Our Advisory Firm
Telemus Capital, LLC (“TC”, “we” or “us”) (CRD #168794) is an
investment adviser which succeeded to the advisory businesses of its
predecessor advisers, Telemus Investment Management, LLC (SEC #
801-131580), Telemus Wealth Advisors, LLC (SEC # 801-64748), and
Beacon Asset Management, LLC (SEC # 801-67441) as of August 1,
2013, thereafter continuing business under the name “Telemus Capital,
LLC.” The predecessors’ advisory businesses were originally founded in
2005. The advisory services and management of TC remained the same;
however, the successor application dated August 29, 2013, reflected new
ownership by Focus Operating, LLC (“Focus Operating”).
Effective October 1, 2017, TC completed the acquisition of the assets of, and
combination with, Barrington Strategic Wealth Management Group LLC
(“Barrington”) of Chicago Illinois. Barrington was an SEC registered investment
adviser providing investment management and wealth advisory services to its
clients nationwide. The combined organization will continue business under the
name of “Telemus Capital, LLC.” TC will continue to maintain Barrington’s
presence in Chicago, and the advisory services and management will remain the
same.
Focus Operating, LLC, Focus Financial Partners, LLC, and Focus Financial
Partners Inc.
TC is part of the Focus Financial Partners, LLC (“Focus LLC”) partnership.
Specifically, TC is a wholly owned subsidiary of Focus Operating, LLC (“Focus
Operating”), which is a wholly owned subsidiary of Focus LLC. Focus Financial
Partners Inc. (“Focus Inc.”) is the sole managing member of Focus LLC and is a
public company traded on the NASDAQ Global Select Market. Focus Inc. owns
approximately two-thirds of the economic interests in Focus LLC.
Focus Inc. has no single 25% or greater shareholder. Focus Inc. is the managing
member of Focus LLC and has 100% of its governance rights. Accordingly, all
governance is through the voting rights and Board at Focus Inc.
Focus LLC also owns other registered investment advisers, broker-dealers,
pension consultants, insurance firms, business managers and other firms (the
“Focus Partners”), most of which provide wealth management, benefit consulting
and investment consulting services to individuals, families, employers, and
institutions. Some Focus Partners also manage or advise limited partnerships,
private funds, or investment companies as disclosed on their respective Form
ADVs.
TC is managed by Lyle Wolberg, Robert A. Stone, Joshua S. Levine and Ari
Fischman (“TC Principals”), pursuant to a management agreement between TCP
Management, LLC and TC. The TC Principals serve as leaders and officers of
TC and are responsible for the management, supervision and oversight of TC.
TC Clients
We provide personalized and confidential wealth management services to
clients, who are primarily high net worth individuals, trusts and family offices,
sponsors of retirement plans, charitable organizations, municipal government
entities and business entities. These services include investment management,
financial planning and advising on estate planning and insurance needs. We and
affiliated entities also manage private investment funds.
Discretionary Investment Advisory Services
Our investment management services are generally provided on a discretionary
basis, though clients who invest in our affiliated private investment funds must
affirmatively elect the investment on a non-discretionary basis.
Our Advisory Role
At the outset of each client relationship through an interactive process, TC
evaluates each client’s financial circumstances, risk tolerance, investment
objectives and goals. As part of the evaluation, clients may impose restrictions on
investing in certain securities or types of securities.
Based on the results of the client discussion(s) and the information provided by
the client, we prepare a Financial Life Proposal for the client which includes the
agreed upon investment strategy. For clients using the Envestnet program
(described below), we prepare and review with the client a customized Statement
of Investment Selection (“SIS”). The SIS incorporates an investment profile
summary, summarizes the information the client has provided us and makes
recommendations for the client’s portfolio based on the information provided.
Using tools provided by Envestnet, we may recommend that the client’s portfolio
be allocated among various investment managers and/or products.
After reviewing the client’s final investment strategy or SIS (in the case of clients
using the Envestnet program), the client enters into an investment advisory
agreement (“Client Agreement”) with TC. The Client Agreement discusses the
services to be provided to the client and other applicable terms and conditions.
