Harfst and Associates, Inc. is organized as a corporation under the laws of the State of Wyoming, and our firm became licensed as a registered investment advisor in 2007. We are owned by Robby D. Harfst and Danette J. Harfst. Robby D. Harfst, President/Principal Owner, has been employed in the securities and financial services industry since 1993. Danette J. Harfst is the Chief Operating Officer and has been in the financial services industry since 2010. Our corporate office is located in Sheridan, Wyoming. We have an additional office in Ashalnd, Oregon. As an independent advisor, we offer the full spectrum of wealth management services by incorporating financial planning, investment management, and risk management.
As used in this brochure, the words "we", "our" and "us" refer to Harfst & Associates, Inc., and the words "you", "your" and "client" refer to you as either a client or prospective client of our firm. Also, you may see the term "Associated Person" throughout this brochure. As used in this brochure, our Associated Persons are our firm's officers, employees, and all individuals providing investment advice on behalf of our firm.
Advisory Services and Fees Currently, we offer the following advisory services, which are tailored for each individual client:
•Wealth Management Services
•Institutional Management Services
•Pension Consulting Services and Pension Investment Management
•Financial Planning and Consulting Services The following paragraphs describe our services and fees. Please refer to the description of each advisory service listed below for information on how we tailor our services to your individual needs.
Wealth Management Services We offer wealth management services to individuals, families and small businesses. Our wealth management services include investment management combined with general financial planning, retirement planning, estate planning, and charitable giving planning. We offer discretionary and, in some instances, non-discretionary investment management services to our wealth management clients and prospective clients. If you retain our firm for wealth management services, we will determine your objectives, risk tolerance, and other relevant information (the "suitability information") at the beginning of our advisory relationship. We will use the suitability information we gather from our initial meeting and any subsequent meetings to develop a strategy that enables our firm to give you continuous and focused financial advice including investment advice and/or to direct investments on your behalf. The investment objective information will be maintained in an Investment Policy Statement (IPS) and updated as needed. As part of our wealth management services, we may invest your assets in one or more predefined model portfolios developed by our firm or sub-advisory firm, or we may customize a portfolio for you. Once we implement an investment strategy, we will monitor your portfolio's performance on an ongoing basis and will rebalance the portfolio as needed.
Discretionary investment management grants our firm authority with respect to managing the investment of client investment assets, including the authority to determine specific investments, purchase, sell, exchange, convert, trade and generally deal in securities and other property comprising the clients investment assets within the investment guidelines set forth in the IPS without your approval prior to each transaction. Discretionary authority is typically granted by the investment advisory agreement you sign with our firm, a limited power of attorney, or trading authorization form.
4 You may specify investment objectives, guidelines, and/or impose certain conditions or investment parameters for your account(s) in the IPS. For example, you may specify that the investment in any particular stock or industry should not exceed specified percentages of the value of the portfolio and/or restrictions or prohibitions of transactions in the securities of a specific industry or security or asset class. Please refer to the "Investment Discretion" section in this Brochure for more information on our discretionary management services.
As part of our wealth management services, we may use one or more sub-advisors to manage a portion of your investments on a discretionary basis. The sub-advisor(s) may use one or more of their model portfolios to manage your account and/or they may design a custom portfolio. We will regularly monitor the performance of your accounts managed by sub-advisor(s), and may hire and/or fire any sub-advisor or re-allocate your assets without your prior approval based on you granting our firm discretionary authority. You may incur additional advisory fees if a sub-advisor is used. Depending on the sub-advisor used, the fees paid to the sub-advisor may be in addition to our advisory fee and may be deducted directly from your account separately from our advisory fee. In such circumstances, any management/advisory fees, which are deducted directly from your account, will be clearly indicated on your account statement. Fees assessed by the sub-advisor will range from .25% to .50% of the assets managed by the sub-advisor.
If you enter into a non-discretionary arrangement with our firm, we must first obtain your approval prior to the execution of any trades in your account(s).
We also offer wealth management services to our clients for accounts they have that may be held with custodians where we may not have trading authority, we may not have discretionary management authority, and/or we are unable to debit advisory fees. Our advisory fees for these types of situations may be merged into fees of other accounts under our management.
