Disclosures
Alternative Investments and Direct Participation Programs
IFG receives compensation from Alternative Investment (“AI”) and DPP sponsors (such as REITs, Limited Partnerships, Oil and Gas programs and Tenant-in-Common offerings) that includes commissions and due diligence/marketing allowances. Commissions are described in detail in the offering’s Private Placement Memorandum, vary depending upon the offering and range from 2.00% to 9.00%. Due diligence/marketing allowances typically range from 0.5% to 1.50% and in some cases, a portion may be shared with the RR/IAR. In addition, certain AI/DPP sponsors may pay IFG to support our Conference Program. The following AI/DPP sponsors have or are currently participating in the IFG Conference Program:
Apollo
Blackstone
Blue Owl
Bluerock Real Estate
Cantor Fitzgerald
Carter Funds
Cottonwood Residential
Empire Group
First Eagle
Griffin Capital
Hamilton Lane
Hines
iCapital
Inland Real Estate Corp
Jones Lang LaSalle
JW Capital
Madison Capital
Mewbourne Oil Co.
Mill Green Capital
NexPoint Securities
PASSCO Companies
Peachtree Hotel Group
PIMCO
Prospect Capital Corporation
Sealy & Company
SmartStop Asset Management
T. Rowe Price Oak Hill Advisors
US Energy Development Co.
Waveland Resources Partners
529 Plans
IFG is paid a portion of the payment collected by the fund family or distributor. IFG does not have a revenue sharing program with any 529 Plan sponsors nor do we receive any additional fees (conference or marketing allowance) other than those disclosed in the issuer’s offering statement.
Conference Programs
IFG’s representatives have the ability to create investment portfolios from a variety of approved products and programs. Certain product sponsors contribute additional funds and resources to programs that support our marketing, education, and training efforts, such as our national conference and other seminars or conferences conducted throughout the year (“Marketing Support Program”). The amounts that product sponsors pay to participate in the Conference Program is based on a tiered platform that ranges from $1,500 to $150,000 and according to the events and activities the sponsor chooses, may include conference calls, web-casts, advertising in Independent Financial Group’s monthly and quarterly magazines, Elite Advisor Conference, Practice Management Forum, and National Conference; including speaking times (breakout sessions) and exhibits (booths).
Additional Training and Support
In addition, product sponsors and other companies may also reimburse up to 100% of the cost of due diligence, training and education/joint marketing meetings for our RRs/IARs, as permitted by industry rules. Sales of any products by IFG RRs/IARs may qualify them for additional cash and non-cash compensation that includes support for their business activities, attendance at seminars, conferences and entertainment. It is important to know that although the product sponsors contribute these funds to IFG and may have greater access to our RRs/IARs the client does not pay more to purchase these products through IFG than they would through another broker-dealer. The payment of this additional compensation to IFG by these product sponsors may pose a financial incentive to promote certain products over other products, although we do not believe that these arrangements compromise the service the RR/IAR provides to the client.
Investment Advisory Services
IFG’s Registered Investment Advisor offers advisory services and portfolio management through various third-party money managers. IFG receives a percentage of advisory fees as a percentage of client assets invested with the third-party money managers. In addition to customary compensation based on customer assets, IFG may receive additional compensation from certain money managers under a revenue sharing agreement. IFG’s Investment Adviser Representatives (IARs) do not participate in revenue sharing under this agreement, however the marketing and educational activities paid for with these payments may lead IARs to focus on those funds when making recommendations. Although compensation varies, IFG receives up to 10 basis points (0.10%) of the gross amount of the account value. For example, a $10,000 transaction with a participating advisory firm could result in a one-time payment of $10 under this agreement. The following money managers currently participate in the revenue sharing program:
EQIS Capital
Dunham & Associates
BTS
Trademark Financial
Hanlon Investment Management
Envestnet
Ocean Park Asset Management
Weatherstone Capital Management
AssetMark
Orion Companies
Certain third-party advisors pay IFG to support our Conference Program. The following third-party money managers have or are currently participating in the IFG Conference Program:
Beacon Capital Management
EQIS Capital
Ocean Park Asset Management
AssetMark, Inc.