For most client accounts, TC constructs client portfolios generally in accordance
with our traditional model strategies: Income Only, Capital Preservation,
Conservative, Moderate, Balanced, Aggressive, Ultra Aggressive and Growth
Only. Client portfolios are managed in accordance with the model strategy most
appropriate for the client’s risk profile. Each model strategy can allocate across
as many as five sleeves: Growth, Diversifier, Income (either with taxable or tax-
exempt bonds), Private Investments and Cash. Allocations to each sleeve are
made in differing percentages depending on the risk profile of each model. All of
the model strategies include some combination of individual equities, individual
bonds, mutual funds, ETFs, private funds and potentially other investment
products.
For accounts not deemed large enough for the traditional models or clients
seeking a passively managed portfolio, including but not limited to in the Telemus
Digital product, TC also constructs client portfolios in accordance with the
following model strategies: Ultra-Conservative, Conservative, Moderate,
Balanced, Aggressive and Ultra-Aggressive. Client portfolios are managed in
accordance with the model strategy most suitable for the client’s risk profile.
Each model strategy has three sleeves: Growth, Income and Cash. Allocations
to each sleeve are made in differing percentages to each model strategy
depending on the risk profile of the strategy. All of these model strategies are
constructed with passive ETFs.
Clients should know that their assets in each model strategy are likely to be
managed in a manner similar to other clients having similar investment objectives
and risk tolerance. The implementation of a model strategy may vary depending
on a client’s preferences for separately managed accounts, current income,
liquidity constrains, taxes or environmental/social/governance concerns.
We implement investment advice on behalf of certain clients in held-away
accounts that are maintained at independent third-party custodians. These held-
away accounts are often 401(k) accounts, 529 plans and other assets that are
not held at our primary custodian(s).
TC is the investment manager to the Telemus Decorrelation Opportunity Fund,
LP (the “TDOF Fund”), and its affiliate, Telemus Decorrelation Opportunity GP,
LLC, is the General Partner of the Fund. The TDOF Fund, which is a fund of
funds, is a multi-strategy, privately offered investment vehicle that invests in a
diversified portfolio of investments that seeks to provide low and non-correlated
returns relative to the broader equity and fixed income markets. The underlying
investment strategies include, but are not limited to, insurance-linked securities,
longevity-contingent assets, real estate credit, alternative lending, and other
assets that generally have low or non-correlated returns with traditional financial
markets. The TDOF Fund is closed to new investors and is in the process of
being dissolved.
TC’s affiliate, Telemus Life Science Real Estate Fund Manager, LLC, is the
Manager of the Telemus Life Science Real Estate Fund, LLC (the “TLSRE
Fund”). The TLSRE Fund is a privately offered investment vehicle that was
created for the purpose of investing in IQHQ, Inc., a privately traded REIT formed
to acquire, develop and redevelop real estate for life sciences tenants.
TC also has relationships with external providers of investment management,
research and due diligence services. One such service provider is Envestnet1, a
registered investment adviser that provides an asset management platform and
related technology, as well as operational and administrative support services.
TC uses some of the services provided by Envestnet, including the Unified
Managed Account Program (the “UMA program”) and the Separate Managed
Accounts Program (the “SMA program”). Through the UMA program TC
constructs a single client portfolio comprised of various investment vehicles,
typically third-party managers. Through the SMA program TC will select third
party managers which are appropriate to manage the client’s assets. In both
programs, the client grants TC with discretion to make changes to the managers
and/or investments if TC determines such a change is in the client’s best interest.
Factors considered in making this determination include account size, risk
tolerance, the opinion of each client, the investment philosophy of the third-party
manager, and the client’s investment objectives. TC will have full discretionary
authority to invest and reinvest client assets and retain third party asset
managers who, in turn, have full discretionary authority to invest and reinvest
client assets, subject to reasonable restrictions imposed by the client.
