A. Firm Description. Baltimore-Washington Financial Advisors was incorporated in 1986 and is a comprehensive Fee-Only wealth management firm, offering Financial Planning, Investment Management, Tax, and Business Services. As a Fee-Only advisor, BWFA only receives compensation directly from its clients for the services it provides to them. [See Item 14.A] Because BWFA's compensation is not contingent on the purchase or sale of financial products, it can offer clients advice that is objective and unbiased. Advisors and employees in BWFA's Financial Planning, Investment Management, Tax, and Business Services departments work as a team and take a holistic approach to analyzing each client's situation. BWFA's objective is to integrate the disciplines of planning, investments, and taxes so its clients can derive a greater benefit than they would if these issues were addressed individually. BWFA's principal owner is Robert Carpenter (100%).
B. Types of Advisory Services. BWFA offers services to clients in Financial Planning, Investment Management, Taxes, and Business Services as outlined below.
1. Financial Planning Services - BWFA provides the following types of planning services.
a. Financial Blueprint Plans - These plans address the issues of concern to people who are at or near the beginning of their careers. The objective of this type of plan is to identify ways for clients to embark on a healthy financial life. The Financial Blueprint highlights how to save for multiple priorities, finance major purchases, pay off debt, and begin investing for retirement. Advice is also given in the areas of tax minimization, education funding, insurance, and basic estate planning.
b. Retirement and Estate Plans - These types of plans address the myriad issues of concern to people who are closer to retirement, or in retirement. The objective of this type of plan is to outline for clients how they can achieve their retirement goals and live in retirement with financial security. This is accomplished by developing detailed year-by-year financial projections and using sophisticated analytical tools (such as Monte Carlo simulation) to "test" different scenarios, and then helping clients identify the best course to follow. In addition, the plan identifies estate planning issues that need to be addressed:
•Organize the client's financial affairs to make the estate settlement process as easy and as inexpensive as possible for the client's heirs, thereby promoting family harmony
•Establish how the client's assets will be handled when s/he is no longer able to manage them
•Minimize taxes (federal & state estate and income) BWFA generally expects to complete all types of financial plans in 30-60 days from the date the Financial Planning Service Agreement is signed. There are usually multiple contacts during the data gathering phase and at least one face-to- face meeting at the time the plan is delivered.
c. Financial Plan Updates - Included as part of all Retirement Plans is a periodic review, at a minimum annually, of the Financial Plan. The purpose of this review is to determine if the client's financial objectives are being met and if modifications or revisions to the plan should be made. At Financial Plan Update meetings, a member of BWFA's financial planning team will: 4
•Track the progress of their plan
•Review the status of action items identified in the original plan
•Discuss the client's current situation
•Identify any new issues and establish action items, as appropriate For non-retirement Financial Plans, all clients that engage with BWFA for financial planning only, receive one complimentary review. Premier Level Service Clients receive an annual financial planning review and update. Clients who engage in Financial Planning only have the option for additional reviews at a cost.
d. Financial Planning Projects- BWFA will occasionally provide to clients specialized financial planning information that meets a specific client need. These types of special projects generally fall outside the scope of BWFA's typical financial plans and are completed by BWFA on a discretionary basis.
2. Investment Management Services - BWFA's advisors/portfolio managers consider a client's financial goals, financial situation, income needs, and tax circumstances. They also evaluate the client's investment risk tolerance. Based on these factors, BWFA designs, constructs, and implements one or more investment portfolios appropriate to the client's circumstances. The investments selected for the client's portfolio conform to the BWFA investment model chosen by the client in consultation with his/her advisor. The advisor provides ongoing oversight and management of the client's investments in accordance with the investment committee's analysis of current financial conditions. BWFA's advisors make changes in a client's portfolio (execute sells and buys) only when they believe the changes will benefit the client. Because BWFA receives no compensation for making trades, the advisors can act in the interests of their clients. BWFA provides investment advice to clients only with respect to the following:
•Securities that are listed on public securities exchanges, including stocks, bonds, preferred securities, convertible securities, real estate investment trusts, options on securities, and publicly traded limited partnerships
•Certificates of deposit
•United States government securities
•Collective investment funds (such as index funds, actively managed mutual funds, and exchange-traded funds) that are composed of securities listed on public securities exchanges BWFA does not provide investment advice on private investments or securities that do not trade on public securities exchanges. One exception occurs when a client seeks advice on investment options held within annuities, permanent life insurance policies, or employer-sponsored retirement plans that the client holds.
BWFA maintains a buy/sell/hold list of approximately 80-100 securities that it believes are appropriate investments for its clients. These 80-100 securities vary as to type (e.g. aggressive growth, growth, growth & income, income, international, etc.) A client's investment model (as well as certain other factors) defines the proportion of each security type that is held in the client's account. BWFA follows news, broad research resources, published analyses, and developments that it believes might influence each of the 80-100 investments. Based on our research of companies and the economy, we endeavor to select those securities that we believe represent the most attractive opportunities for our clients over the long term. Our core investment time horizon is typically three to five years. Our investment objective is generally long-term growth of capital. See Item 8.A for a discussion of BWFA's methods of analysis for managing assets. See Item 13.A(1) for additional information on BWFA's buy/sell/hold list.
5 BWFA uses Broadridge's Global Securities Class Action Services to monitor class action shareholder lawsuits and file claims on behalf of its clients to participate in cases where they may be eligible to receive proceeds due to legal settlements. Processing of class action claims are subject to a contingency fee assessed directly by Broadridge, in the event a recovery is made. (See Item 5C.2.) Class action recoveries, less the contingency fee, are paid directly by Broadridge to BWFA clients. Clients may opt out of this service by advising BWFA in writing.
