A. Services
About Securian
Securian Financial Services, Inc. (“Securian”) is registered with the Securities and Exchange
Commission (“SEC”) as both an investment adviser and a securities broker-dealer. It is also a
member of FINRA and SIPC. As a broker-dealer, Securian offers a wide range of securities
brokerage services and products, including mutual funds and variable insurance products.
Securian provides investment advisory and brokerage services to a variety of clients, including
individuals, businesses, and retirement plans. Clients may simultaneously receive both
investment advisory and brokerage services from Securian. Advisory services offered by Securian
include but are not limited to financial planning for individuals and businesses, asset allocation
and portfolio management services.
This Wrap Fee Program Brochure describes the Securian Spectrum Advisor Plus wrap fee program
(the “Program”). Securian offers five other wrap fee programs. In Securian Select, clients get
access to a multi-discipline managed account housed in a single portfolio managed on a
discretionary basis by third party manager(s). In Securian Spectrum Advisor, Securian, on a non-
discretionary basis, develops and recommends an investment strategy and portfolio of securities
that is appropriate for a client’s investment objective, risk tolerance, time horizon, and other
pertinent financial characteristics. Securian Freedom is managed by Securian on a discretionary
basis, and clients retain Securian to assist in establishing investment objectives and selecting an
asset allocation strategy for the client’s account. Securian One is a unified managed account
wrap-fee program providing a diversified portfolio pursuant to a single asset allocation plan,
holding a variety of securities (such as stocks, bonds, mutual funds, exchange-traded funds,
Treasuries and money market funds) and receiving advice from multiple investment advisers
(some discretionary, some non-discretionary) within a single account. Portfolio Solutions I is an
asset allocation program in which Securian develops and recommends for a client’s account an
investment strategy and portfolio of securities, including mutual funds, exchange traded funds,
and, in some cases, individual securities, that is appropriate for the client’s investment objective,
risk tolerance, time horizon and other pertinent financial characteristics. Each of these wrap
programs is described in a separate wrap fee program brochure containing the information
required by Part 2A, Appendix 1 of Form ADV. Advisory services offered by Securian other than
wrap fee programs are all described in another brochure containing the information required by
Part 2A of Form ADV.
Securian Spectrum Advisor Plus Program
Securian Spectrum Advisor Plus is a wrap fee program sponsored by Securian that provides both
non-discretionary investment management services and financial planning services. As described
below, these services are provided in exchange for a combination of an asset-based investment
management fee and a negotiated annual financial planning fee. The Program seeks to
coordinate a client’s overall financial plan with the investment management strategy and other
recommendations made by Securian with respect to such client’s assets in the Program.
Securian Spectrum Advisor Plus Program – Financial Planning Services
Securian will provide clients comprehensive financial planning services covering the following six
areas: (1) financial position, (2) investment planning, (3) income tax planning, (4) protection
planning, (5) retirement planning, and (6) estate planning. The financial planning services
provided to clients will seek to address clients’ financial concerns based on clients’ current
financial condition and future needs and objectives. The financial planning services will include
various recommendations and planning strategies, which may include recommendations to
allocate assets among generic product or account types. Financial planning services do not
include recommendations to buy or invest in specific products or accounts. The scope of the
financial planning services will vary depending upon such factors as age, income, net worth, and
financial goals, but clients are responsible for selecting the scope of services.
Securian is also registered as a securities broker-dealer and an insurance agency. Consultants
(defined below) are also registered representatives authorized to provide securities brokerage
services through Securian and licensed insurance agents for one or more insurance companies.
In these other capacities Securian and/or the Consultant may offer to assist clients in
implementing one or more financial planning recommendations. Likewise, Securian and the
Consultant may offer clients investment advisory services in addition to those that are a part of
the Program. None of these additional services are covered by this Brochure. If clients elect to
receive any of these other services, they will be charged fees and/or commissions and Securian
and the Consultant will receive compensation separate from, and in addition to, the fees
described in this Brochure. Clients are under no obligation to purchase any such additional
services from Securian or the Consultant.