TC also provides Asset Management Services to select clients. When doing so,
TC uses the following equity and fixed income investment strategies in managing
clients’ assets:
• Core Equity: Actively managed core equity strategy that focuses on large-
cap companies with demonstrated consistent, above-average earnings
growth and reasonable valuations. It is managed relative to the Russell
1000 and/or S&P 500 Indices as benchmarks. Evercore
Wealth
Management LLC currently serves as sub-advisor for this strategy.
• Investment Grade Taxable Fixed Income: Actively managed intermediate
taxable bond portfolio managed relative to the Bank of America Merrill
Lynch 1-10 Year US Corporate & Government Index as its benchmark.
• High Yield Taxable Fixed Income: Actively managed fixed income portfolio
that focuses exclusively on the highest quality (BB) component of the high
1 We currently use the services of certain sub-advisors, including those of Envestnet Asset
Management, Inc., Evercore Wealth Management LLC, Mar Vista Investment Partners, LLC,
Aristotle Capital Management, LLC and SpiderRock Advisors, LLC.
yield universe. The portfolio is managed relative to the Bank of America
Merrill Lynch 1-10 Year BB Cash Pay High Yield Index as its benchmark.
• Blended Taxable Fixed Income: Actively managed fixed income portfolio
that combines TC’s investment grade capability with its high yield (BB)
capability. The portfolio is managed relative to a custom blended
benchmark comprised of 50% corporate/government intermediate
investment grade bonds (as identified in the Bank of America Merrill Lynch
1-10 Year US Corporate & Government Index) and 50% intermediate BB
rated bonds (as identified in the Bank of America Merrill Lynch 1-10 Year
BB Cash Pay High Yield Index).
• Treasury Bond Ladder: Actively managed strategy that invests in Treasury
bonds 1-10 years in maturity.
• Tax-Exempt Fixed Income: Actively managed strategy that focuses on
investment grade, short-to-intermediate maturity municipal bonds. The
strategy is customized to maximize the after-tax returns for each individual
client.
• Taurus: Actively managed growth strategy focusing on above-average
growth businesses that are poised to benefit from secular growth trends.
The process utilizes a proprietary screen to identify attractive securities
alongside fundamental and technical analysis.
• Aware: Actively managed domestic equity portfolio focused on making
investments in businesses that meet strict environmental, social and
governance (ESG) criteria.
• High and Rising Dividend: Equity strategy which seeks to invest in equity
securities of companies that pay relatively high dividends as measured by
yield. Stability and/or growth of dividends and dividend yield may also be
considered by the manager. The strategy invests across a broad range of
market capitalizations. It is primarily designed for taxable investors
seeking current income and/or who can benefit from the lower federal
income tax rates applicable to dividends and/or long-term capital gains.
The strategy may also be appropriate for taxable or tax-exempt investors
seeking a different and complimentary income stream, the principal of
which can fluctuate greatly. Finally, investors may use this strategy to
diversify their equity allocation. Investments are diversified across sections
and industries in an effort to reduce the risk of concentrating investments
only in industries with the highest dividend yields.
Non-Discretionary Advisory Services
TC also provides personalized investment management services on a non-
discretionary basis at a client’s request. This typically involves selecting or
making recommendations as to specific securities or other investments the
client’s account(s) should purchase or sell based on the client’s needs and
objectives, however, the client must approve the recommendations before the
trade is placed. As noted above, investments by clients in affiliated private funds,
such as the TLSRE Fund, will be on a non-discretionary basis.
Financial Plans
Basic financial planning services are included in the wealth management
services offered to clients. For clients who are interested in this service, an
investment adviser representative (“IAR”) meets with the client and gathers
information regarding a client’s financial goals, objectives, risk profile and other
pertinent information and provides asset allocation recommendations among
different types of securities and non-securities investments.
Retirement Plan Review Services
TC provides retirement plan advisory services for its clients, which provides
clients the opportunity to have TC review and consult on the client’s assets
invested in her or his employer’s retirement plan. This provides clients with a
consolidated view of their retirement assets.
