Townsend & Associates, Inc. doing business as Townsend is an investment advisor registered with the United States Securities and Exchange Commission (“SEC”) and is a corporation formed under the laws of the State of Colorado.
• Jeffery Townsend is the principal owner and CEO of Townsend & Associates, Inc.
• Townsend & Associates, Inc. has been registered as an investment advisor since April 2006.
• Townsend & Associates, Inc. has been in business since it incorporated in 1991. General Description of Primary Advisory Services The following are brief descriptions of Townsend’s primary advisory services. A more detailed description of Townsend’s advisory services is provided in Item 5 – Fees and Compensation so that clients and prospective clients can review the description of services and description of fees in a side-by-side manner. Financial Planning Services - Townsend provides advisory services in the form of financial planning services. Financial planning services do not involve the active management of client accounts, but instead focuses on a client’s overall financial situation. Financial planning can be described as helping individuals determine and set their long-term financial goals, through investments, tax planning, asset allocation, risk management, retirement planning, and other areas. The role of a financial planner is to find ways to help the client understand his/her overall financial situation and help the client set financial objectives. Asset Management Services - Townsend provides advisory services in the form of discretionary or non- discretionary Asset Management Services. Asset Management Services involve providing clients with continuous and on-going supervision over client accounts. This means that Townsend will continuously monitor a client’s account and make trades in client accounts when necessary. To commence the investment advisory process, Townsend will ascertain each client’s investment objective(s) and then allocate the client’s assets consistent with the client’s designated investment objective(s). Once allocated, Townsend provides ongoing supervision of the account(s). Before engaging Townsend to provide investment advisory services, clients are required to enter into an Investment Advisory Agreement with Townsend setting forth the terms and conditions of the engagement (including termination), describing the scope of the services to be provided, and the fee that is due from the client. Advice Regarding Certain Types of Investments Townsend provides investment advice on the following types of investments:
• Mutual Funds
• Exchange-listed securities (i.e. stocks)
• Securities traded over-the-counter (i.e. stocks)
• Fixed income securities (i.e. bonds)
• Closed-End Funds and Exchange Traded Funds (ETFs)
• Certificates of deposit
• Municipal securities
• Variable life insurance
• Variable annuities
• United States government securities Townsend does not provide advice on foreign issues, warrants, commercial paper, futures contracts on tangibles and intangibles, or hedge funds and other types of private (i.e. non-registered) securities. When providing asset management services, Townsend typically constructs each client’s account holdings using mutual funds, ETFs, stocks, bonds, options, and variable annuities to build diversified portfolios. It is not Townsend’s typical investment strategy to attempt to time the market but we may increase cash holdings modestly as deemed appropriate, based on your risk tolerance and our expectations of market behavior. We may modify our investment strategy to accommodate special situations such as low basis stock, stock options, legacy holdings, inheritances, closely held businesses, collectibles, or special tax situations. (Please refer to Item 8 – Methods of Analysis, Investment Strategies and Risk of Loss for more information.) Tailor Advisory Services to Individual Needs of Clients Our advisory services are always provided based on the individual needs of each client. This means, for example, that you are given the ability to impose restrictions on the accounts we manage for you, including specific investment selections and sectors. We work with each client on a one-on-one basis through interviews and questionnaires to determine the client’s investment objectives and suitability information. Disclosure Statement A copy of Townsend's written Brochure as set forth on Part 2A of Form ADV, in addition to our Form ADV Part 3 (Form CRS), shall be provided to each client prior to, or contemporaneously with, the execution of the Financial Advisory Agreement. Wrap Fee Programs Townsend does not participate in wrap fee programs when providing portfolio management services. Client Assets Managed by Townsend The amount of client assets managed by Townsend totaled $1,116,550,512 as of December 31, 2023. $1,115,515,395 is managed on a discretionary basis and $1,395,117 is managed on a non-discretionary basis. Miscellaneous Disclosures Limitations of Financial Planning and Non-Investment Consulting/Implementation Services. To the extent requested by the client, Townsend may provide financial planning and related consulting services regarding non-investment related matters, such as estate planning, tax planning, insurance, etc. Neither Townsend, nor its investment adviser representatives, assist clients with the implementation of any financial plan, unless they have agreed to do so in writing. In addition, Townsend does not monitor a client’s financial plan, and it is the client’s responsibility to revisit the financial plan with Townsend, if desired. Townsend does not serve as a law firm or accounting firm, and no portion of its services should be construed as legal or accounting