KEEL POINT CAPITAL, LLC
Regulation Best Interest Disclosure
This guide summarizes important information concerning the scope and terms of the brokerage services Keel Point Capital, LLC offers and details the material conflicts of interest that arise through our delivery of brokerage services to you. We encourage you to review this information carefully, along with any applicable account agreement(s) and disclosure documentation you may receive from us.
As you review this information, we would like to remind you that we are registered with the U.S. Securities and Exchange Commission (SEC) as a broker dealer that provides brokerage services. Our affiliate, Keel Point, LLC, is an SEC-registered investment adviser that provides investment advisory services. Our brokerage services are the primary focus of this guide. For more information about investment advisory services and how they differ from brokerage services, please review the Customer Relationship Summaries available at keelpoint.com. Those summaries contain important information about the types of services that are available to you, both brokerage and investment advisory, along with general information related to compensation, conflicts of interest, disciplinary action and other reportable legal information.
Brokerage Services
When you establish a brokerage account with us, you have the ability to buy, sell and hold investments within your account. We introduce proposed trades to our clearing firm, National Financial Services, LLC (“National Financial”), which will execute purchases and sales on your behalf, as directed by you. In a brokerage services relationship, we can trade with you for our own account, for an affiliate or for another client, and we can earn a profit on those trades. The capacity in which we act is disclosed on your trade confirmation. However, we are not required to communicate it in advance, obtain your consent, or inform you of any profit earned on trades.
Cash Brokerage and Margin Brokerage Accounts
We provide brokerage services through either a cash brokerage account or margin brokerage account, based on your eligibility and selection. In a cash brokerage account, you must pay for your purchases in full at the time of purchase. In a margin brokerage account, you must eventually pay for your purchases in full, but you may borrow part of the purchase price from our clearing firm. This is generally referred to as a “margin loan.” The portion of the purchase price that is loaned to you is secured by securities in your account, also referred to as “collateral.” You will incur interest costs as a result of your margin activity. While many securities are eligible to be used as collateral for a margin loan, some assets are not available for margin collateral purposes.
Given that a margin-enabled brokerage account has specific eligibility requirements, unique costs, and governing regulatory requirements, our default brokerage option is our cash brokerage account. You must execute a separate margin agreement before engaging in margin brokerage activity. Included with your margin agreement is a copy of the Margin Disclosure Statement. This statement contains important information you should understand and consider before establishing a margin brokerage relationship with us. A margin disclosure document is provided at the time of account opening for a margin account. It is also available upon request. For more information on our margin brokerage services, contact your financial professional.
Brokerage Account Types
We offer many different brokerage account types including individual and joint accounts, custodial accounts, Delivery Versus Payment (DVP) accounts, estate and trust accounts, partnership accounts, individual retirement accounts and other types of retirement accounts as outlined in our account agreement(s). You should refer to our account agreement(s) for more information concerning available account types or speak with a financial professional.
Incidental Brokerage Services, Recommendations and Account Monitoring
Within your brokerage account, we may make recommendations to buy, sell, or hold assets and may also provide incidental services, such as research reports. When we make a securities recommendation, investment strategy recommendation or recommendation to rollover assets from a Qualified Retirement Plan (QRP) to an Individual Retirement Account (IRA), the recommendation is made in our capacity as a broker-dealer unless otherwise stated at the time of the recommendation. Any such statement will be made orally to you. Moreover, when we act in a brokerage capacity, we do not agree to enter into a fiduciary relationship with you.
It is important for you to understand that when our financial professionals make a brokerage recommendation to you, we are obligated to ensure that the recommendation is in your best interest, considering reasonably available alternatives, and based on your stated investment objective, risk tolerance, liquidity needs, time horizon, financial needs, tax status, and other financial information you provide us. You may accept or reject any recommendation. It is also your responsibility to monitor the investments in your brokerage account, and we encourage you to do so regularly. We do not commit to provide on-going monitoring of your brokerage account. If you prefer on-going monitoring of your account or investments, you should speak with a financial professional about whether an advisory services relationship is more appropriate for you.
