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• Advising on specific financial issues and risks.
• Establishing financial goals.
• Reviewing and providing a statement of current financial position.
• Analyzing cash flow.
• Developing target asset allocation.
• Reviewing allocation expected returns.
• Reviewing debt management.
• Coaching or validation in addressing a particular financial topic.
• Designing, implementing, monitoring, and maintaining an investment plan.
• Tax planning/preparation
• Estate planning
Unless otherwise requested by a client, the Firm manages each Wealth Management client’s
assets on a discretionary basis based on an investment strategy tailored to the needs of the
client. The strategy includes an Exencial asset allocation model portfolio comprised of
investments determined to be suitable and in line with the client’s overall investment objectives
and risk appetite provided by the client to the Firm. Exencial offers four main types of asset
allocation model portfolios, which are designed to provide clients with an appropriate mixture of
preservation, inflation protected, and growth assets that the Firm believes is likely to meet a
client’s future cash flow needs and planning parameters.
Wealth Management clients may impose reasonable restrictions on investing in certain
securities or may request to be contacted before trading certain types of securities.
Client assets being transferred to the Firm for management may include cash or securities.
After consultation with the client, the Firm may liquidate and/or hold transferred securities as
part of the investment strategy. Assets can potentially be liquidated before transferring in as
well. These actions may subject the client to taxes, transaction fees, or other investment-
related costs. If the client wishes to retain existing securities, the client needs to notify the Firm.
Upon approval of the strategy by the client, the Firm implements and manages the investment
portfolio by:
• Selecting specific investments.
• Placing trades in the client’s account.
• Rebalancing the account, as necessary.
• Regularly monitoring the investments and exposure.
In providing Wealth Management services, the Firm primarily allocates client assets among
asset classes that are in line with the client’s selected asset allocation portfolio. The asset
classes utilized include cash, fixed income, U.S. large companies, U.S. small companies,
international large companies, international small companies, emerging markets, and real
and alternative assets. Securities used to gain asset class allocations include individual
equities, fixed income securities, mutual funds (including exchange traded funds (“ETFs”) and
exchange traded notes (“ETNs”), private investments, derivatives (e.g., options), and cash
and cash equivalents.
For certain qualifying clients, the Firm will recommend investments in certain privately held
securities. Such securities are usually structured as private investment funds that invest in
different types of instruments, including but not limited to equities, debt instruments,
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commodities, real estate, private companies, and other private investment funds. The Firm
will only recommend private funds to clients meeting the regulatory definition of “accredited
investor” under Regulation D of the Securities Act of 1933, and/or “qualified client” under the
Investment Advisers Act of 1940. While a Firm representative goes over the details of the
investment and its risks when providing the recommendation, it is important that clients also
read the fund’s offering documents that are provided by the Firm in their entirety prior to
investing as these investments are deemed higher risk than similar publicly traded
securities. These documents outline the fund’s investment strategy and objectives, the fees
to be paid by investors, the risks, and conflicts, along with any lockup periods and potential
tax consequences.
Exencial Wealth Advisors also, from time to time, will recommend and/or utilize independent
third-party investment managers (“Separate Account Managers” or “SAMs”) to manage a
portion of a Wealth Management client’s assets. See below under “Use of Separate Account
Managers” for further information.
Depending on the needs of a client and at client request, the Firm will also provide investment
advice on other assets a client owns, such as annuities, or assets held in an employer-
sponsored retirement plans or other outside account. In addition, depending on the needs of a
client the Firm will recommend that the client consider obtaining a securities-backed loan or
line of credit with an unaffiliated third-party bank or brokerage firm. These types of loans are
not suitable for all investors and carry a number of risks (Please refer to Item 8 below for
details on applicable risks). Clients should not obtain such a loan or line of credit without fully
understanding the benefits and risks.
In these cases, described in the paragraph above, the Firm is primarily providing consulting
services and not continuous management recommendations. The Firm will typically
incorporate these positions into a recommended overall asset allocation and regularly review it.
The Firm recommends that clients meet with a representative at least annually to review their
specific portfolio. Clients are advised to notify the Firm as soon as possible if their financial
situation or investment objectives should change.
Please refer to Item 8 below for further information on our investment strategies, asset
allocation model portfolios, and asset classes utilized, along with the associated risks.
Financial Planning Consulting Services
The Firm offers Financial Planning Consulting to clients on a broad range of issues
including general cash flow planning, retirement planning, insurance analysis, education
funding, tax planning, tax preparation, charitable giving, business succession, risk
management, estate planning, financial aspects of divorce, and other services agreed to in
writing.
The Firm provides specific recommendations to clients who engage the Firm for Financial
Planning Consulting. Depending on the needs of a client, the Firm will recommend the
services of professionals, including the Firm itself, to implement the financial planning
recommendations. The client retains absolute discretion over all implementation decisions and
is under no obligation to act upon any of the recommendations. Clients should be aware that a
conflict of interest exists if the Firm recommends its own services as part of its
recommendations. Financial Planning Consulting clients are advised that it is their
responsibility to notify the Firm of changes in their objectives or financial situation.
