financial planning as a stand-
alone service, it may be for a specific project, a specified time, or an ongoing relationship.
Under any service, we’re not obliged to check information we received from you or from your lawyer,
accountant, and other professionals. (If you ask, we may suggest other professionals to help you
implement your financial planning. You’re never obliged to engage anyone we suggest.)
Tell us about changes to your circumstances or investment objectives so we can review, evaluate, and
revise our previous advice.
4.C How we tailor our services
We’re willing to tailor our services to meet your needs and preferences. We do this through our initial
interviews and ongoing conversations where we try to understand your circumstances and issues.
Another way we tailor our services to meet your needs and preferences includes investment restrictions.
For discretionary management, you may direct us not to invest in a particular investment, or in a kind of
investment, that you specify clearly enough so we can apply your restriction. We reserve the right to
decline an account if we believe the investment restrictions placed on its management is onerous.
4.D Not a wrap-fee program
None of our services involves a wrap-fee program.
4.E Assets under our management or advice
As of December 31, 2023, Axia had about $1,516,521,001 of assets under our management, with about
$986,097,482 on a discretionary basis, and about $530,423,518 on a non-discretionary basis.