Cetera Investment Management LLC (CIM) is a registered investment advisor that provides model portfolio services and market commentary services to its related broker-dealers and registered investment advisors.
CIM is wholly owned by Cetera Financial Group, Inc. (Cetera Financial Group). Please refer to Item 10 of this brochure for more information on our corporate structure and affiliates.
Our Advisory Activities We are primarily engaged in the business of providing model portfolio services, strategist services, and market research. Our services are available primarily to related registered investment advisers (Related RIAs) and broker-dealers (Related BDs) (certain of our Related RIAs are also Related BDs), or investment advisers owned by representatives of related broker-dealers (ORIAs).
Related RIA Programs As described below, certain of our Related RIAs have developed and co-sponsor investment advisory programs on the My Advice Architect Platform (MAA), and also sponsor investment advisory programs on the RIA Services Platform.
MAA Platform Within MAA, the Unified and Guided Programs (the “MAA Programs”), among other investment program options, offers Related RIA clients asset allocation model investments based on a particular investment strategy and philosophy of an investment adviser (Strategist). We, as well as investment adviser firms not affiliated with or related to us, act as a Strategist in the MAA Programs and provide the Programs with model portfolios of securities (Model Portfolios) consisting of select mutual funds and/or exchange traded funds (ETFs). We do not receive any compensation for providing this service nor do we act as an investment adviser to you. Our Related RIAs that co-sponsor the MAA Programs, and not us as Strategist, make the investment decisions for client accounts regarding the selection of a particular Strategist and Model Portfolio in the MAA Programs. Envestnet Asset Management, Inc. (Envestnet), an independent investment adviser, also acts as a co- sponsor and investment adviser in the MAA Programs and has trading discretion in the MAA Programs.
RIA Services Platform Within RIA Services, the Unified Managed Account Program and Advisor as Portfolio Manager Program (the “RIA Services Programs”), among other investment program options, offers Related RIA clients asset allocation model investments based on a particular investment strategy and philosophy of a Strategist. Like in MAA, we, as well as investment adviser firms not affiliated with or related to us, act as a Strategist in the RIA Services Programs and provide these Programs with Model Portfolios consisting of select mutual funds and/or ETFs. Like MAA, we do not receive any compensation for providing this service to the RIA Services Programs, nor do we act as an investment adviser to you in the RIA Services Programs. Our Related RIAs, and not us as Strategist, make the investment decisions for client accounts regarding the selection of a particular Strategist and Model Portfolio in the RIA Services Programs.
As described further below, we provide the following different sets of Model Portfolios (collectively the “CIM Portfolios”): for MAA and RIA Services Platforms, Tactical model portfolios of securities (Tactical Portfolios) and strategic model portfolios of securities (Strategic Portfolios); for the Freedom Program, model portfolios of securities (Freedom Portfolios), for the InvestPath Program, model portfolios of securities (InvestPath Portfolios); and for two investment management programs, Legacy Advance and Trust Connection (together, Trust Programs), that offer tactical and strategic asset allocation model portfolios of securities (described below). These Trust Programs are offered only by Cetera Trust Company, N.A., which is related to CIM, as it is also a wholly-owned subsidiary of Cetera Financial Group.
Tactical Portfolios and Strategic Portfolios Our strategies provide clients with the opportunity to participate in an asset allocation strategy using either a tactical model, a strategic model, or a combination of tactical and strategic models. The Program Sponsor will recommend a CIM Portfolio that is consistent with a client’s Asset Allocation Model, choosing from the applicable set of CIM Portfolios made available by us for the Program. Each Portfolio has a broad equity/fixed income asset allocation based on risk tolerance level.
The Strategic and Tactical Model Portfolios are based on certain key principles. First, we believe that diversified portfolios provide a prudent approach to achieving long-term investment goals. Second, we believe that many different investment Page 4 of 10© 2017 Cetera Investment Management LLC strategies can be valuable if implemented in a consistent, disciplined manner. Finally, we believe that top quartile performance over a complete market cycle is achievable by outperforming blended benchmarks by 2% per annum, although there is no guarantee we will achieve our objective.
Strategic Asset Allocation Strategic asset allocation is a portfolio strategy that involves the periodic rebalancing of the portfolio in order to maintain a long-term goal of a chosen asset allocation mix. The initial investments are chosen based on expected returns and risk tolerance. Because the value of the assets can change based on market conditions, the portfolio constantly needs to be re-adjusted to meet the policy. This is often called rebalancing, and may be done at regular intervals. This strategy does not purposely deviate from the original determined asset allocation percentages. The emphasis is on preserving this initial chosen asset allocation mix because the mix ultimately relates to a larger performance objective based on historical data.
Tactical Asset Allocation Tactical asset allocation is a portfolio strategy that involves the rebalancing of assets held in various categories in order to take advantage of market pricing anomalies or strong market sectors, as chosen by the portfolio managers. This strategy provides the opportunity to try and create extra value by taking advantage of these potential situations in the markets. It is a moderately active strategy and may use short-term trading methods. This investment philosophy is usually based on the belief that investor psychology and market forces can lead to periods of misevaluation. A tactical allocation process attempts to capture these misevaluations. It is not a fixed asset weight mix and the allocation and risk level of the portfolio may change quite dramatically.