Please also consider that, from time to time, we may provide you with additional information and resources to assist you with managing your brokerage account. This may include but is not limited to educational resources, sales and marketing materials, performance reports, asset allocation guidance, and/or periodic brokerage account reviews. When we offer these services and information, we do so as a courtesy to you. These activities are not designed to monitor specific investment holdings in your brokerage account, they do not constitute specific investment recommendations about investment holdings, and you should not consider them to be a recommendation to trade or hold any particular security in your brokerage account. Upon your request, we will review such information and reports with you and may provide you with investment recommendations, but we are not under a specific obligation to do so.
Clearing Services
We have entered into an agreement with National Financial to carry your account and provide certain back office functions. We and National Financial share responsibilities with respect to your account as set forth in the materials that were delivered to you upon the opening of your account.
Understanding Risk
It is important for you to understand that all investment recommendations and activities involve risk, including the risk that you may lose your entire principal. Further, some investments involve more risk than other investments. Higher-risk investments may have the potential for higher returns but also for greater losses. The higher your “risk tolerance,” meaning the amount of risk or loss you are willing and able to accept in order to achieve your investment goals, the more you may decide to invest in higher-risk investments offering the potential for greater returns. We align risk tolerances with investment needs to accommodate different investment objectives from which to choose (see below). You should select the investment objective and risk tolerance best aligned with your brokerage account goals and needs.
Investment objectives typically have different time horizons and different levels of emphasis on preservation of capital, income and growth. Risk tolerance also varies and can be measured on a continuum. Please consult with your financial professional for more information.
Our recommendations are based in part on your risk tolerance and investment objectives. We encourage you to carefully consider your investment objectives and risk tolerance before investing.
Cash Sweep Program Feature
Our brokerage services include a Cash Sweep Program feature. This program permits you to earn a return on uninvested cash balances in your brokerage account by allowing cash balances to be automatically “swept” into a “Cash Sweep Vehicle,” until such balances are otherwise required to satisfy obligations arising in your account. These Cash Sweep Vehicles include interest-bearing deposit accounts, and if permissible, money market mutual funds or such other sweep arrangements made available to you. You will receive additional information concerning the Cash Sweep Program in your account agreement(s).
Account Minimums and Activity Requirements
There is no minimum initial account balance required to open a brokerage account with us. However, if you either fail to fund your account or do not return account opening documents as required, your account will be closed. In addition, some types of brokerage accounts have minimum account activity requirements and/or minimum on-going balance requirements that must be maintained, or your brokerage account will be closed. These requirements are detailed in the account agreement(s) you receive when you open your brokerage account.
You should also understand that our financial professionals may establish their own minimum account balance requirements for the brokerage accounts they service. For example, a dedicated financial professional may choose to service only those brokerage account customers who satisfy account-specific or total household asset conditions. Minimum asset requirements are disclosed to you orally by your financial professional.
Brokerage Service Models and Products
Keel Point Capital, LLC is an introducing broker-dealer that recommends and facilitates the purchase and sale of the securities products described in this guide on behalf of customer accounts.
Brokerage Fees and our Compensation
It is important to consider that while a brokerage relationship can be a cost-effective way of investing your assets, it is not for everyone given the fees and costs involved.
Transaction-Based Fees
You will pay transaction-based fees for trades you decide to enter into, such as buying and selling stocks, bonds, Exchange Traded Products (ETPs), mutual funds, annuity contracts, exercising options and other investment purchases and sale. These transaction-based fees are generally referred to as a “commission,” “mark up,” “sales load,” or a “sales charge.” Transaction-based fees are based on a host of factors, including, but not limited to:
- Underlying product selection
- Your brokerage service model and account type
- Size of your transaction and/or overall value of your account
- Frequency of your trade activity
- Available discounts and/or fee waivers
Account and Service Fees
You will pay fees for various operational services provided to you through your brokerage account. These fees are set at least annually and communicated to you through information included in your account statement and other notifications. These fees do not apply to all account types and may be waived under certain conditions.