Our fee for wealth management services is based on a percentage of your assets we manage and is set forth in the following fee schedule: Assets Under Management Annual Fee* $0 to $250,000 1.25% Additional Assets from $250,000 to $500,000 1.15% Additional Assets from $500,000 to $1,000,000 1.00% Additional Assets from $1,000,000 to $3,000,0000.75% Additional Assets from $3,000,000 to $10,000,000 0.70% Additional Assets from $10,000,000 to $20,000,0000.50% Additional Assets from $20,000,000 and greater 0.40% *Note: Fees are calculated on a graduated basis. For example, an account of $1,000,000 would pay on an annualized basis 1.25% of the first $250,000, 1.15% on the next $250,000 and 1.00% on the next $500,000. The above fee schedule does not include transaction fees, or other fees/expenses charged by brokers, custodians, or mutual funds. Mutual fund purchases will be made at NAV (net asset value). Pre- existing client relationships may be subject to fee schedules and account minimums that differ from the current fee schedule and account minimum disclosed in this brochure. In limited circumstances, we may charge a flat fee. Our advisory fee is negotiable, depending on individual client circumstances.
5 We may combine the account values of related accounts to determine the applicable advisory fee. Combining account values will increase the asset total, which may result in your paying a reduced advisory fee.
Our annual wealth management fee is billed and payable quarterly in advance based on the market value of your account(s) on the last day of the previous calendar quarter. If the wealth management agreement is executed at any time other than the first day of a calendar quarter, our fees will apply on a pro rata basis, which means that the advisory fee is payable in proportion to the number of days in the quarter for which you are a client.
We will deduct our fee directly from your account through the qualified custodian holding your funds and securities. We will deduct our advisory fee only when you have given our firm written authorization permitting the fees to be paid directly from your account. In some circumstances, we will send you an invoice for the payment of our advisory fee or negotiate other terms. Further, the qualified custodian will deliver an account statement to you at least quarterly. These account statements will show all disbursements from your account, including the advisory fees deducted. You should review all statements for accuracy.
You may terminate the wealth management agreement upon written notice to our firm. You will incur a pro rata charge for services rendered prior to the termination of the wealth management agreement, which means you will incur advisory fees only in proportion to the number of days in the quarter for which you are a client. If you have pre-paid advisory fees that we have not yet earned, you will receive a prorated refund of those fees.
Institutional Management Services We provide specialized asset management to high net worth individuals, family offices, trusts, endowments, foundations, charitable institutions, pension plans and other institutions. We may provide sub-adviser services for other investment advisors whereby such advisors engage us for the purpose of managing the advisor's client assets ("outside accounts"). The third party advisor will remain the "primary advisor" for its client accounts. Depending upon the specific engagement, model portfolio allocations may be constructed and maintained to provide investment objective driven management services to investors. The primary advisor will communicate with and assist its clients, the investors, in selecting the appropriate model based on information the investor provides. We will monitor the investments contained in the outside

accounts in order to provide on-going supervision as to changes in the investments, and/or allocations of such investments, that are necessary to adhere to the desired investment objective. Similarly, we may be engaged to act as a portfolio manager for wrap-fee programs sponsored by unaffiliated investment advisors, broker-dealers, and other financial institutions. A "wrap-fee" program is an advisory program whereby a specified fee is charged to the investor for providing a bundle of services, which typically includes execution of transactions, custodial services, advisory and/or management services. The total fee levels charged to investors are set by the program sponsor. Our fees for these services represent a portion of the total wrap-fee charged and are generally lower than our standard management fee to recognize the marketing, account set-up and account maintenance of the program sponsor and/or primary advisor. As part of our institutional management services, we may use one or more sub-advisors to manage a portion of your investments on a discretionary basis. The sub-advisor(s) may use one or more of their model portfolios to manage your account and/or they may design a custom portfolio. We will regularly monitor the performance of your accounts managed by sub-advisor(s), and may hire and/or fire any sub-advisor or re-allocate your assets without your prior approval based on you granting our firm 6 discretionary authority. You may incur additional advisory fees if a sub-advisor is used. Depending on the sub-advisor used, the fees paid to the sub-advisor may be in addition to our advisory fee and may be deducted directly from your account separately from our advisory fee. In such circumstances, any management/advisory fees, which are deducted directly from your account, will be clearly indicated on your account statement. Fees assessed by the sub-advisor will range from .25% to .50% of the assets managed by the sub-advisor.
Generally, our fees are negotiable based on a percentage of assets under management and will not exceed an annualized fee of 1.25%. Applicable fees, fee payment arrangements, and the terms of the engagement will be clearly set forth in the agreement executed prior to services being rendered. Either party may terminate the management agreement by giving written notice at any time for any reason; such termination would be effective as of the last day of the calendar quarter in which written notice is delivered.
Pension Consulting Services and Pension Investment Management We offer pension consulting services and/or pension investment management to employee benefit plans and their fiduciaries based upon the needs of the plan and the services requested by the plan sponsor or named fiduciary. In general, these services may include an existing plan review and analysis, plan-level advice regarding fund selection and investment options, education services to plan participants, investment performance monitoring, ongoing consulting, and investment management. We offer advisory services for both participant directed and non-participant directed plans. We provide pension investment advisory services as a fiduciary under the Employee Retirement Income Security Act (ERISA). The ultimate decision to act on behalf of the plan shall remain with the plan sponsor or other named fiduciary.