Securian Spectrum Advisor Plus Program – Investment Management Services
Securian Spectrum Advisor Plus is a wrap fee program sponsored by Securian. In accordance with
the Program, clients open a brokerage account (“Account”) with Securian that will hold the assets
of the Account. Clients pay fees and charges for various services provided under the Program in
accordance with a bundled fee arrangement described below. Securian has established and
actively maintains model portfolios and asset allocation strategies (“Strategies”) that may be
used in providing investment advice to clients with respect to assets in the Program. Securian
has also established and actively maintains a recommended list of mutual funds and exchange
traded funds on which Securian has performed due diligence (“Preferred List”) that may be used
in recommending securities pursuant to the Strategies. Based upon information provided by the
client regarding the client’s investment objective, risk tolerance, time horizon, and other
pertinent financial characteristics (“Characteristics”), Securian will recommend a Strategy and a
portfolio of securities that is appropriate for the client’s Account. Where appropriate for the
client’s Characteristics, the recommended Strategy may be a customized Strategy rather than
one based on Securian’s model portfolios. Securities recommended for the Account may be
securities from the Preferred List, as well securities not on the Preferred List, including equities,
corporate bonds, U.S. government bonds, mutual funds, exchange traded funds, closed-end
funds, municipal securities and other securities.
Clients may dedicate a portion of the Account to hold non-managed or “non-advised” assets
(“Administrative/Non-Managed Assets”). The Administrative/Non-Managed Assets may be
either cash/cash equivalents or securities from the Account or that have transferred into the
Account. One type of Administrative/Non-Managed Assets is cash which the Client has directed
Securian not to include in the model portfolios (“Protected Cash”). Administrative/Non-Managed
Assets will not be managed or advised under the Program and no advisory services, or any
services other than such administrative and reporting services, will be rendered with respect to
these assets pursuant to the Agreement. Client authorizes Securian to classify securities as
Administrative/Non-Managed Assets as Securian determines is necessary. In addition, the
Administrative/Non-Managed Assets will not be included when determining the amount of the
Spectrum Fee.
Securian’s securities recommendations under the Program are based on Securian’s due diligence
and analysis of securities and their potential for meeting a client’s financial needs. Accordingly,
Securian seeks to make securities recommendations that are consistent with a client’s
Characteristics and reasonable guidelines or restrictions provided by a client in writing accepted
by Securian. Unless otherwise instructed by the client, Securian will reinvest all dividends and
other distributions in client’s Account.
Except for the ability to liquidate securities in order to generate cash to pay fees owed by clients,
the Program is non-discretionary in nature and trades in a client’s Account are executed on a
non-discretionary basis. In certain cases, however, clients may expressly grant Securian limited
discretionary authority to buy and sell mutual funds and/or exchange traded funds in clients’
accounts. Therefore, except as described in the prior sentences, clients in the Program are
required to review and approve Securian’s Strategy and security recommendations. Except as
described in the prior sentences, Securian will not place securities orders without obtaining the
prior approval of clients.
Securian is authorized to follow the instructions of clients in every respect concerning the client’s
participation in the Program. However, Securian may reject such instructions if, in Securian’s
reasonable judgment, such instructions (i) are not consistent with the terms of the Program, or
(ii) if implemented, would violate any applicable law, rule or regulation.
The Strategies utilized by Securian may vary from client to client. In most cases, Securian will
recommend purchasing mutual funds, exchange traded funds (ETFs), and other equity and fixed
income securities. Except where Securian has limited discretion as noted above, clients must
decide whether to accept or reject Securian’s recommendations.
Mutual fund shares transferred into the Account by a client will be analyzed on a case-by-case
basis and may, in the discretion of Securian, be liquidated within sixty days of such transfer,
transferred to a separate Securian brokerage account or permitted to be held in the Account.
Further, Securian may, in its sole discretion, reject any other type of security that a client wishes
to transfer into the Account. Clients are solely responsible for any losses or tax consequences as
a result.
Clients are responsible to vote all proxies, consents, waivers and other documents regarding
corporate actions, with respect to any securities held in their Account. Securian will not vote
proxies.
Nor will
Securian be responsible for taking action or rendering any advice with respect
to securities held in the Account which become subject to legal notices or proceedings, including
bankruptcy proceedings.
Securian’s Model Allocation Portfolio System
Securian’s Model Allocation Portfolio System (“MAPS”) seeks to take a systematic approach to
providing an investment portfolio based on a client’s risk profile, time horizon and investment
objectives. Each of the five MAPS portfolios represents a different level of expected risk and
return that seeks to accomplish its objectives by allocating portfolio assets across a different mix
of investment sub-asset classes. MAPS offers the following five model portfolios, each with a
different investment risk and return profile:
• Income Portfolio – appropriate for clients whose primary objective is current income.