You should understand that, based on the brokerage service model you choose, the same or similar products, accounts and services may vary in the fees and costs charged to you. An example of some of the costs you may be charged, include ACAT exit fee, transfer & ship, trade and margin extension, bounced check, stop payment on check and trade & margin extension. A detailed list of current fees and expenses can be provided by request via your Financial professional.
How We Are Compensated
We receive direct and indirect compensation in connection with your accounts. Direct compensation is taken directly from the affected account. Indirect compensation is compensation paid in ways other than directly from the account and may impact the value of the associated investments in your account. The sections below describe the compensation that we receive in connection with various investments that may be available to you. In many cases, the descriptions that follow refer to a prospectus or offering documents.
Commission Schedule for Stocks, Rights, Warrants, Secondary Market Closed End Funds (CEFs) and Exchange Traded Products (ETPs), Options and Fixed Income Securities is available below:
Equities
Compensation for stocks and exchange-traded funds generally take the form of a dollar amount plus a percentage of the principal amount. The dollar amount and the percentage will vary, however, based upon the price of the security and the quantity of shares being sold. These amounts are subject to the minimum and maximum amounts that are shown in the fee schedule below. Discounts may apply.
| Stocks under $1.00 | ||||||
| $50.00 + 4.5% of principal | ||||||
| Stocks $1.00 and above | ||||||
| Principal Amount | Base | Plus % | ||||
| $0.00 | $4,999.99 | $24.00 | 2.25% | |||
| $4,999.99 | $9,999.99 | $24.00 | 2.00% | |||
| $9,999.99 | $19,999.99 | $24.00 | 1.75% | |||
| $19,999.99 | $29,999.99 | $24.00 | 1.62% | |||
| $29,999.99 | $39,999.99 | $24.00 | 1.50% | |||
| $39,999.99 | $49,999.99 | $24.00 | 1.38% | |||
| $49,999.99 | $74,999.99 | $24.00 | 1.20% | |||
| $74,999.99 | $99,999.99 | $24.00 | 1.10% | |||
| $99,999.99 | and above | $24.00 | 1.00% | |||
| Round Lot Surcharge | ||||||
| Round Lots | Surcharge | |||||
| 1 | 10 | $6.00 per Round Lot | ||||
| 11 | and above | $60.00 + $4.00 per Round Lot above 10 Round Lots | ||||
| Minimum | ||||||
| $35.00 | ||||||
| Maximum under 100 shares | ||||||
| $95.00 | ||||||
| Maximum 100 shares and above | ||||||
| $95.00 per round lot | ||||||
| Special Products | ||||
| Principal Amount | Base | Plus % | ||
| $0.00 | $2,999.99 | $30.00 | 0.90% | |
| $2,999.99 | $9,999.99 | $30.00 | 0.80% | |
| $9,999.99 | and above | $30.00 | 0.70% | |
| Minimum | ||||
| $2.00 per contract | ||||
| Maximum | ||||
| $25.00 per contract | ||||
| Government | ||||
| $50.00 | ||||
| Non-Government | ||||
| $50.00 | ||||
Options
Commissions for options trades are based on a percentage of the principal value plus a flat fee in addition to a separate fee per contract. All options trades are subject to a minimum commission amount, as shown in the fee schedule. Discounts may apply here as well.
Fixed Income Securities
The firm offers a number of fixed income securities, including but not limited to treasury securities, corporate bonds, municipal bonds and mortgage-backed securities. Fixed income securities offered in the secondary market can be made available by the firm while acting as your agent, in which case a commission is charged. These commissions are shown in the fee schedule.
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Mutual Funds We currently offer a broad array of mutual funds varying in share class structure and investment style. If you invest in mutual funds, we may receive direct and indirect compensation in connection with such mutual fund investments, as described below.