TC is a fiduciary under the Employee Retirement Income Security Act of 1974, as
amended (“ERISA”) with respect to investment management services and
investment advice provided to ERISA plans and ERISA plan participants. TC is
also a fiduciary under section 4975 of the Internal Revenue Code (the “IRC”) with
respect to investment management services and investment advice provided to
individual retirement accounts (“IRAs”), ERISA plans, and ERISA plan
participants. As such, TC is subject to specific duties and obligations under
ERISA and the IRC that include, among other things, prohibited transaction rules
which are intended to prohibit fiduciaries from acting on conflicts of interest.
When a fiduciary gives advice, the fiduciary must either avoid certain conflicts of
interest or rely upon an applicable prohibited transaction exemption (a “PTE”).
As a fiduciary, we have duties of care and loyalty to you and are subject to
obligations imposed on us by the federal and state securities laws. As a result,
you have certain rights that you cannot waive or limit by contract. Nothing in our
agreement with you should be interpreted as a limitation of our obligations under
the federal and state securities laws or as a waiver of any unwaivable rights you
possess.
TC and Sentinel Pension Advisors, LLC (“SPA”) have an agreement in place
whereby TC serves as a subadvisor to SPA for certain client retirement plans.
This arrangement is more fully described in Item 10.
TC also provides fee-based wealth management services, including estate tax,
social security, education expense planning and asset allocation, as well as other
financial planning services to its clients on a non-discretionary basis.
In addition to the non-discretionary investment management services described
above, TC also offers other non-discretionary advisory services. Clients who
utilize our discretionary advisory services may, as an accommodation, also be
permitted to establish non-discretionary advisory accounts in which all securities
transactions are client-directed. For these accommodation accounts, TC
generally charges an annual fee of 20 basis points based on the average daily
balance of the account market values for the 12-month period being billed. These
assets are not included in the calculation of TC’s regulatory assets under
management. Additionally, certain accounts hold assets which the client has
directed TC to hold for tax or other purposes. TC provides ongoing and
continuous supervision of these client assets. These assets are included in the
calculation of TC’s non-discretionary regulatory assets under management.
In addition to the above investment management and wealth advisory services,
TC also provides a suite of accounting, management, administrative and
reporting services to clients, referred to as “Family Office Services” (also called
“Virtual Family CFO Services”). These services are customized based on the
individual needs of the client. These services are more fully described as follows:
• Accounting and Management Services: Telemus provides hands-
on day-to-day oversight and management of clients’ financial
affairs, including bill pay and invoice management.
• Administrative Services: Telemus helps organize and maintain
clients’ important financial information.
• Reporting: Telemus develops customized, detailed reports that
provide meaningful information to help families better understand
their overall financial picture.
One of these services is Telemus Tax Concierge which assists clients with their
tax return preparation requirements. If a client needs a tax preparer to complete
his/her returns, Telemus Family Office Services will make an introduction to a
qualified CPA. If the client engages the CPA, Telemus will receive a referral fee
from the CPA which is disclosed to the client. For clients using this service,
Telemus will help in the compilation of source documents and other information
needed to complete the client’s return(s).
TC also provides a suite of services referred to as “Corporate Executive
Services.” These include concierge-like advisory services to senior corporate
executives. These services, which in some cases will be in concert with third
party service providers, include advisory services relating to the following:
• Compensation and Benefits.
• Estate Planning and Wealth Transfer.
• Risk Management and Insurance.
• Tax Planning and Return Preparation.
• Retirement Planning.
• Investment Planning.
TC offers an online investment platform called “Telemus Digital.” It allows clients
to complete their personalized risk and suitability assessment and new account
paperwork requirements digitally. Once an account is set up, clients still have the
benefit of TC’s wealth management services through the assistance of a financial
life advisor.
In addition, TC offers clients the option of obtaining certain financial solutions
from unaffiliated third-party financial institutions with the assistance of our
affiliate, Focus Treasury & Credit Solutions (“FTCS”), a wholly owned subsidiary
of our parent company, Focus Financial Partners, LLC. Please see Items 5 and
10 for a fuller discussion of these services and other important information.
As of December 31, 2022, TC manages approximately $2,972,199,618 in assets
for approximately 1,652 clients. This includes approximately $2,391,503,994
managed on a discretionary basis, and approximately $580,695,624 managed on
a non-discretionary basis.