• Income and Growth Portfolio – appropriate for clients whose primary objective is
income, with a secondary objective of modest long-term growth.
• Conservative Growth Portfolio – appropriate for clients whose primary objective is
growth of principal with a secondary objective of income.
• Growth Portfolio – appropriate for clients whose objective is high long-term growth of
principal.
• Aggressive Growth Portfolio – appropriate for clients whose objective is the highest
possible long-term growth of principal.
The Income Portfolio is the most conservative MAPS portfolio, but it still has exposure to certain
risks, including interest rate risk, credit risk, and loss of principal. The Aggressive Growth Portfolio
is the most aggressive MAPS portfolio, and may experience considerable fluctuations in value,
especially over the short-term, including loss of principal.
MAPS includes three different allocation strategies for aligning a portfolio with a client’s financial
goals:
• Core Allocation Strategy – In this strategy, allocations in each of the five MAPS model
portfolios use up to seven investment sub-asset classes.
• Strategic Allocation Strategy – In this strategy, allocations in each of the five MAPS model
portfolios use up to 12 of 13 available investment sub-asset classes. The strategic model
portfolio allocations seek greater risk-adjusted returns through additional categories of
investments.
• Tactical Allocation Strategy – In this strategy, allocations in each of the five MAPS
portfolios also use 13 available investment sub-asset classes, but the strategy includes an
additional category for more specialized tactical investments to further customize a
portfolio. An allocation to tactical investments is intended to create a more efficient
portfolio, but it generally increases exposure to risks that apply to any individual sub-asset
class. Additional risk may also be incurred because managers of tactical investment
vehicles may have broad investment discretion with little restriction as to asset type,
market capitalization or investment style. Tactical investment strategies may use
speculative techniques such as short sales, investments in derivatives, and the use of
long/short strategies, and may also place a greater reliance on a manager’s ability to
accurately anticipate the future value of a security or the market.
Securian’s Preferred List Selection Process
When selecting a mutual fund or exchange traded fund for inclusion on the Preferred List,
Securian seeks to utilize a disciplined due diligence process which includes the examination of a
variety of factors, which may include, but is not limited to the following:
• Mutual Funds – factors include the manager’s investment style, whether the approach is
active or passive, the manager tenure and length of track record, stability of investment
personnel, assets under management/capacity, rate of return as compared to risk and
peers over multiple time periods, expense ratio, level of adherence to a stated investment
style, investment approach, investment performance, level of risk and
portfolio holdings.
• Exchange Traded Funds – factors include the benchmark, tracking error to the benchmark,
investment performance, volume, liquidity, cost, comparison to peer groups, investment
objective, investment philosophy, investment process, construction methodology and
portfolio holdings.
Administrative, Execution and Clearance Services
Each client participating in the Program is required to enter into a brokerage account agreement
with Securian to open an Account that will hold the client’s assets covered by the Program.
Clients also direct that all orders for the purchase or sale of securities in client Accounts will be
introduced to Pershing, LLC (“Pershing”) by Securian and settled and cleared by Pershing.
Pershing (member FINRA/SIPC) is a global provider of financial business solutions to institutional
and retail financial organizations and independent registered investment advisors. Pershing is a
subsidiary of The Bank of New York Mellon Corporation. See
www.pershing.com for more
information about Pershing (Securian makes no representations as to the completeness or
accuracy of such materials).
By directing trades to Pershing in the foregoing manner, Securian will not be able to: (i) select
broker-dealers on the basis of price or other attributes; (ii) negotiate commissions (or mark-ups
or mark-downs on fixed income and other securities) or negotiate the price or quality of the
custody, settlement and clearing services provided by Pershing; or (iii) aggregate or “batch”
orders for purposes of execution with orders for the same securities for other accounts managed
by Securian which are not settled and cleared by Pershing. As a result, certain transactions may
result in less favorable net prices on the purchase and sale of securities than would be the case
if Securian were able to shop around and select broker-dealers. The ability to achieve best
execution may be partially or wholly limited by the nature of the directed brokerage arrangement
and clients may not achieve executions of the nature, quality, speed or price that might otherwise
occur. As a result of the foregoing, a client’s Account might not generate the returns it would if
orders were not directed. However, since management of the Account occurs via a bundled fee
arrangement that includes the costs of Pershing’s settlement and clearance services, the use of
Pershing should not result in additional brokerage fees to a client.