12b-1/Shareholder Service Fees Annual 12b-1 fees, also known as trails, are paid by the fund and paid to us out of fund assets under a distribution and servicing arrangement to cover distribution expenses and sometimes shareholder service expenses that are provided on the fund’s behalf. Shareholder servicing fees are paid to respond to investor inquiries and provide investors with information about their investments. These fees are asset-based fees charged by the fund family. These fees range from 0.00% to 1.00%, but the majority of these fees are below 0.85%.
Front-end Sales Charge Fees/Contingent Deferred Sales Charges (CDSC)
Front-end sales charge fees may be charged and paid to us, including your financial professional, when you purchase a fund. The front-end sales charge is deducted from the initial investment on certain share classes. This charge normally ranges from 0.00% to 5.75%. Some purchases may qualify for a reduced front-end sales charge due to breakpoint discounts based on the amount of the transaction and rights of accumulation. In addition, some purchases may qualify for a sales charge waiver based on the type of account, and/or certain qualifications within the account. You should contact your financial professional if you believe you are eligible for sales charge waivers.
A contingent deferred sales charge (CDSC) is a charge you pay upon withdrawal of money from a fund prior to the end of the fund’s CDSC period. CDSC charges range from 0.00% to 5.50%. CDSC periods can range from zero to seven years. This charge typically exists only on share classes that do not have a front-end sales charge. It is sometimes referred to as the back-end load. CDSCs are not charged when you purchase a fund. The fee charged will depend on the share class purchased by the investor. A CDSC is not passed on to your financial professional. You can find a description of the amount and payment frequency of all fees and expenses charged and paid by the fund in the fund’s prospectus. Fees and expenses disclosed in the fund’s prospectus are charged against the investment values of the fund.
Revenue Sharing
Keel Point Capital, LLC has a revenue sharing agreement with Transact Capital related to merger and acquisition referrals.
Annuities Our annuities consist of fixed, index, and variable annuities. Under arrangements with insurance companies, we, including your financial professional, receive commissions from the insurance companies for the sale of annuities, as well as trail commissions, and they are considered indirect compensation.
Variable Annuities
The commissions generally range between 1 and 10 percent of the total value of your annuity contract, depending on the annuity type. We receive commission payments from the insurance company issuing the annuity. A portion of those commissions is shared with our financial professionals. Commissions and trails paid to us vary by product type and may vary by insurance carrier and will be disclosed in the prospectus. |
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Unit Investment Trusts (UITs)
A Unit Investment Trust (UIT) is an investment vehicle that offers a fixed portfolio of securities to investors in the form of a redeemable unit. UITs are assembled by a sponsor and sold through broker-dealers. Information about the fees and expenses associated with a specific investment trust can be found in the trust prospectus. This may include information regarding sales charges, organization costs and annual expenses. Your Keel Point Financial Professional can provide you with copies of individual prospectuses upon request. Keel Point makes no representations as to the completeness or accuracy of the prospectuses or offering statements, as they are generated by unaffiliated third-party issuers.
Cash Sweep Program/Bank Deposit Sweep/Other Float Compensation
We receive 10 basis points from National Financial for balances held in cash sweep accounts.
Training and Education
We are not compensated for any training or education expenses by product or service providers.
Operational Fees
We receive compensation for various operational services provided to you through a brokerage account. A detailed list of current fees and expenses can be provided by request via your Financial professional.
ACAT Exit Fee
Trade and Margin Extension
Bounced Check
Stop Payment
Trade Corrections
Trade errors must be immediately reported to the Chief Compliance Officer (“CCO”) or the appropriate designated principal (“DP”). The CCO or DP is responsible for issuing instructions to correct the trade immediately. Normally this is done through our trade error account. A Trade Error Report must be completed by the trader and signed by the CCO or DP. The Trade Error Report will include the reason for the trade error and the resolution. The CCO or DP reviews the error account monthly and compares it to the Trade Error Reports. The CCO or DP will note frequent errors by a trader, errors not supported with Trade Error Reports and other unusual activity. The CCO or DP will also document the review on the Error Account Statement or Trading Supervisory Spreadsheet along with the resolution.