services. Accordingly, Townsend does not prepare estate planning documents or tax returns. To the extent requested by a client, Townsend may recommend the services of other professionals for certain non-investment implementation purposes (i.e. attorneys, accountants, insurance agents, etc.), including representatives of Townsend in their separate individual capacities as representatives of Securities America, Inc., an SEC registered and FINRA member broker-dealer, and as licensed insurance agents. The client is under no obligation to engage the services of any such recommended professional. The client retains absolute discretion over all such implementation decisions and is free to accept or reject any recommendation from Townsend and/or its representatives. Please Note: If the client engages any unaffiliated professional, and a dispute arises thereafter relative to such engagement, the client agrees to seek recourse exclusively from and against the engaged professional. If, and when, Townsend is involved in a specific matter (i.e. estate planning, insurance, accounting-related engagement, etc.), it is the engaged licensed professional (i.e. attorney, accountant, insurance agent, etc.), and not Townsend, that is responsible for the quality and competency of the services provided. Please Also Note-Conflict of Interest: The recommendation by Townsend’s representative that a client purchase a securities or insurance commission product through Townsend’s representative in his/her separate and individual capacity as a registered representative and/or as an insurance agent presents a conflict of interest, as the receipt of commissions may provide an incentive to recommend investment or insurance products based on commissions to be received, rather than on a particular client’s need. No client is under any obligation to purchase any securities or insurance commission products through such a representative. Clients are reminded that they may purchase securities and insurance products recommended by Townsend through other, non-affiliated broker-dealers and/or insurance agencies. Townsend’s Chief Compliance Officer, Shawn Kelly, remains available to address any questions that a client or prospective client may have regarding the above conflict of interest. Client Obligations. In performing its services, Townsend shall not be required to verify any information received from the client or from the client’s other professionals, and is expressly authorized to rely thereon. Moreover, each client is advised that it remains their responsibility to promptly notify Townsend if there is ever any change in their financial situation or investment objectives for the purpose of reviewing, evaluating or revising Townsend’s previous recommendations and/or services. Cybersecurity Risk. The information technology systems and networks that Townsend and its third-party service providers use to provide services to Registrant’s clients employ various controls, which are designed to prevent cybersecurity incidents stemming from intentional or unintentional actions that could cause significant interruptions in Registrant’s operations and result in the unauthorized acquisition or use of clients’ confidential or non-public personal information. Clients and Townsend are nonetheless subject to the risk of cybersecurity incidents that could ultimately cause them to incur losses, including for example: financial losses, cost and reputational damage to respond to regulatory obligations, other costs associated with corrective measures, and loss from damage or interruption to processes. Although Townsend has established its systems to reduce the risk of cybersecurity incidents. There is no guarantee that these efforts will always be successful, especially considering that Townsend does not directly control the cybersecurity measures and policies employed by third-party service providers. Clients could incur similar adverse consequences resulting from cybersecurity incidents that more directly affect issuers of securities in which those clients invest, broker-dealers, qualified custodians, governmental and other regulatory authorities, exchange and other financial market operators, or other financial institutions. Non-Discretionary Service Limitations. Clients that determine to engage Townsend & Associates, Inc. on a non-discretionary investment advisory basis must be willing to accept that Townsend & Associates, Inc. cannot effect any account transactions without obtaining prior consent to any such transaction(s) from the client. Thus, in the event of a market correction, or if Townsend wants to make a specific transaction, and the client is unavailable, Townsend & Associates, Inc. will be unable to effect any account transactions (as it would for its discretionary clients) without first obtaining the client’s consent. Please Note: Retirement Rollovers-Potential for Conflict of Interest: A client or prospective client leaving an employer typically has four options regarding an existing retirement plan (and may engage in a combination of these options): (I) leave the money in the former employer’s plan, if permitted, (ii) roll over the assets to the new employer’s plan, if one is available