As the introducing broker-dealer of record for Accounts, Securian has an interest in having
Pershing settle and clear securities transactions under the Program. Under its agreement with
Pershing, the fees charged and the level of services provided by Pershing are dependent upon
the amount of assets introduced by Securian to Pershing. The securities trades directed to
Pershing under the Program are included in the calculation of assets introduced by Securian to
Pershing and therefore may result in reduced fees being charged to Securian by Pershing or in
Securian’s receipt of additional services from Pershing. Pershing’s custodial and brokerage
services are included in the fees paid by clients as described in Item 4.B below.
Clients authorize Securian to aggregate purchase and sale orders for securities held (or to be
held) in client Accounts with similar orders being made on the same day for Securian’s other
accounts which are also custodied or cleared through Pershing. Securian may aggregate trades
for clients and transmit “batched” orders in an effort to reduce market impact and to obtain best
execution. When an order is so aggregated: (i) the actual prices applicable to the aggregated
transaction will be averaged and the Account and each other account or portfolio participating
in the aggregated transaction shall be treated as having purchased or sold its portion of the
securities at such average price, and (ii) all transaction costs incurred in effecting the aggregated
transaction shall be shared on a pro-rata basis among the accounts participating in the
transaction. Where the batched order is not filled in its entirety, clients will be deemed to have
purchased or sold a proportionate share of the securities involved. In some cases, aggregating
orders may adversely affect the size of the position obtainable, and in some cases, clients would
receive better price execution if they did not participate in a batched order.
Pershing maintains custody of Account assets and performs custodial functions including, among
other things, crediting of interest and dividends on Account assets and crediting of principal on
called or matured securities in the Account, together with other custodial functions customarily
performed with respect to securities brokerage accounts.
Securian will not have legal custody of Account assets except in the event the client instructs
Securian, through a letter of instruction or other similar asset transfer authorization
arrangement, to transfer assets from time to time to a designated third party upon the future
instruction of Securian in accordance with the limited authority the client grants to Securian.
Cash balances in the Account are subject to periodic sweeps into a choice of one or more money
market funds as Securian may make available from time to time for designation by clients on the
brokerage account application. As part of the program, the client must agree that, after providing
the client prior notice, Securian may change the sweep option and transfer funds from one sweep
option to another sweep option, including changes between money market funds and bank
deposit products. The client receives a separate prospectus relating to the applicable mutual
fund(s), which prospectus will contain a complete description of the relevant fees and/or
expenses.
Pershing makes available to the client confirmations of each purchase and sale. Monthly Account
statements are forwarded by Pershing to the client for each month in which activity occurs in the
client’s Account. Quarterly account statements are also forwarded by Pershing to the client,
regardless of whether there has been any activity in the client’s Account.
Securian has also entered into an agreement with a general administrator for the Account
(“General Administrator”), and the General Administrator’s functions shall include various
administrative services, including making quarterly reports analyzing the performance of the
Account available to Client, calculating Account fees and directing collection of Account fees
through Pershing, pursuant to the client instructions transmitted by Securian, deposits to and
withdrawals from the Account. Upon the date of this Wrap Fee Program Brochure, Envestnet
Asset Management, Inc. is the General Administrator for the Program, however, Securian
reserves the right to replace the General Administrator from time-to-time.
The costs of the execution, clearance and administrative services provided by Pershing and
General Administrator are included in the total Spectrum Fee, described below.
If a client has granted Securian the limited authority to do so, upon the client’s instruction,
Securian will (1) instruct Pershing or other custodians to transfer assets from the client’s Account
to another of the client’s identically registered account(s) with Securian held at such custodian;
or (2) instruct Pershing or other custodians to remit to the client funds or securities in the client’s
Account to the client at the client’s address of record with Pershing. Securian does not have the
authority to open an account on a client’s behalf or to designate or change a client’s address of
record.
Securian Consultants
Certain of the services available under the Program are provided by Securian’s investment
advisor representatives (“Consultants”), who are also registered securities representatives of
Securian (i.e., registered with FINRA to sell securities) and licensed as insurance agents for
Securian's affiliate, Minnesota Life Insurance Company ("Minnesota Life"). Consultants may also
be licensed as insurance agents for other insurance companies.