Compensation for Termination of Services
Other than any contingent deferred sales charge for a fund (as described under the Mutual Funds section above, if applicable), IRA termination fees (when applicable), and account transfer fees, we would not receive any additional compensation in connection with the termination of our services. If you have questions or need additional copies, contact your financial professional.
Conflicts of Interest
Conflicts of interest exist when we provide brokerage services to you. A conflict of interest is a situation in which we engage in a transaction or activity where our interest is materially adverse to your interest. The mere presence of a conflict of interest does not imply that harm to your interests will occur, but it is important that we acknowledge the presence of conflicts. Moreover, our regulatory obligations require that we establish, maintain, and enforce written policies and procedures reasonably designed to address conflicts of interest associated with our recommendations to you.
Our conflicts of interest are typically the result of compensation structures and other financial arrangements between us, our financial professionals, our customers and third parties. We offer a broad range of investment services and products and we receive various forms of compensation from our customers, product providers and money managers, and other third parties as described above. Securities rules allow for us and our financial professionals to earn compensation when we provide brokerage services to you. However, the compensation that we and our financial professionals receive from you varies based upon the product or service you purchase, which creates a financial incentive to recommend investment products and services that generate greater compensation to us.
We are committed to taking appropriate steps to identify, mitigate and avoid conflicts of interest to ensure that we act in your best interest when providing brokerage recommendations to you. Below you will find additional information related to our conflicts of interest. This information is not intended to be an all-inclusive list of our conflicts, but generally describes those conflicts that are material to your brokerage relationship. In addition to this disclosure, conflicts of interest are disclosed to you in your account agreement(s) and other information we make available to you.
| Compensation We Receive From Customers |
Transaction-Based Conflicts
In your brokerage account, you pay certain fees (commissions and sales charges) in connection with the buying and selling of each investment product, including mutual funds, variable annuities, alternative investments, exchange traded funds, equity securities, and bonds. Where these fees apply, the more transactions you enter into, the more compensation that we and your financial professional receive. This compensation creates an incentive for us to recommend that you buy and sell, rather than hold, these investments. We also have an incentive to recommend that you purchase investment products that carry higher fees.
Account Maintenance and Other Administrative Fees
For the services we provide or make available to you with respect to your brokerage account, we charge certain account maintenance and other administrative fees, including transfer, wire, or other miscellaneous fees, as described in the fee schedule provided to you on an annual basis.
| Compensation We Receive from Third Parties |
Third-party payments we receive may be based on new sales of investment products, creating an incentive for us to recommend that you buy and sell, rather than hold, investments. In other cases, these payments are made on an ongoing basis as a percentage of invested assets, creating an incentive for us to recommend that you buy and hold investments (or continue to invest through a third-party manager or adviser).
The total amount of payments we receive varies from product to product and varies with respect to the third-party investment products we recommend. It also varies from the compensation received in connection with other products and services that are made available to you, including the advisory services provided by Keel Point, LLC. We have an incentive to recommend investment products and services that generate greater payments to us. This compensation generally represents an expense embedded in the investment products and services that is borne by investors. The types of third-party compensation we receive include:
- Compensation Provided by National Financial. We also receive the compensation described above in connection with balances held in cash sweep accounts. These are incentives to continue using National Financial as our clearing firm and, therefore, constitute a conflict of interest. We believe, however, that our selection of National Financial is in the best interest of our brokerage customers.
- Trail Compensation. We receive ongoing compensation from Product Sponsors, which are shared with our financial professionals. This compensation (commonly known as trails, service fees or Rule 12b-1 fees in the case of mutual funds) is typically paid from the assets of the investment product under a distribution or servicing arrangement and is calculated as an annual percentage of invested assets. The amount of this compensation varies from product to product. We have an incentive to recommend that you purchase and hold interests in products that pay us higher trails.