and rollovers are permitted, (iii) roll over to an Individual Retirement Account (“IRA”), or (iv) cash out the account value (which could, depending upon the client’s age, result in adverse tax consequences). If Townsend recommends that a client roll over their retirement plan assets into an account to be managed by Townsend, such a recommendation creates a conflict of interest if Townsend will earn new (or increase its current) compensation as a result of the rollover. When acting in such capacity, Townsend serves as a fiduciary under the Employee Retirement Income Security Act (ERISA), or the Internal Revenue Code, or both, as applicable, which are laws governing retirement accounts . No client is under any obligation to rollover retirement plan or IRA account assets to an account managed by Townsend. Townsend’s Chief Compliance Officer, Shawn Kelly remains available to address any questions that a client or prospective client may have regarding the potential for conflict of interest presented by such rollover recommendation. Use of Mutual Funds and Exchange Traded Funds. While Townsend may recommend allocating investment assets to mutual funds and exchange traded funds that are not available directly to the public, Townsend may also recommend that clients allocate investment assets to publicly available mutual funds and exchange traded funds that the client could obtain without engaging Townsend as an investment adviser. However, if a client or prospective client determines to allocate investment assets to publicly- available mutual funds and exchange traded funds without engaging Townsend as an investment adviser, the client or prospective client would not receive the benefit of Townsend’s initial and ongoing investment advisory services. Please Note: In addition to Townsend ’s investment advisory fee described below, and transaction and/or custodial fees discussed below, clients will also incur, relative to all mutual fund and exchange traded fund purchases, internal charges imposed at the fund level (e.g. management fees and other fund expenses) Custodian Charges-Additional Fees. As discussed below at Item 12, when requested to recommend a broker-dealer/custodian for client accounts, Townsend recommends that that Charles Schwab and Co. (“Schwab”) or Fidelity Institutional Wealth platform (hereinafter “Fidelity”) and where clearing, custody and other brokerage services are provided by National Financial Services, LLC or Fidelity Brokerage Services LLC, Members FINRA, NYSE, SIPC) serves as the broker-dealer/custodian for client investment advisory accounts. Broker-dealers such as Schwab and Fidelity charge commissions and/or transaction fees for effecting certain securities transactions for your account. Schwab and Fidelity do not charge commissions or transaction fees for direct equity, ETF or options trades in certain accounts based upon account size and method of statement and confirmation delivery. In situations where trades are undertaken directly by the client with trade desk assistance, commission charges and fees may apply. The types of securities for which transaction fees, commissions, and/or other type fees (as well as the amount of those fees) shall differ depending upon the broker-dealer/custodian (while certain custodians, including Schwab and Fidelity, do not currently charge fees on certain individual equity or ETF transactions, other custodians do). Commissions may be waived in certain accounts based upon account size and method of statement delivery. In addition to Townsend’s investment management fee, and certain brokerage transaction fees, clients will also incur, relative to all mutual fund and exchange traded fund purchases, charges imposed at the fund level (e.g. management fees and other fund expenses). Please Note: there can be no assurance that Schwab and/or Fidelity will not change their transaction fee pricing in the future. Please Also Note: Fidelity and Schwab may also assess fees to clients who elect to receive trade confirmations and account statements by regular mail rather than electronically. The fees charged by Schwab and Fidelity, as well as the charges imposed at the mutual fund and exchange traded fund level, are in addition to Townsend’s advisory fee referenced in Item 5 below. Please Note-Use of Mutual and Exchange Traded Funds: Townsend utilizes mutual funds and exchange traded funds for its client portfolios. In addition to Registrant’s investment advisory fee described below, and transaction and/or custodial fees discussed above, clients will also incur, relative to all mutual fund and exchange traded fund purchases, charges imposed at the fund level (e.g., management fees and other fund expenses). The mutual funds and exchange traded funds utilized by Townsend are generally available directly to the public. Thus, a client can generally obtain the funds recommended and/or utilized by Townsend independent of engaging Townsend as an investment advisor. However, if a prospective client does so, then he/she/they will not receive Registrant's initial and ongoing investment services. Orion Advisor Platform. Registrant may provide its clients with access to an online platform hosted by Orion Advisor” (“Orion”). The Orion platform allows a client to view their complete asset allocation, including those assets that Registrant does not manage (the “Excluded Assets”). Registrant does not provide investment management, monitoring, or implementation services for the Excluded Assets. Unless otherwise specifically agreed to, in writing, Registrant’s service relative to the Excluded Assets is limited to reporting only. Therefore, Registrant shall not be responsible for the investment performance of the Excluded Assets. Rather, the client and/or their advisor(s) that maintain management authority for the Excluded Assets, and not Registrant, shall be exclusively responsible for such investment performance. Without limiting the above, the Registrant shall not be responsible for any implementation error (timing, trading, etc.) relative to the Excluded Assets. The client may choose to engage Registrant to manage some or all of the Excluded Assets pursuant to the terms and conditions of an advisory agreement between Registrant and the