Each Consultant must meet at least one of the following requirements:
• Qualify as a Chartered Financial Analyst (CFA), CERTIFIED FINANCIAL PLANNERTM Professional
(CFP®), or Chartered Financial Consultant (ChFC);
• Pass the NASAA Investment Advisors Law (NASD Series 65) exam or the NASAA Uniform
Combined State Law (NASD Series 66) exam; or
• Otherwise meet state and firm investment advisory registration requirements.
Each Consultant that has clients in the Program is compensated by Securian for providing
financial planning, investment advisory and related services. The amount of this compensation
may be more than what the Consultant would receive if the client participated in other programs
offered by Securian, or paid separately for financial planning, investment advice, brokerage and
other services. A Consultant may therefore have a financial incentive to recommend the Program
over other programs or services.
Opening an Account
Clients may enter the Program by executing an investment management agreement
(“Agreement”) with Securian. This Agreement covers both the financial planning and investment
management services provided in connection with the Program. As noted above, clients must
also open a brokerage account with Securian in order to participate in the Program.
In connection with opening an Account, Securian obtains information regarding the client’s
investment objective, risk tolerance, time horizon, and other financial characteristics. Based
upon the information provided by the client, Securian will develop and recommend both a
financial plan for the client and an investment strategy and securities for the Account. Except as
discussed herein, it is up to the client to decide whether to accept or reject Securian’s
recommendations.
Terminating an Account
Either Securian or a client may terminate the Agreement at any time with written notice and
thereby terminate an Account under the Program. If an Account is terminated during a quarter,
or the client makes a full withdrawal of Program assets, Securian will refund to the client a pro-
rata portion of any pre-paid, but unearned Spectrum Fees paid for that quarter. The amount
refunded to the client will be based on the number of days remaining in the quarter as of the
date of termination. However, termination will not affect any liabilities or obligations incurred
or arising from transactions in a client’s Account that are initiated before such termination. If the
Agreement is terminated before the end of a quarter, the portion of the annual financial planning
fee pre-paid for that quarter will not be refunded.
Upon termination of the Agreement, Securian will not be obligated to recommend any action
with regard to the securities in the Account and clients will have sole responsibility to decide
what happens to the assets in the Account. Upon termination, it is clients’ responsibility to issue
instructions in writing regarding the assets held in the Account. Clients may either instruct
Securian to liquidate the assets in the Account or to transfer the assets in the Account to a third
party. If clients instruct Securian to liquidate the assets in the Account, clients will be subject to
Securian’s then-current standard commission and fee schedule. If clients do not provide
instructions regarding the Account assets to Securian upon termination of the Agreement, then
Securian will automatically transfer the assets therein to a standard brokerage account that is
subject to Securian’s then-current standard commission and fee schedule.
B. Fees
Annual Financial Planning Fee
The amount of the annual financial planning fee is set forth in client’s investment management
agreement for the Program. The entire amount of the annual financial planning fee will be
deducted from a client’s Account by Pershing and paid to Securian. Securian then uses a portion
of the annual financial planning fee to pay its Consultant. The amount of the annual financial
planning fee is negotiable between each client and the client’s Consultant. The first year annual
financial planning fee may be a higher amount than the annual financial planning fee payable in
subsequent years. In negotiating the amount of the annual financial planning fee Consultants
take into consideration, among other things, the complexity of the client’s financial planning
needs, the amount of client assets in the Program, whether the client maintains other securities
brokerage or investment advisory relationships with Securian, the amount of assets in such other
accounts, and the duration and scope of the client’s relationships with Securian. In general,
clients may be able to negotiate a lower annual financial planning fee if they maintain other
securities brokerage or investment advisory relationships with Securian.
Spectrum Fee
Each client in the Program pays an annualized asset-based investment management fee
(“Spectrum Fee”) in accordance with the schedule set forth in the Agreement. The Spectrum
Fee, which includes the costs of the investment advisory, execution, custody, clearing and
administrative services provided by Securian, General Administrator, and Pershing under the
Program (exclusive of certain charges associated with securities transactions described below
and charges for optional services), is comprised of two components: (i) the “Program Fee”
charged by Securian (which covers, among other things, the cost of the administrative, clearance
and custodial services charged to Securian by Pershing and General Administrator) and (ii) the
“Consultant Fee,” which is the fee charged for services of Securian’s Consultant.
General Administrator calculates the Spectrum Fee and directs Pershing to deduct the entire
Spectrum Fee from Client’s Account and pay it to Securian. Pershing retains the portion of the
Program Fee due to Pershing for its services. Securian then uses a portion of the Program Fee
(which is included in the total Spectrum Fee) to pay General Administrator, and a portion of the
Consultant Fee (which is also included in the total Spectrum Fee) to pay its Consultant.