Dunham & Associates
Hanlon Investment Management
Pacific Financial group
Envestnet
Lord Abbett
Capital Group American Funds
Money Market Funds
Brokerage accounts provide automatic daily cash sweep programs into client selected money market funds offered by Federated Financial Services Company and Dreyfus Insured Deposit Program. IFG receives compensation of up to 0.50% of the assets invested in Dreyfus Insured Deposits and up to 0.35% of the assets invested in Federated money market funds. RRs do not receive any portion of these payments.
Mutual Funds
Before investing in mutual funds, it is important to understand their associated fees and expenses. Mutual funds have ongoing expenses that clients will pay as long as they hold the funds. Most funds pay a sales commission to the RR when the fund is purchased in addition to the annual costs that are associated with operating the fund. Annual operating expenses include management fees, 12b-1 fees (payments made in connection with marketing and distribution expenses which may include trailing compensation to RRs), the cost of shareholder mailings and other expenses. Investors should always consult the fund’s prospectus for specific details regarding fees, expenses, and charges. Certain mutual fund companies pay IFG to support our Conference Programs. The following mutual fund companies have or are currently participating in the IFG Conference Program:
Sierra Mutual Funds
Lord Abbett
Brinker
SEI
Thornburg
T. Rowe Price
Angel Oak
MFS
Columbia Threadneedle
Non-Traditional ETFs
Non-traditional ETFs may be “leveraged” or “inverse,” and function like traditional ETFs, but may offer leverage depending on the product’s investment objective. These ETFs, which are sometimes referred to as “geared,” “responsive” or “exotic,” generally rebalance daily, although some rebalance monthly. They are complex financial instruments designed to meet a stated investment objective although their performance can change significantly from their stated objective on a daily or monthly basis, depending upon the trading session. These non-traditional ETFs seek to deliver multiples of the performance of the index or benchmark they track. To accomplish their objectives, non-traditional ETFs involve investment strategies that utilize swaps, futures contracts and other derivative instruments. Both leveraged and inverse non-traditional ETFs are trading vehicles and are not suitable for investors who are interested in a buy-and-hold strategy, particularly in volatile markets.
Leveraged:
Leveraged ETFs attempt to track a multiple of the daily (or monthly) returns of an index usually by using total return swaps. A leveraged ETF may be two times (2x) or three times (3x) leveraged, which means it attempts to provide two or three times the daily index return or loss, respectively. For instance, the double leveraged ETF seeks to provide a 2% gain on that daily return for each 1% increase in the market index return. Conversely, if the index drops 1%, your loss, in theory, would be 2% for that given day, assuming the ETF is rebalanced daily.
Inverse:
Some leveraged ETFs are inverse or “short” funds, meaning that they seek to deliver the opposite of the performance of the index or benchmark they track. An inverse ETF generally engages in trading strategies, such as short selling, or enters into total return swap agreements and futures contracts. An inverse ETF seeks to deliver the inverse (-1x) of the index’s performance, while two times (-2x) or three times (-3x) leveraged inverse ETF seeks to deliver two or three times the opposite of the index’s performance, respectively.
Non-traditional ETFs are not suitable for most investors. The effects of mathematical compounding can grow significantly over time, leading to scenarios whereby performance over the long run can differ significantly from the performance (or inverse performance) of their underlying index or benchmark during the same period of time. Leveraged, inverse, and leveraged inverse ETFs may be more volatile and risky than traditional ETFs due to their exposure to leverage and derivatives, particularly total return swaps and futures. In addition, these instruments are typically designed to achieve their desired exposure on a daily (in a few cases, monthly) basis. Holding leveraged, inverse, and leveraged inverse ETFs for longer periods of time potentially increases their risk due to the effects of compounding and the inherent difficulty in market timing.