Additional Compensation from Product Sponsors and Other Third Parties
We and our financial professionals, associates, employees, and agents receive additional compensation from Product Sponsors and other third parties including:
- Gifts and awards, an occasional dinner or ticket to a sporting event, or reimbursement in connection with educational meetings or marketing or advertising initiatives, including services for identifying prospective customers.
- Payment or reimbursement for the costs associated with education or training events that are attended by our employees, agents, and financial professionals, and for conferences and events that we sponsor.
Note: The amount of these payments is not dependent or related to the level of assets you or any other of our clients invest in or with the Product Sponsor.
Product Share Classes
Some Product Sponsors offer multiple structures of the same product (e.g., mutual fund share classes) with each option having a unique expense structure, and some having lower costs to you as compared to others. We are incentivized to make available those share classes or other product structures that will generate the highest compensation to us. However, our policy is to recommend the share class that is in your best interest.
Payment for Order Flow
We do not receive compensation in exchange for routing orders to broker-dealers or market makers for the execution of trades.
Compensation Related to Proprietary Products
We do not have any proprietary products.
| Compensation Related to Our Affiliates |
We are an introducing broker-dealer and provide other brokerage services to investment advisory clients of our affiliate, Keel Point, LLC, on a fully disclosed basis through National Financial. We receive compensation for the provision of those services.
| Compensation Received by Financial Professionals |
Financial professionals are compensated in a variety of ways based on the percentage of revenue generated from sales of products and services to customers and/or total assets under advisement, including brokerage account activity. This compensation may vary by the product or service associated with a brokerage recommendation. In addition to upfront-transaction-based compensation, some products feature on-going residual or “trail” payments. Thus, financial professionals are incentivized to recommend products that have higher fees as well as those with on-going payments.
Typically, a financial professional’s payout schedule (periodically adjusted by us at our discretion) increases with production and asset levels. The same payout schedule is reduced when financial professionals discount certain customer fees and commissions, or customer relationship asset levels are below minimums established by us from time to time. Financial professionals also may be eligible for annual or ongoing bonuses and deferred compensation awards based upon a variety of factors that may include reaching certain production levels, tenure with the firm, customer product mix, asset gathering, referrals to affiliates or other targets, as well as compliance with our policies and procedures and meeting best business practices.
As a result, financial professionals have an incentive to provide brokerage recommendations that result in selling more investment products and services, as well as investment products and services that carry higher fees. Financial professionals also have an incentive to provide brokerage recommendations to gather more assets under management and to increase brokerage trading activity.
Financial professionals also have an incentive to recommend that customers roll over assets from a Qualified Retirement Plan (QRP) to a brokerage Individual Retirement Account (IRA) because of the compensation they will receive. We maintain policies and procedures designed to ensure that rollover recommendations are in your best interest.
Brokerage accounts, unlike advisory accounts, do not feature an on-going fee based on assets under management. Financial professionals are incentivized to recommend that you transition your brokerage services account to an advisory account to generate on-going revenue where your brokerage account has minimal activity. Further, financial professionals are incentivized to recommend that you transition your brokerage account to an advisory account after you have already placed purchases resulting in commissions and/or other transaction-based brokerage fees. We have controls established to identify and mitigate this risk. Financial professionals also have an incentive to provide higher levels of service to those clients who generate the most fees.
Financial professionals are also compensated in the form of education meetings and recognition trips. This is classified as non-cash compensation. Portions of these programs are subsidized by external vendors, such as mutual fund companies, insurance carriers, or money managers. Consequently, product providers that sponsor and/or participate in education meetings and recognition trips gain opportunities to build relations with financial professionals, which could lead to sales of such product provider’s products. Financial professionals also receive promotional items, meals, entertainment, and other noncash compensation from product providers up to $100 per year for gifts per vendor and $1,000 per year for meals per vendor.