3. Tax Services - BWFA provides tax preparation, estimated tax, and tax advisory services. BWFA's tax services are integrated with the planning, investment, and business services provided by BWFA, thus distinguishing the tax services offered by BWFA from those offered by other tax preparers. This integration can be of significant benefit to clients. Each tax service is summarized below: a. Tax Preparation - BWFA uses the data provided by the client to prepare all of the forms, schedules, and worksheets that are required for a complete and accurate tax return. In cases where the tax client also utilizes BWFA's investment management services, the

client's advisor/portfolio manager is engaged in the tax process to help ensure that all relevant factors and tax savings strategies are considered and applied appropriately. Advisors/Portfolio managers also review for completeness and accuracy the tax returns of their clients prior to filing.
b. Premium Estimated Tax Service- BWFA provides this service to ensure that a client's estimated tax payments are computed accurately and paid by the due dates to the appropriate federal and state taxing authorities. The service is designed for clients who must make estimated tax payments and who may have wide variations in their income and/or deductions. The service has the following objectives:
•Relieve the client of the burden of calculating and making quarterly estimated tax payments
•Avoid/Minimize penalties for underpayment of taxes
•Plan the payment of large tax bills ($1,000 or more) by the due dates
•Avoid a large, unexpected tax bill c. Tax Planning and other Advisory Services- BWFA will research complex tax issues and provide tax advice to clients. When engaged in providing tax consulting services, such advice will be provided in writing with appropriate tax regulation references. Examples of projects include:
•Stock option tax analysis
•Tax-free disposition of real estate
•Choice of business entity
•Responses to tax agency audits or letters
•Representation at audits
•Planning for large charitable donations
•Multi-year alternative minimum tax planning projects 4. Business Services - BWFA offers a variety of business-related services to clients who own or want to own a business. We perform business valuations and succession/exit planning, offer business accounting and financial advice, and help clients obtain business financing. In addition, we aid business owners and potential owners with services, support, and advice during each step of a business sale/purchase. BWFA guides a client through: preparing a business for sale, 6 determining market value, examining the financial implications of the sale, marketing and positioning the company, matching buyers and sellers, negotiating terms, completing due diligence, and closing the transaction.
5. Employer-Sponsored Retirement Plan Services - For small- to mid-sized companies offering employee retirement plans, BWFA will: a. Build a list of available funds and ETFs from which employees can pick when allocating investments in their retirement accounts b. Provide portfolio models with suggested allocations that employees can use as a reference c. Assist in the development of an investment policy statement (IPS) d. Sponsor one or more educational seminars or webinars each year to provide employees with investment-related information that will aid them in making investment decisions e. Offer certain financial planning services to some plan participants Note: Portfolio management services are not provided as part of this service. BWFA has no discretion over employee investments and does not manage employee assets. Employees choose their own portfolio models and investment allocations. They are free to disregard BWFA-provided suggestions and manage their retirement accounts in whatever manner they choose.
C. Tailoring Investment Management Advisory Services. In addition to what is described in section B above, BWFA tailors its advisory services to the individual needs of investment management clients in three basic ways.
1. Portfolio Strategies - BWFA offers three different investment strategies in order to meet the needs of individual clients. Strategies range in risk level from Capital Appreciation to Conservative Growth to Growth and Income. In addition, some custom models exist to accommodate unusual circumstances. Each strategy provides specific guidelines for allocating client investments among various asset types. Clients choose a BWFA investment strategy in consultation with their advisor/portfolio manager.
Each client is encouraged to complete a standard investment risk tolerance assessment. Results of the assessment help the client and advisor understand the client's attitude toward investment risk and confirm the suitability of the selected investment strategy. The use of investment strategies:
•Ensures that clients' funds are invested in a manner appropriate for their risk tolerance, financial goals, and circumstances
•Allows the advisor/portfolio manager and the client to share an understanding about how the advisor is investing the client's funds
•Makes it easy for the client to monitor the investment activities of the advisor and see that the strategy is being followed as agreed
•Ensures appropriate diversification among investments 2. Restrictions and Special Instructions - Clients may place restrictions on securities or provide special instructions regarding their investments. BWFA will endeavor to honor these restrictions and special instructions. However, clients are advised in the BWFA Service Agreement each client signs that accommodating restrictions and special instructions constitutes an exception to BWFA's normal operating procedure and is therefore subject to occasional unintentional error. Accordingly, 7 clients are encouraged to monitor their accounts and review the trade confirmations and reports they receive from the custodian and from BWFA. Clients are asked to notify BWFA if they observe that BWFA has failed to properly act on restrictions or special instructions that clients have placed on their accounts. It is BWFA's policy to make each client "whole" for any loss or gain a client sustains as a result of BWFA failing to observe the restriction or special instruction. Making a client "whole" means that BWFA will refund losses to, or remove gains from, the affected account(s).
D. Wrap Fee Programs. BWFA does not provide a wrap fee program, nor receive fees from any source except its clients. A wrap fee program bundles or wraps investment advice, custody, and execution services under one contract for a single fee. Rather, BWFA chooses to operate in a transparent way where a client is charged specific fees based directly upon the transactions in the client's account.
E. 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. 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.
F. Assets Under Management. As of March 1, 2024, we provide continuous management services for $1,859,790,618 in client assets on a discretionary basis, and $81,859,686 in client assets on a non- discretionary basis.