Non-Variable Insurance
IFG receives compensation from product sponsors and/or their affiliates for marketing their insurance products to IFG RRs. IFG receives marketing and educational support payments of up to $130,000 on an annual basis from Field Marketing Organizations (FMOs) to assist with training and educating IFG RRs. Such training and education of IFG RRs may include conference calls, webcasts, advertising in IFG’s monthly and quarterly magazines, and participation at IFG conferences including speaking opportunities (breakout sessions) and exhibit time (booths). Payments received through the IFG Marketing Support Program are not made in connection with any specific IFG retirement plan customer. IFG RRs do not receive any portion of these payments. The following FMOs current participate in the IFG Marketing Support Program:
Ash Brokerage
Diversified Brokerage Services
Financial Independent Group (FIG)
Impact Partners
Simplicity Distributors
Pershing LLC
IFG has a clearing relationship with Pershing, LLC where IFG is responsible for the opening and maintenance of accounts. In return for servicing the accounts, Pershing shares revenue generated from these accounts with IFG through various forms including but not limited to: mark-ups on transactions, interest rates, and other account and transaction-related fees. This revenue sharing agreement is customary within the industry and is reasonable given the time and resources utilized to provide account servicing support.
Retirement Plan Providers
Under IFG’s Marketing Support Program, IFG receives compensation from product sponsors and/or their affiliates for marketing their retirement plan products and platforms to IFG RRs. IFG receives marketing and educational support payments of up to $150,000 on an annual basis from retirement plan product sponsors to assist in the training and education of IFG RRs. Such training and education of IFG RRs may include conference calls, webcasts, advertising in IFG’s monthly and quarterly magazines, and participation at IFG conferences including speaking opportunities (breakout sessions) and exhibit time (booths). Payments received through the IFG Marketing Support Program are not made in connection with any specific IFG retirement plan customer. IFG RRs do not receive any portion of these payments. The following Retirement Plan product sponsors currently participate in the IFG Marketing Support Program:
Principal
The Standard
Transamerica
T. Rowe Price
Voya
Traditional ETFs
ETFs are typically structured as registered unit investment trusts (UITs) or open-end investment companies whose shares represent an interest in a portfolio of securities that track an underlying benchmark or index. Some ETFs that invest in commodities, currencies, commodity- or currency-based instruments, or volatility instruments are not registered as investment companies and are generally established as grantor trusts. Unlike traditional UITs or mutual funds, shares typically trade throughout the day on an exchange at prices established by the market. Like individual stocks, ETFs can be bought and sold throughout the trading day at the current market value, which continuously fluctuate and reflect the value of each ETF share at any particular time. Shares of ETFs are bought and sold on various stock exchanges. ETFs can track a wide variety of sector-specific, country-specific and broad-market indexes. ETFs may provide diversification to your overall portfolio because one share or one unit may represent multiple underlying stocks, bonds and/or other asset classes. Each ETF seeks to replicate the market performance of the underlying index that makes up its basket of securities. Although ETFs seek to mirror the performance of a particular index, the relationship between performance of the index or sector and the ETF is not exact because of the fees and trading costs associated with the ETF, as well as the difficulties in exactly mimicking an index.
Variable Products
IFG receives compensation in different ways from the purchase of variable annuities and variable life insurance products. Similar to mutual funds, IFG is paid by variable product companies based on the fees paid by the investor and a portion of that payment is paid to the RR. In addition to customary compensation from variable product companies that include commissions and ongoing payments (known as residuals or trails), IFG may receive additional compensation from certain variable product sponsors under a revenue-sharing agreement. RRs do not receive a greater or lesser commission from sales under this agreement, however, the marketing and educational activities paid for with these payments may lead RRs to focus on those funds when making recommendations. Although compensation may vary, IFG receives up to 30 basis points (0.30%) of the gross amount of each sale of a variable product. For example, a $10,000 transaction with a participating company could result in a one-time payment of $30 under this agreement. The following variable product sponsor(s) currently participate in the revenue sharing program:
Allianz
AuguStar
Brighthouse
Corebridge
Delaware Life
Eagle Life
Equitable
Jackson National
Lincoln National
Midland National
Nationwide
Pacific Life
Principal Group
Protective Life
Prudential
Transamerica
TruStage
Certain variable product companies pay IFG to support our Conference Program. The following variable product companies have or are currently participating in the IFG Conference Program:
Allianz
AuguStar
Corebridge
Delaware Life
Diversified Brokerage Services
Eagle Life
Equitable
Impact Partnership
Jackson National
Jackson National Prudential
Lincoln National
Midland National
Nationwide
Pacific Life
Principal Group
Prudential
Transamerica
TruStage