client. The Orion platform also provides access to other types of information and applications including financial planning concepts and functionality, which should not, in any manner whatsoever, be construed as services, advice, or recommendations provided by Registrant. Finally, Registrant shall not be held responsible for any adverse results a client may experience if the client engages in financial planning or other functions available on the Orion platform without Registrant’s assistance or oversight. Client Retirement Plan Assets. If requested to do so, Townsend shall provide investment advisory services relative to 401(k) plan assets maintained by the client in conjunction with the retirement plan established by the client’s employer. In such event, Townsend shall allocate (or recommend that the client allocate) the retirement account assets among the investment options available on the 401(k) platform. Registrant’s ability shall be limited to the allocation of the assets among the investment alternatives available through the plan. Townsend will not receive any communications from the plan sponsor or custodian, and it shall remain the client’s exclusive obligation to notify Townsend of any changes in investment alternatives, restrictions, etc. pertaining to the retirement account. Unless expressly indicated by the Townsend to the contrary, in writing, the client’s 401(k) plan assets shall be included as assets under management for purposes of Townsend calculating its advisory fee. Please Note: Cash Positions. Townsend continues to treat cash as an asset class. As such, unless determined to the contrary by Townsend, all cash positions (money markets, etc.) shall continue to be included as part of assets under management for purposes of calculating Townsend’s advisory fee. At any specific point in time, depending upon perceived or anticipated market conditions/events (there being no guarantee that such anticipated market conditions/events will occur), Townsend may maintain cash positions for defensive purposes. In addition, while assets are maintained in cash, such amounts could miss market advances. Depending upon current yields, at any point in time, Townsend’s advisory fee could exceed the interest paid by the client’s money market fund. Cash Sweep Accounts. Certain account custodians can require that cash proceeds from account transactions or new deposits, be swept to and/or initially maintained in a specific custodian designated sweep account. The yield on the sweep account will generally be lower than those available for other money market accounts. When this occurs, to help mitigate the corresponding yield dispersion, Townsend shall (usually within 30 days thereafter) generally (with exceptions) purchase a higher yielding money market fund (or other type security) available on the custodian’s platform, unless the Townsend reasonably anticipates that it will utilize the cash proceeds during the subsequent 30-day period to purchase additional investments for the client’s account. Exceptions and/or modifications can and will occur with respect to all or a portion of the cash balances for various reasons, including, but not limited to the amount of dispersion between the sweep account and a money market fund, the size of the cash balance, an indication from the client of an imminent need for access to such cash, or the client has a demonstrated history of writing checks from the account. Please Note: The above does not apply to the cash component maintained within a Townsend actively managed investment strategy (the cash balances for which shall generally remain in the custodian designated cash sweep account), an indication from the client of a need for access to such cash, assets allocated to an unaffiliated investment manager, and cash balances maintained for fee billing purposes. Please Also Note: The client shall remain exclusively responsible for yield dispersion/cash balance decisions and corresponding transactions for cash balances maintained in any of the Firm’s unmanaged accounts. Fee Dispersion. Registrant, in its discretion, may charge a lesser or higher investment advisory fee, charge a flat fee, waive applicable minimum asset or minimum fee levels, waive its fee entirely, or charge a fee on a different interval, based upon certain criteria (i.e., anticipated future earning capacity, anticipated future additional assets, dollar amount of assets to be managed, related accounts, account composition, complexity of the engagement, anticipated services to be rendered, grandfathered fee schedules, employees and family members, courtesy accounts, competition, negotiations with client, etc.). Please Note: As result of the above, similarly situated clients could pay different fees. In addition, similar advisory services may be available from other investment advisers for similar or lower fees. Portfolio Activity. Townsend has a fiduciary duty to provide services consistent with the client’s best interest. As part of its investment advisory services, Townsend will review client portfolios on an ongoing basis to determine if any changes are necessary based upon various factors, including, but not limited to, investment performance, fund manager tenure, style drift, and/or a change in the client’s investment objective. Based upon these factors, there may be extended periods of time when Townsend determines that changes to a client’s portfolio are neither necessary nor prudent. Of course, as indicated below, there can be no assurance that investment decisions made by Townsend will be profitable or equal any specific performance level(s). Clients nonetheless remain subject to the fees described in Item 5 below during periods of account inactivity.