The Program Fee is not negotiable. In contrast, the Consultant Fee is negotiable, within limits,
by clients and the Consultant. In negotiating the Consultant Fee, Consultants generally take into
consideration, among other things, the amount of assets clients maintain in the Program,
whether clients maintain other securities brokerage or investment advisory relationships with
Securian, the amount of assets in such other accounts, and the duration and scope of clients’
relationship with Securian. In general, clients may be able to negotiate a lower Consultant Fee if
they maintain other securities brokerage or investment advisory relationships with Securian.
Maximum Fees for Client Accounts Opened After June 1, 2014
Account Assets* Maximum
Consultant
Fee
Program Fee Maximum
Spectrum Fee
First $250,000 1.75% 0.25% 2.00%
Next $250,001 to $500,000 1.80% 0.20% 2.00%
Next $500,001 to $1,000,000 1.20% 0.10% 1.30%
Next $1,000,001 to $2,000,000 1.01% 0.09% 1.10%
Next $2,000,001 to $3,000,000 1.02% 0.08% 1.10%
Next $3,000,001 to $4,000,000 1.03% 0.07% 1.10%
Next $4,000,001 to $5,000,000 1.04% 0.06% 1.10%
Next $5,000,001 to $10,000,000 1.05% 0.05% 1.10%
Over $10,000,000 1.10% 0.00% 1.10%
* This fee table and the annual financial planning fee may not apply to accounts opened on or before June 2, 2014.
For fee information about such accounts, please contact Securian or your Consultant.
The total fees charged under the Program may be higher than what another investment adviser
would charge for a similar combination of services, or what would be charged by Securian or
another investment adviser if the investment advisory and securities brokerage services were
provided separately. The relative cost of the Program is affected by such factors as the
administrative costs associated with wrap fee arrangements, the fees charged when investment
adviser and brokerage services are purchased separately, the size of a client’s Account, and the
level of trading activity in a client’s Account.
The Spectrum Fee does not include certain fees and charges associated with securities
transactions, including the following: (i) charges imposed by law; (ii) internal charges and fees,
including redemption or short-term trading fees, that may be imposed by any collective
investment vehicles, such as mutual funds, closed-end funds, unit investment trusts, exchange-
traded funds or real estate investment trusts (clients pay a pro-rata portion of such fees, which
are in addition to the fees paid to Securian under the Program), and (iii) fees for optional services
elected by clients. Pershing also charges interest on any outstanding loan balances to clients who
borrow money from it. Clients will also be charged for specific account services, excluding
commissions for transactions in clients’ Accounts, as described in Securian’s Client Commission
and Fee Schedule. If clients choose to have trade confirmations delivered by mail rather than
delivered electronically, there will be a charge for each trade confirmation. See the Securian
Account agreement or ask a Securian Consultant for more information regarding these fees.
Additionally, assets in the Account may be designated as Administrative/Non-Managed to aid in
the transition of client assets into the model portfolios, as well as to hold certain assets on an
ongoing basis. Securian does not provide investment advice on Administrative/Non-Managed
Assets, and Administrative/Non-Managed Assets are excluded from the Spectrum Fee
calculation.
Each Consultant assigned to a client’s Account will be compensated for services to such client by
receiving a percentage of the compensation received by Securian in accordance with the fee
schedule attached to the client’s investment management agreement with Securian. Consultant
compensation ranges from 30% to 56% of the total compensation the Consultant’s sales and
other activities produce for Securian in any given twelve-month period. Therefore, depending
upon the Consultant’s total sales and revenue production from all clients, the Consultant’s
compensation for the services provided to client may range from 30% to 56% of the
compensation received by Securian pursuant to the formula described in client investment
management agreements with Securian, and it can change each month depending upon the
Consultant’s total revenue production for Securian.
Each Consultant also has one or more supervisors who do not provide Services directly to client.
These supervisors are paid a percentage of the compensation received by Securian for the
supervisory services they provide for Securian. Some of these supervisors may share a portion
or all of their compensation with the Consultants they supervise. For more detailed information
about the compensation paid to Consultants, please call Securian at (800) 820-4205.