Freedom Program The Freedom program (Freedom) is a wrap fee program available for certain Advisors to offer and is discretionary which means that our applicable Related RIA, Advisor, the Strategist, and/or a third-party overlay manager are able to make allocation changes or trades without Client’s prior approval. Clients and their Advisor will initially

select one of the pre- defined strategist portfolios for Client’s Freedom account which includes the Freedom Portfolios. Advisor must obtain Client’s authorization to change Client’s risk profile or to elect another portfolio, including the Freedom Portfolios. Strategists, including CIM, manage assets in a comprehensive perspective using mutual fund-based models and/or exchange-traded product-based models. CIM Portfolios CIM does not receive any compensation for making available any of the CIM Portfolios. The CIM Portfolios include Strategic Partner funds as discussed further below.
Conflict of Interest in Model Portfolios with Strategic Partner Funds A conflict of interest exists in that our Related BDs are paid more revenue-sharing fees if you invest in a Model Portfolio, like the CIM Portfolios, that includes Strategic Partner funds or more Strategic Partner funds than a Model Portfolio offered by another or the same Strategist. Thus, we have a financial incentive to recommend the Model Portfolios over non- affiliated Portfolios that do not include Strategic Partner funds or do not include as many Strategic Partner funds because of the additional compensation our Related BD receives as the result of such investments in funds sponsored by our Strategic Partners. Our Related RIAs mitigate this conflict of interest by supervising the suitability of the Model Portfolios that are made available against each client’s goals and objectives. Additionally, Client’s Advisor does not receive any of the additional compensation that our Related BD receives from our Strategic Partners. For a more detailed description of the Related BDs Strategic Partner Program and a list of Strategic Partners as well as the conflicts of interest associated with the Strategic Partner Program, please refer to Cetera Advisory Services ADV Part 2A.
Investment Fiduciary Manager Program CIM provides investment advisory services to its Related RIAs that offer investment fiduciary advisory services to participant directed employer-sponsored plans that are subject to Section 3(38) of ERISA (Plans) in a program entitled the Investment Fiduciary Manager Program (Program). To support the Related RIA’s Program, CIM’s investment advisory services are limited to creating recommended investment lineups for each record keeper platform that the Related RIA makes available in the Program. The investment lineups developed and recommended by CIM are a subset of the available investments at certain platforms of record keepers that are also strategic partners (Retirement Partners) in the Related RIA’s Retirement Strategic Partner Program. Prior to recommending the investment lineups, which are composed primarily of Strategic Page 5 of 10© 2017 Cetera Investment Management LLC Partner (as opposed to Retirement Partner) funds, CIM reviews the appropriate selection and monitoring criteria. In addition to selecting and monitoring the investment lineups, CIM’s process may include the addition, removal, and/or replacement of investment product(s) within a particular investment lineup, as needed. Under the Program, the Related RIAs, and not CIM, provide investment advisory services to the Plans. The Related RIAs determine whether to adopt the investment lineups recommended by CIM and the Plan grants the Related RIA the discretion to choose an investment lineup at a particular record keeper for that Plan. For a more detailed description of a Related RIA’s Investment Fiduciary Manager Program, please refer to the applicable Related RIA’s ADV Part 2A.
Information about Model Portfolio Services We do not maintain custody of your accounts. The firms that engage us to provide services on their behalf enter into relationships with qualified custodians. The majority of accounts that utilize our services result from our relationships with our Related RIAs or Related BDs.
CIM is not an ERISA Fiduciary because it:
• Does not provide individualized models,
• Does not contract directly with clients for services,
• Does not execute trades in clients’ portfolio,
• Does not agree to assume fiduciary responsibility,
• Does not have control on whether its model is used in any specific client account, and
• Does not receive any fee or compensation directly from end clients who use the models. We communicate with you primarily through your Advisor who registered with the Program Sponsor. We rely on that Advisor to analyze your goals and needs when implementing any CIM service. The Advisor will collect suitability information and ensure that the investment strategy chosen is appropriate for the client.
CIM Research Team & Reports CIM provides market research that is made available only to the broker-dealers and registered investment advisers related to Cetera Financial Group and their Advisors. These materials include detailed market information as well as investment perspectives, asset allocation strategies, and investment ideas and recommendations. The research team provides Advisors with specific recommendations of mutual funds and Exchange Traded Products (includes both ETFs and exchange traded notes) through a “Research Select List” as well as certain other internal lists. The CIM Research Team supports Advisors by giving them access to a large-scale body of research, including: (1) market perspectives, (2) economic insights, and (3) asset allocation recommendations.
Managed Wealth ADVANTAGE® CIM oversees the design and ongoing management of asset allocation models for the Managed Wealth ADVANTAGE (MWA) wrap-fee program offered by the Related RIAs. CIM also independently selects and adds or removes the mutual funds and/ or exchange-traded funds that the Related RIAs will make available through MWA. CIM determines the investment allocation targets for client accounts under the MWA program. CIM does not receive any compensation for providing services to the MWA Program.
InvestPath Program We provide support to the InvestPath Program, an asset allocation strategy sponsored and managed by a Related RIA, Cetera Investment Advisers LLC (CIA), as described more fully in its Form ADV. This investment solution offered through partner financial institutions, uses mutual funds and ETFs to establish the portfolio allocations. Our approach offers five different risk tolerance-based models and within each model, provides a diversified portfolio with a strategic approach to portfolio construction. CIM is responsible for determining asset allocation and model portfolio construction, selecting, and monitoring the mutual funds and ETFs that are included in the InvestPath Program. CIA is ultimately responsible for overseeing CIM’s performance.
Assets Under Management As of December 31, 2019, CIM does not have assets under management or assets under advisement.
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