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When performing financial planning consulting services to a client, the Firm will request
information from the client and possibly other professionals such as the client’s tax advisor,
insurance agent, attorney, etc. When relying on information from others, the Firm is not liable
for errors in the information provided and is not required to independently verify the information
provided.
401(k)/Retirement Plan Consulting and Fiduciary Services
The Firm serves all of its 401(k)/Retirement Plan clients as a fiduciary. At the beginning of the
relationship, the Plan client chooses whether the Firm will manage its accounts under Section
3(21) or 3(38) of the Employee Retirement Income Security Act (“ERISA”), and such
election will be outlined in the client agreement.
As part of this service offering, the Firm meets with plan sponsors to determine the
investment goals of the plan. For plans that do not already have one, the Firm will assist in
developing an investment policy statement that is consistent with the plan document by:
• Listing criteria for selection of investment vehicles, procedures, and timing of
performance monitoring.
• Providing analysis and advice in order to assist plan fiduciaries in their decision- making
processes.
• Making recommendations of mutual fund options to plan sponsors for implementation, or
determining and implementing investment options for the Plan, depending on authority
granted to Exencial.
In addition, the Firm offers the following services to plans and their participants:
• Ongoing monitoring of plan investment options, maintenance of a “watch list” when
appropriate, and making recommendations regarding the replacement or addition of
investment choices.
• Providing ongoing supervision of plan client assets (discretionary management).
• Providing model portfolios as plan options that participants can choose from (these would
be in addition to mutual fund options made available by the plan). Consulting regarding
compliance with the plan document and ERISA requirements.
• Educating participants regarding the plan.
• Assisting with group enrollment meetings with plan employees.
• Monitoring of the record keeper and trustee to ensure they are performing the functions
in their service agreement.
• Plan benchmarking of plan costs and services to market and peer averages.
401K Participant Accounts
When Exencial manages a client’s 401K participant account, if such account is held at a
custodian that is not directly accessible by Exencial (“Held Away Account”), then we request
permission from such client to use a platform that is administered by a third-party service
provider. The platform gives Exencial the ability to view the 401K account assets in real time
and effectively place transactions.
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Exencial has entered into a subscription agreement with the third-party service provider and
when a client agrees to Exencial’s use of the platform, the client will be given a copy of the
service provider’s terms and conditions agreement for users and must agree to the terms
and
conditions outlined within. It is important for clients to review the agreement in its entirety in
order to be fully aware of all conditions and requirements. For example, the terms and
conditions include, but are not limited to, the client agreeing to provide the third-party service
provider with access to all account information in their 401K account and authorizing Exencial
to use the platform to facilitate the investment management of that account. Exencial is
granted access to view and manage the client’s 401K account assets via a platform login. The
login access does not give Exencial the authority or ability to transfer or withdraw any assets in
a client’s 401K account.
Exencial is not affiliated with the third-party service provider, and we do not receive any
compensation from them for using their platform. There is a fee charged by the third-party
service provider for the use of the platform, which is paid by Exencial, not our clients.
Executive Services
The Firm is often hired by companies for the benefit of their corporate executives. These
companies pay the Firm to provide services that they choose from the list below:
• Tax planning and preparation, including tax returns
• Estate planning
• Insurance planning
• Employee benefit analysis
• Retirement planning
The Firm provides Executive Services recipients with services outlined in its employer’s
executive services contract and can include statements of net worth, stock option charts, tax
projections, tax returns, estate planning flow charts, insurance sufficiency models and
retirement cash flow models. In addition to the services provided under the employer’s contract,
some of these executives may wish to hire the Firm to provide other services not covered
under their employer’s contract. In these cases, the individuals pay for these services directly.
Use of Separate Account Managers (SAM)
As mentioned above, from time to time the Firm will recommend or select (depending on the
arrangement) one or more Separate Account Managers to actively manage a portion of a
Wealth Management client’s assets. Generally, this happens when a SAM offers an investment
strategy that is in line with a client’s investment objectives and risks, but not offered by Exencial.
Importantly, Exencial only utilizes a SAM when the Firm believes it is appropriate and, in a
client’s, best interest.
Access to SAMs will be through either a sub-advisory arrangement between Exencial and the
SAM, or through a direct contract engagement between the client and the SAM. Exencial is
delegated the authority to hire and fire SAMs on behalf of a client when deemed in the client’s
best interest, through the client agreement that each client enters into with Exencial.
Under both types of arrangements, the SAM will have discretionary authority to manage the
allocated assets, which will be performed in accordance with each client’s objectives and
restrictions and the selected investment strategy. On an ongoing basis, the Firm monitors the
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performance of the accounts being managed by SAMs to help ensure the SAMs’ strategies
and investments remain aligned with clients’ investment objectives and overall best interests.
Each Wealth Management client that has account assets managed by one or more SAMs will
receive a copy of each SAM’s Form ADV Part 2A (Disclosure Brochure) at the beginning of the
relationship, which should be read in its entirety, along with this Form ADV Part 2A. This will
allow clients to fully understand the services, fees, conflicts, and risk surrounding these
arrangements.