Clients should be aware that the Program Fee will be reallocated and the Consultant Fee will be
increased in the event the aggregate value of assets of clients of your Consultant, or group of
consultants with which your Consultant works, under investment advisory programs sponsored
and operated by Securian (collectively, the “Core Programs”) reach a specified threshold. As
Consultants grow the aggregate value of clients’ assets in Securian’s Core Programs, the resulting
economies of scale are shared with the Consultants by reallocating flat dollar amounts of the
aggregate Program Fees to the Consultants in the form of increased Consultant Fees. Consultants
or consultant groups with quarterly aggregate client assets in the Core Programs generally
exceeding $75 million will earn additional compensation ranging from $2,500 to $15,000
quarterly, with the payment increasing at increased asset levels. For more detailed information
about the compensation paid to your Consultant, please call Securian at (800) 820-4205.
The increase in the Consultant Fee that is paid to the Consultant for reaching various levels of
assets under management presents a conflict of interest because it provides a financial incentive
for your Consultant to recommend one of Securian’s Core Programs, including this Program, over
other available investment advisory programs that are not sponsored and operated by Securian,
since such programs do not offer the same possibility of higher payouts to your Consultant.
Securian has adopted policies and procedures to mitigate this conflict for Consultants. In addition
to these policies and procedures, a Consultant's recommendation of an advisory program will be
reviewed by personnel in Securian's home office to confirm that the program selected aligns with
the stated objectives and rationale clients provide to us in the program application paperwork.
Payment of Fees
Annual Financial Planning Fee. A portion of the annual financial planning fee is generally paid in
advance each quarter. The actual amount of the financial planning fee paid in advance is
negotiated between client and Consultant, subject to limitations imposed by Securian. If the
Account is terminated by either party, the portion of the annual financial planning fee paid for
that quarter will not be refunded.
Spectrum Fee. The Spectrum Fee is payable at inception based on the value of the assets in the
Account on the date of inception and quarterly in advance thereafter based on the value of the
assets in the Account on the last business day of the prior quarter. The Fee will be calculated by
multiplying the Spectrum Fee annual rate as set forth in the Investment Management Agreement
by the value of the assets in your account on the last business day of the prior quarter, by the
fraction of the number of days in the calendar quarter divided by the number of days in the
calendar year (except as discussed below in connection with additions to the Account). The first
Spectrum Fee payment will be assessed on a pro rata basis in the event the Agreement is
executed at any time other than the first day of the billing cycle. For the purposes of fees and
valuation, securities will be valued at the closing price on the principal exchange on which they
are traded. All cash and securities in the Account, except for Administrative/Non-Managed
Assets, will be included in determining the value of the Account for the purpose of calculating
the Spectrum Fee. Securities not listed on a national securities exchange will be valued in a
manner determined in good faith by Securian by consulting other exchanges or validation
services.
Assets from Which Fees Will Be Paid. All applicable fees will be paid first out of free credit
balances, if any, in the Account, second, from the liquidation or withdrawal of shares of any
money market funds or balances in any money market account, and to the extent that such assets
are insufficient to satisfy payment of the fee, from the sale and liquidation of other Account
assets. Securian may, in its discretion and without seeking the prior consent of clients, sell
securities to the extent necessary to pay the financial planning fee or Spectrum Fee. Such
discretion may be exercised only if the free credit balances in a client’s Account are not sufficient
to pay the financial planning or Spectrum Fee. Clients are solely responsible for any losses or tax
consequences as a result of a sale of Account assets to satisfy their obligation to pay the Spectrum
Fee.
Impact of Additions and Withdrawals on the Spectrum Fee. Additions to clients’ Accounts may
be made at any time and will result in an adjustment to the Spectrum Fee with respect to such
new assets prorated from the date of the addition. Withdrawals of assets from clients’ Accounts
may be made at any time and will result in an adjustment to the Spectrum Fee with respect to
the withdrawn assets prorated from the date of the withdrawal. The proceeds of a withdrawal
will be delivered to the client after the time necessary for the resulting trades to clear and settle.
If the Account is terminated by either party, Spectrum Fees paid for that quarter will be prorated
based on the number of days in the quarter for which the Program was in effect and any
unearned Spectrum Fees will be returned to the client, and the market value of the assets in the
Account shall be calculated as of the close of trading on the last business day that Securian
provides investment management services under the Agreement.
Client Authorization to Deduct Fees. The client will authorize Pershing to deduct all applicable
fees from the client’s Account. All such fees will be clearly noted on the client’s statements.