We may also assist with participant enrollment meetings, advise plan participants regarding distribution alternatives, provide investment-related information to plan participants on such topics as diversification, asset allocation, risk tolerance, and time horizon and assist participants with investment selection. Additionally, our educational seminars may include other investment-related topics specific to the particular plan.
The scope of these services, the fees, and the terms of the agreement for these services will be negotiated on a case-by-case basis with each plan sponsor. Generally, our fees will be based on a percentage of plan assets and will not exceed an annualized fee of 1.25%. However, depending on the complexity of the plan and the agreement with the sponsor, our fees may also be based on an hourly fee, on a flat fee, or on a combination of all three fee arrangements.
Asset based fees are generally deducted directly from your plan's account(s) through the qualified custodian holding your funds and securities. We will deduct our advisory fee only when you have given our firm written authorization permitting the fees to be paid directly from your account. Fees may be charged monthly, quarterly, in advance or in arrears based upon the custodian and type of plan. Please refer to advisory agreement for specific details on fee billing terms. In some circumstances, we will send you an invoice for the payment of our advisory fee. Further, the qualified custodian will deliver an account statement to you at least quarterly. These account statements will show all disbursements from your account, including the advisory fees deducted. You should review all statements for accuracy.
Either party to the pension consulting agreement may terminate the agreement upon written notice to the other party. The pension consulting fees will be prorated for the period in which the termination notice is given and any unearned fees will be refunded to the client. 7 Financial Planning and Consulting Services We offer broad-based, modular, and consultative financial planning services to our clients and prospective clients. Financial planning will typically involve providing a variety of advisory services to clients regarding the management of their financial resources. If you retain our firm for financial planning services, we will first define the relationship and the scope of the engagement. Then we will gather the necessary information about your financial position and circumstances. After we analyze and evaluate the information, we will develop and present our recommendations. Finally, we will assist with implementing the recommendations and monitor the situation if/as needed.
Generally, our fee is based on an estimate of the hours necessary to complete the engaged services. Our hourly rate is $250 for financial planning services. An estimate of the total time/cost will be determined at the start of the advisory relationship. The time required to perform the engaged services may vary depending on the complexity and scope of the engagement. In limited circumstances, the cost/time could potentially exceed the initial estimate. In such cases, we will notify you in advance and request that you approve the additional fee.
In the alternative, we may charge a fixed fee for financial planning services, which generally ranges between $250 and $5,000. The fee is negotiable depending upon the complexity and scope of the engagement. Unless otherwise agreed upon, financial planning and consulting fees are billed and due upon completion of services rendered. Further, we will not require prepayment of a fee more than six months in advance and in excess of $1,200. You may terminate the financial planning agreement by providing written notice to our firm. You will incur a pro rata charge for services rendered prior to the termination of the agreement. You are under no obligation to act on our financial planning recommendations. Should you choose to act on any of our recommendations, you are not obligated to implement them through our firm.
IRA Rollover Recommendations Effective December 20, 2021 (or such later date as the US Department of Labor ("DOL") Field Assistance Bulletin 2018-02 ceases to be in effect), for purposes of complying with the DOL's Prohibited Transaction Exemption 2020-02 ("PTE 2020-02") where applicable, we are providing the following acknowledgment to you.
When we provide investment advice to you regarding your retirement plan account or individual retirement account, we are fiduciaries within the meaning of Title I of the Employee Retirement Income Security Act and/or the Internal Revenue Code, as applicable, which are laws governing retirement accounts. The way we make money creates some conflicts with your interests, so we operate under a special rule that requires us to act in your best interest and not put our interest ahead of yours. Under this special rule's provisions, we must:
•Meet a professional standard of care when making investment recommendations (give prudent advice);
•Never put our financial interests ahead of yours when making recommendations (give loyal advice);
•Avoid misleading statements about conflicts of interest, fees, and investments;
•Follow policies and procedures designed to ensure that we give advice that is in your best interest;
•Charge no more than is reasonable for our services; and
•Give you basic information about conflicts of interest. 8 We benefit financially from the rollover of your assets from a retirement account to an account that we manage or provide investment advice, because the assets increase our assets under management and, in turn, our advisory fees. As a fiduciary, we only recommend a rollover when we believe it is in your best interest.
Assets Under Management As of February 29, 2024, we provide continuous management services for $629,453,434 in client assets on a discretionary basis, and $31,517 in client assets on a non-discretionary basis. The assets under our management total $629,484,951. We also manage $42,975,595 in client assets on a non- continuous basis. The assets under management and under advisement total $672,460,546.