Research Services
From time to time, we enter into agreements with financial planning firms and other similar
services providers, wherein we provide research services that assist these other providers in,
among other things, evaluating securities and investment opportunities.
Sub-Adviser Services
Exencial has entered into written agreements with one or more unaffiliated third-party
investment advisers to serve as a sub-adviser and provide investment management services
to the third-party advisers’ clients. Under a sub-advisory arrangement, the third-party
investment adviser is responsible for working with its clients to select the appropriate
Exencial strategy for investment that is suitable for the client based on the client’s overall
investment objectives. Exencial manages the clients’ assets designated to Exencial based on
their respective selected investment strategy, as provided by the third-party investment
adviser. The third-party adviser is responsible for informing Exencial of any changes to a
client’s objectives.
General Consulting
In addition to the foregoing services, we provide general consulting services. These services
are generally provided on a project basis, and can include, without limitation, minimal cash flow
planning for certain events such as education expenses or retirement, estate planning
analysis, income tax planning analysis and review of a client’s insurance portfolio, as well as
other matters specific to a client as and when requested by a client and agreed to by Exencial.
The scope and fees for consulting services will be negotiated with each client at the time of
engagement for the applicable project.
Unaffiliated Wrap Programs
Exencial also offers its investment strategies through certain wrap programs (each, a “Wrap
Program”), which are sponsored by multi-service financial institutions unaffiliated with us
(each, a “Wrap Sponsor”). A list of such Wrap Programs may be found in Part 1 of our Form
ADV. Clients wanting to participate in a wrap program (“Wrap Client”) will enter into a written
agreement with the Wrap Sponsor, not Exencial Wealth Advisors. Generally, a Wrap Client will
select an investment adviser, such as Exencial, from a list of Wrap Sponsor-approved
advisers. The selected adviser will provide investment management services to the Wrap
Client for the assets allocated to the Wrap Program. For a single all-inclusive fee that the Wrap
Client pays the Wrap Sponsor (the “Wrap Fee”), a Wrap Client receives certain other services
from the Wrap Sponsor, such as trading execution and custodial services. Exencial does not
receive any fees or compensation directly from any Wrap Client. Under an agreement with the
Wrap Sponsor, Exencial receives a portion of the Wrap Fee from the Wrap Sponsor for
providing investment management services to the Wrap Client. Although the types of
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investment management services we provide to Wrap Clients are generally the same as the
types of investment management services provided to our non-wrap clients, certain differences
exist. These include that: 1) the Wrap Sponsor collects each Wrap Client’s investment
objectives and assists in determining the strategy best suited for the Wrap Client, and 2)
communications regarding the investment management of a Wrap Clients’ assets is between
the Wrap Sponsor and the Wrap Client, with Exencial only communicating with the Wrap
Sponsor (unless the Wrap Client requests otherwise).
SMA Model Programs
Exencial has entered into a written agreement with an unaffiliated investment adviser (“Program
Sponsor”) that has developed and maintains a “Separately Managed Account Models Program”,
which provides model portfolios to third party advisers to use with their clients. Under this
agreement, Exencial provides the Program Sponsor with a model portfolio for one or more of our
investment strategies. Exencial is responsible for ongoing management of the model portfolio(s)
and communicates recommended changes to the Program Sponsor. Exencial does not have any
relationship or agreement with the Program Sponsors’ clients or the third-party advisers’ clients
(together referred to as “Program Clients”) and we do not receive any specific information about
the Program Clients from either party. The Program Sponsor and/or the third-party adviser retain
full discretion on whether to invest their clients’ assets using Exencial’s model portfolio and
implement any of the changes we recommend. Exencial does not include any Program Clients’
assets that are invested in our model portfolio(s) in the calculation of our AUM (assets under
management); however, we are paid an annual flat percentage fee that is based on the amount of
assets invested in our model portfolio(s), which is calculated and paid quarterly to us by the
Program Sponsor. Please refer to Item 5 below for further information on fees.
Client Assets Under Management
As of December 31, 2023, the Firm has $$4,806,693,229 in discretionary assets and
$208,994,242 in non-discretionary assets for a total of $5,015,687,471.
The Firm offers its services to clients on a fee basis.
Wealth Management Fees
The Firm provides Wealth Management Services to clients for a fee based upon a percentage
of the market value of the assets under management. This fee is generally 1% annually but
can be higher or lower depending upon the size of the client’s portfolio and the services to
be provided. The Firm has in the past, and may in the future charge a lower fee based on other
factors such as anticipated additional assets, related accounts, pre-existing client, pro bono
activities, etc. In some cases, legacy fees for clients from advisory firms acquired by the Firm
are honored and continued given a historical relationship with the Firm services. These fee
arrangements usually result in a lower fee, or fee minimum than what is being charged by
Exencial. In addition, these clients can have a different billing arrangement, such as being
billed in arrears instead of in advance. All fees and billing arrangements are outlined in each
client’s investment advisory agreement. For additional important information about
Exencial’s acquisitions and the material conflicts, please refer to Item 10 – Other Financial
Activities and Affiliations.